Cms Energy Corporation · NYSE:CMS
Cms Energy — Evercore ISI Utility CEO Retreat 2015
21 slides from Cms Energy's conference presentation, Jan 8, 2015
Slide 1: Evercore ISI Utility CEO Retreat
Top of Mind • Why Invest? • Investment • Upsides • Partners • Regulatory • Passion to Improve Evercore ISI Utility CEO Retreat January 8-9, 2015 Ludington Pumped Storage Ray Compressor Jackson Gas PlantStation Cross Winds Energy Park Fourth largest in the world #1 LDC in gas storage #2 in renewable
Slide 2: Forward-looking statements
This presentation is made as of the date hereof and contains “forward-looking statements” as defined in Rule 3b-6 of the Securities Exchange Act of 1934, Rule 175 of the Securities Act of 1933, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. All f
Slide 3: End of Year Observations
End of Year Observations . . . . Status • Financial Results January 29 • Customer Satisfaction Up (Gas First Quartile) More Progress • Cross Winds - $255 mil; SW 36” Pipeline - $88 mil Operational • Gas Rate Case (Pending MPSC order) Settled • Cost down 7% since 2006 Unequalled • Safety First Qu
Slide 4: Why Invest?
Why Invest? . . . . Our Growth Engine Supported By (2015-2024 Capex) ● UPSIDES create headroom (Investment, Sales, Cost, & DIG) ● PARTNERS in progress $15.5 Billion (Customers, Regulators, & Policy Makers) 5% - 7% EPS growth ● PASSION to improve for customers AND owners (Value, Reliability, & Enviro
Slide 5: INVESTMENT -- "Catch-Up"
INVESTMENT -- “Catch-Up” . . . . Amount (billions) $1.8 > $1.5 per year Peers Peer Performance a Consumers Energy Peer Average CMS Capex Liquidity Cash Flow (oper) 20% 16% 15% 14% 15% 12% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 __
Slide 6: INVESTMENT -- Ten-Year Capex Plan Can Expand
INVESTMENT -- Ten-Year Capex Plan Can Expand . . . . 2015-2024 Opportunity Level 10-Year Plan Amount (bils) Generation capacity • PPA replacement $3.0 • ROA return • Higher renewables $20+ Billion $15.5 Billion Gas conversions & expansion 1.0 Grid modernization 1.0 Total Opportunities $5.0 Upside? R
Slide 7: UPSIDES -- Capacity Opportunities
UPSIDES -- Capacity Opportunities . . . . Further Capacity Growth Over Next Ten Years Upside MW 11,000 Not in plan 10,000 1,200 MW PPA’s Expire PPA ~8,600 MW 1,240 MW 580 PPA 2,600 780 MW 7,500 capacity Owned ~30% 8,820 ~800 MW 410 MW Lower customer bills Owned Shortfall 6,000 540 MW 5,000 Today Jac
Slide 8: UPSIDES -- Capacity Price Increases
UPSIDES -- Capacity Price Increases . . . . Today Future Scenarios Recent Contracts (mils) (mils) +$50 $55 • Nine-year 250 MW “energy” contract at $4.06 • Capacity to Consumers $35 • 25 MW/2015 at $2.32 +$30 • 50 MW/2016 at $4.36 Upside: Capacity and energy $5 contracts layered in over time Capacity
Slide 9: UPSIDES -- Reinvestment Model Helps Customers
UPSIDES -- Reinvestment Model Helps Customers . . . . Adjusted EPS (non-GAAP) 2014 +18¢ October 23rd Status Third Quarter EPS Weather (Electric) (6)¢ +15¢ Reinvestment (5) Total Change (11)¢ +9¢ Good First Nine Months EPS Choices Weather (Gas) 16¢ +4¢ Cost savings 4 Reinvest & other (16) +7%- Total
Slide 10: UPSIDES -- Trend of Cost Savings
