Cms Energy Corporation · NYSE:CMS
Cms Energy — EEI Financial Conference 2015
39 slides from Cms Energy's conference presentation, Nov 6, 2015
Slide 1: EEI Financial Conference, November 2015
Exhibit 99.1 EEI Financial NYSE. LISTED CMS November Ludington Fourth ENERGY largest Pumped 8 - Conference 11, in the 2015 Storage world #1 Ray LDC Compressor in gas storage Station #2 Cross in renewable Winds®sales Energy in the Park Great Lakes area
Slide 2: Forward-looking statements and non-GAAP information
This relevant from STATEMENTS 10-Qs. important obligation The comparable CMS adjusted regulatory Investors of 1 distribution. presentation presentation time ENERGY Energy CMS legal basis. and factors to items GAAP time Energy’s update provides others decisions. Management AND from also that is inmea
Slide 3: Why CMS Energy?
Why CMS Our (2015-2024 $15.5 +5% EPS More $5 Supported UPSIDES (Investment, PARTNERS (Customers, PASSION .(Value, SELF-FUNDED! 2 . .bil . Growth Growth next -Invest ENERGY “upside” Billion NOT +7% Reliability, 10 -- to Byyet in Capex) Engine Regulators, -- years More Sales, improve CMS Facilitate in
Slide 4: CMS Energy adjusted EPS growth
EPSa CMS EPS 2 0 $1.36 $1.45 $1.55 $1.66 $1.77 $2.01 +7% Further More Capacity Gas .aOriginal 3 .010 Adjusted . . infrastructure araised Average $1.89 +5% 2011 ENERGY renewables Guidance $1.35 $1.44 $1.55 $1.66 $1.78 +7% Growth guidance for 2012 EPS with $1.87 $1.97 $1.52 $1.63 $1.73 “ROA”/“PPAs” gr
Slide 5: CMS Energy model: simple, sustainable, self-funded
MODEL CMS 5-Year Upside -Capital O&M ENERGY Plan 1/2 (drives Opportunity investment cost —sustainable Simple, reductionsPerhaps 21/pts long-term 1Short-term Unique .growth) . . ROA . Replace 5% return - 7% and/or 6% - 8% Sales .No INVESTMENT Rate Note: .Possible 4 growth “block” Surcharges . . drive
Slide 6: Model: organic capital investment opportunity
MODEL CMS $10.7 2005-2014 Organic Environ. $15.5 2015-2024 +30% New Smart Environmental Electric $20 Opportunity Generation Renewables Grid Upside “ROA” More Gas .Replace 5 . . .+ Infrastructure Infra. with Modernization Generation ENERGY renewables bil Energy Opportunity Opportunities Capacity Main
Slide 7: Model: cost down
MODEL CMS 2006 $1.1 Down 2014 $1.0 $0.9 2018 Inflation Smarter Coal Productivity/Attrition “Pole .Productivity/Smart 6 . . . provide bil to ENERGY Top” 10% 7%Gas benefit ≈2% —orHardening Switching O&M more 2%/yr plans “headroom” Cost Energy (Zeeland) (Jackson) Reductions for more . . . . capital inv
Slide 8: Model: actual O&M cost savings versus peers
MODEL CMS Actual (2014 Peer Source: -2.7% Consumers Future 2014 Attrition Productivity “Pole Smart Eliminate Mortality Service Net Percent .FAST 7 . . .Savings Average better & ENERGY Top” over START! Meters Cost Upgrades Savings 2015 SNL, $-35 — Tables Waste than 2006) Hardening Savings Reduction O
Slide 9: Model: mobility and productivity
MODEL CMS Mobility Two-way Technology Grid Quality .Improved 8 . . . driving modernization ENERGY Productivity Productivity — communication/Connectivity work Productivity Other more management cost Ideas 1-2reductions. pt . . voltage . . Productive reduction 25%-50% truck$25-50 rollsreduction $15-25
Slide 10: Model: Consumers Energy customer satisfaction quartile rankings
MODEL Consumers Electric 1st Gas 2nd Moved 3rd 4th .2010 Business Residential 9 . . Quartile .Quartile Quartile continues 2012 to— first 2014 Energy Customer #4quartile! #3to#2 #6 Present improve #9 Satisfaction Rank rapidly. 2016. . . .
Slide 11: Model: interest rate sensitivities
MODEL CMS Amount Interest Benefit Total .Note: 10 . . . mitigated. 1¢ ENERGY ROE Liability Expense (bils) —?Interest Sensitivities $1.0 (discounted) Rates +100Increases (bps) (3)¢ 3.0Pre-Tax +100 . . .4. Earnings Impact
Slide 12: Model: Michigan gross domestic product growth
MODEL CMS Gross Grand Top WA OR CA IL DE HI U.S. Highest Fourth Third Second Lowest .Source: 11 . .6.0 8.1 ..0.7 10.3 12.8 11.3 10% Total among ENERGY quintile Domestic MS Rapids AK quintile DC quintile U.S. quintile NV ID MT —of= 2.2 -1.8 5.8 All 6.6 Michigan’s 10.1% the 1.4 Department 11.6 21.5% I
Slide 13: Model: Grand Rapids and territory growth outperforms
Model CMS Our Grand Building U.S Michigan GDP +13% +18% U 2 0 a3 5.1 5.0 3.4 (9/15) b Annual Total /planned Population 10 14 22 2010—>2014 Conservative 2% 6% Industrial 1% 12.Grand % . .1Service Annualized nemployment 2015-2019 2ENERGY Rapids --Electric Post-Recession 2010-2014 .C Weather Rapids Per
Slide 14: Model: electric sales growth examples
MODEL CMS Examples Electric General Flint Assembly 300 Plants $996 Largest Arauco Announcement press 250 $325 Bayer Dicastal Durolast Continental GM Betz MSU Post Dart Magna-Cosma Enbridge Plasan Auto MW Industries Brembo Denso MACI WKW Food Manufacturing Metal Petroleum Plastics Others .Total 13 .
Slide 15: Clean power: renewable portfolio and customer demand
CLEAN CMS Apple Competitive 100 Commercial Capacity, PPA Community Utility Grand Western .Digital 14 . . .MW with demonstrates ENERGY Blossom Valley Scale rendering Michigan POWER option energy, Solar operation price Solar State Wind toof and -- Gardens ability University, University, purchase Grand
Slide 16: Clean power: generation mix evolving
CLEAN CMS 34% 6% 32% 2014 31% Gas 2005 41% 3% by 2nd < Coal 1% Purchases 9% Oil 8% Nuclear > 12% Storage Pumped 2017 11% .Renewables 15 . Gas 24% .over .6% best evolving reduced ENERGY 35% 40%! 8% Storage POWER in U.S. to cleaner -- Capacity generation Diversity and .becoming ... more cost competiti
Slide 17: Clean power: CO2 emissions outlook
CLEAN CMS Tons Consumers 20 (mils) 950 Retire State coal (Consumers Potential More Not 2 .0 16.015 . .in MW positioned CO2 of 2016 ENERGY Renewables Plan Michigan POWER Outlook 2017 Energy Energy’s well 2018 -- Target Needed 2012 Plan for share) 2019 compliance. Emissions . .--2020 . . 2021 2022 202
Slide 18: Upsides: capacity contracts and DIG
UPSIDES CMS Pre-Tax O 40 $80 (mils) Signed $75 (layering New $20 $35 +$20 +$40 $55 Outage $15 Future 2017 2016 2015 ≈ 2 0 Capacity 25% 0% Energy Available: $7.50 .$4.50 90 50 17 .0pportunities $1.00 $2.00 $3.00 . . adding contracts ENERGY Contracts pull Income ($/kw-mth) in--over ahead value. “DIG”
Slide 19: Upsides: Michigan energy legislation timeline
UPSIDES CMS November/ October Committee Governor’s Sen. Rep. Gov. Senate Renewables Opportunities Efficiency .ROA 18 . . . moving Nofs Nesbitt Snyder -- ENERGY and Fair --House Hearings & December Signature -- choice; Michigan toward Eliminate Full Integrated bills Vote no theEnergy closely waste su