UPSIDES -- Trend of Cost Savings . . . . O&M Cost Trend Future Savings 2018 vs 2013 0 50% (mils) ~6% per year 0 Peers • Fuel mix $ - 25 0 ~2% per year • Benefits - 75 0 • Less Expensive New - 75 0 Inflation -25% Hires & Lower Headcount 00 • Smart Meters - 25 0 -7% -7% • Inflation +100 0 CMS -10% 0 2
Slide 11: PARTNERS -- Michigan Energy Law Update
PARTNERS -- Michigan Energy Law Update . . . . • Adaptability • Reliability Update • Affordability • Environmental protection • Governor Snyder • 10% renewables announced energy a by 2015 top priority in 2015 • Energy efficiency standards • File-and-implement • Historical test • 10% ROA cap year • 1
Slide 12: Partnering with Policy Makers
Partnering with Policy Makers . . . . Governor Rick Snyder Regulation Commission John Quackenbush (R), Chairman Commission remains strong Term Ends: July 2, 2017 Powering Michigan’s Comeback Sally Talberg (I) Energy Committee Chairs Term Ends: July 2, 2019 Senator Mike Nofs Greg White (I) To Be Term
Slide 13: REGULATORY -- Rate Case Summary
REGULATORY -- Rate Case Summary . . . . Electric Rate Case Gas Rate Case Amount (mils) • Settled at $45 million Capital Investment $ 185 Cost & Other - 57 (Pending MPSC order) Core Request $ 128 Jackson Gas Plant 35 • Six months early! Total Request $ 163 2001 Securitization Offset $ - 80 Memo: Net
Slide 14: REGULATORY -- Gas and Electric Rate Cases
REGULATORY -- Gas and Electric Rate Cases . . . . 2014 2015 2016 Our View GAS A) Settled $45 million a a Filed Settled $88 M $45 M B) Six months early 7/01 C) 10.3% ROE D) Revenue decoupling mechanism A) A) Jackson Plant in Jackson Plant Classic 7 Decommissioned rate base B) Final Securitization Fil
Slide 15: PASSION TO IMPROVE -- CMS Energy
PASSION TO IMPROVE -- CMS Energy . . . . Future Shines Bright Sustainable Future Growth $3.50 EPS a +5% to +7% Past Next 5 Dividend Performance Years Investment (bils) $6.3 $7.5 (2009-2014) Capacity Op! +7% O&M Reductions (7)% (10)% (2006-2013) Conservative Sales Growth +1% +½ % (2010-2013) Conserva
Slide 16: Appendix
CUS ENERGY Appendix
Slide 17: Credit Ratings
Credit Ratings . . . . Scale Reflects S&P / S&P Moody’s Fitch Fitch Moody’s (Dec.) (January) (February) A+ A1 • Consistent A A2 Consumers Performance Secured A- BBB+ A3 Baa1 • Less Risk BBB Baa2 BBB- Baa3 • Customer Focus BB+ Ba1 • Constructive BBB Baa2 CMS Unsecured Regulation BBB- Baa3 BB+ Ba1 Pre
Slide 18: Consumers Appears to Be in a Good Carbon Position
Consumers Appears . . . . Carbon Tonnage Reduction Million Tons of CO2 (Preliminary) 25 2005 Baseline 23 21 Clean Power Plan 19 “Implied” EPA Target 17 Consumers Energy Projected 15 emission level 13 2014 2020 2025 2029 2030 . . . . to be in a good carbon position. 17
Slide 19: Generation Strategy: New Supply Sources
Generation Strategy: New Supply Sources . . . . Levelized cost of new build (¢/kWh) New Build 25 Consumers Energy Sources 22¢ 20 15¢ 15 12¢ 11¢ Back 10¢ 10 -up 8¢ 7¢ 6¢ Back 7¢ 6¢ -up 6¢ 9¢ 5.5¢ 5¢ 5¢ 5 Cross Winds 6¢ Big 5 Palisades Zeeland 0 Combined Cycle Gas Plant Wind Coal Nuclear Residential
Slide 20: GAAP Reconciliation
CMS ENERGY GAAP Reconciliation
Slide 21: Earnings Per Share By Year GAAP Reconciliation
Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20 $0.91 $1.28 $1.58 $1.42 $1.66 After-tax items: Electric and gas utility 0.21 (0.39) - - (0.07) 0.05