Slide 20: Stability: consistent EPS growth through conditions
STABILITY CMS 7% Further Dividend EPSa More Hurt Help Weather Recession We 2003 2004 2005 2006 2007 2008 Summer- 2009 2010 Hot 2011 Warm 2012 Mild 2013 Polar 2014 Cold 2015 Future Governor New .aCommission 19 .Adjusted . .work CAGR summer consistent Commission winter Feb. summer vortex ENERGY renewa
Slide 21: Thank you, happy 50th anniversary, EEI
Happy CMS THANK BETTER Q 20& AENERGY 50th YOU THAN Anniversary, forWE your FOUND support EEI! IT
Slide 22: Appendix
Appendix
Slide 23: Rate case filings and settlements
Rate Gas $21 $64 (mils) 2014 June Dec. . . .May $85 (mils) Cases.... 2015 Stay Investment .22 fair Date 2013 out Self-implement Order Electric and Step CMS — Settlement Cost expected of timely.Amount Track ENERGY Upgrades, & Other Filed 7/17 2 1/2 since last order! years Record $89 110 Capital,
Slide 24: Constructive regulation in Michigan
Constructive Commission John Chairman Sally July Norm Term Newly .Baclays 23 . . . 2, is Quackenbush Talberg Ends: Saari appointed! supported 2019 Research, 3(R) July Tier Regulation (I) 2042,by 1952015 2017 2021 (R), State 6a quality 1state CMS 2Ranking 68Michigan rankings Commission ENERGY ranked
Slide 25: O&M cost reinvestment and adjusted EPS
O&M Adjusted (non-GAAP) (mils) DIG 2014 17¢ Weather Natural Cost Total +6% January Guidance .+7% 24 . . .Donations AND outage &-Reliability $(23) 11¢ (mils) “Reinvestment” Other Offsets March 12¢ EPS provides $15 $(8) 11¢ Reinvestment 32015 & 31 (4) (10) $10 13¢ other June sustainable, O&M — 2015 He
Slide 26: Managing cost, reinvestment and EPS
Managing CMS 2011 EPS Adjusted $1.90 1.80 1.70 Polar 1.60 Savings Mild Hot 25 +14% +7% +13¢ Cost +7% 2012 Vortex ENERGY +18¢ Reinvestment . . .Winter 1.50 +1¢ +7% Storms Refinancing Taxes .1.40 the +7¢ 2013 Work Reinvestment Cold Reinvestment Summer has Hot-13¢ permitted Summer 2014 WinterEvery Peer
Slide 27: Generation levelized cost comparison
Generation CMS Levelized 25 (¢/kWh) Consumers Back 11¢ 12¢ 15¢ 22¢ 5¢ 7¢8¢7¢ -up Zeeland C 0 .Gas 26 .ombined .6¢ New . price= combined 10¢ ENERGY 5¢Build 6¢ Back cost Cycle $3.00 Strategy: Cross Energy of -up cycle Gas $4.50 new Winds® 6¢ Sources New gas Plant 9¢ build $6.00 is 5.5¢ Supply Big the
Slide 28: Electric rates and customer bills
Electric CMS 20% Worse National Midwest Residential Better (8)% Rates -20 (17)% .2013 27 . . .-30 affordable 30% 2014 ENERGY Rates &(13)% Worse Customer Fuel Avg 26% 2015 Bills bills &(13)% Rates Industrial Act for well 2016 Industrial Prices 169 residential & Better below Act Plus rates 169 Policy
Slide 29: Operating cash flow outlook
Operating CMS Amount (bils) $2.6 2.1 $1.8 1.6 0.6 1.1 Cash 0.1 (0.9) (0.4) 2014 .NOLs 28 . . .Investment $2.1 $1.55 $2.2 $2.0 up a2015 flow Gross ENERGY &Non-GAAP $0.6 Interest, Up Credits $2.3 Cash before 2016 operating $0.6 billion $2.5 Flow 2017 $0.7 working Billion dividend orGrowth $0.6 cash 20
Slide 30: 2015 forecast and sensitivities
CMS 2015 Status Sales (mils) ROE Electric Gas Interest Capital .aO&M 29 .Reflect . . (10.3%) (301.8 prices reflect Sensitivities... Impact (authorized) aENERGY Cost Sensitivity Investment Rates (37,485 (10.3%) 2015 (NYMEX) Bcf) -strong ±20 1/2% ±100 sales ±5 GWh) ±±EPS risk 10 ++$100 0.01 ±0.07 bps
Slide 31: 2015 sources and uses of cash
2015 CMS Enterprises Overhead DRP, Common Consumers Operating Other Sources Interest Capital Dividend Pension Uses Equity New Retirements Net Financing Cash Bank aAR b 30Includes Facility short-term issues aCash $(2,250) flow at continuous Facility Energy working $(315) infusion $150 expenditures ye
Slide 32: GAAP Reconciliation
GAAP Reconciliation
Slide 33: Earnings per share GAAP reconciliation
CMS Earnings 2008 (Unaudited) Reported After-tax Electric Enterprises Corporate Discontinued Adjusted * (a) 32Less $1.25 2009 ENERGY than and Per excluding earnings items: interest 2010 (0.02) $500 gas Share operations CORPORATION utility 2011 thousand 0.09 and per By discontinued 2012 share, share
Slide 34: Consumers 2015 cash flow reclassifications
CMS Consumers 2015 Reclassifications Presentation Debt Description Operating Other Sources Interest Capital Dividends/tax Pension Uses Equity New Retirements Financing Net aCash 33 Includes short-term change Issues Pymts $(2,250) Forecasted flow at ENERGY working $150 expenditures year and $1,670 Co
Slide 35: CMS Energy parent 2015 cash flow reclassifications
CMS 2015 Reclassifications Presentation Description Consumers Enterprises Sources Interest Overhead Pension Uses New Retirements Equity Common Financing Net Cash (a) 34 Includes short-term cash change Issues (a) Forecasted flow at ENERGY Energy infusions programs year and $395 Contribution $(315) pr
Slide 36: Eliminations, reclassifications and consolidation statements
CMSchange 2015 Eliminations/Reclassifications/Consolidation Statements Other Consolidated Description $1,715 (1,723) $(8) $(37) Net $26 Cash 35 cash $- $30 Forecasted flow at ENERGY $(30) Consolidated $209 $180 (150) year $(204) used provided from of in $277 Consumers $- end $130 CMS Statements (334
Slide 37: Operating cash flow reconciliation
CMScash Reconciliation 2014 (mils) (unaudited) Consumers Enterprises Gross Other Net 36 2015 ENERGY Energy operating Operating provided 2016 Project Operating ofactivities 2017 Cash Gross by Cash operating Income 2018 Flow Operating Flows including 2019 $1,833 +20 activities Depreciation 2020 Cash 2
Slide 38: Investor relations contact and summary
Customer Electric #3 1st 2nd Moved #6 #9 3rd CUSTOMERS 2010 Residential ....continues O&M Adjusted DIG 2014 17¢ INVESTORS 2015 Weather Natural Guidance Total +7% January ....AND INVESTOR Phil Investor Travis One CMS www.cmsenergy.com OUR OUTPERFORMED NEXT 12 (EPS Capex (no Self-funded (5 Conservativ
Slide 39: CMS Energy upsides plan summary
CMS Upsides Plan Actual 7% $1.87 Adjusted Dividend 20¢ 2003 Gross 2009 Self-funded CapEx 2005 Smart 37% $20 Environmental Opportunity Organic No Generation Upside Gas Grid % — Base O&M 2006 $1.1 5% Electric (Ind. 2008 Energy File 10% Sen. ROA Keep 1%/yr Efficiency Phase Renewables New – Eliminate Th