Slide 1: 2020 Environmental, Social & Governance
2020 Environmental, Social & Governance
Slide 2: Forward-looking statements and non-GAAP measures
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: ESG Commitment
ESG Commitment . . . Named the No. 1 Michigan Received 2019 Energy Star® Company for Diversity in 2019 Partner of the Year Sustained PEOPLE PLANET PROFIT by Forbes® Magazine Excellence Award PERFORMANCE Ranked Top Quartile by Named a Top U.S. utility for Ranked No. 1 overall in the EEI Utility Stand
Slide 4: ESG Disclosures
ESG Disclosures . . . Corporate Responsibility People • CMS Energy & Consumers Energy Websites • SEC Filings (10-K & Proxy) • 2019 Carbon Disclosure Project • Report Scope 1, 2 & 3 Emissions Planet • Water • Climate Assessment Report • Considers TCFD Guidelines • EEI & AGA ESG Templates Profit • Sus
Slide 5: Continued World Class Performance
Continued World Class Performance . . . Caring for our Customers and our Co-Workers… • Safety incidents down 70% since 2008. People • >$3.6 MM to Michigan nonprofit organizations in response to the COVID-19 pandemic. • Tripled our spend with diverse suppliers over the past 7 years and doubling our s
Slide 6: People, Planet, Profit Performance
PEOPLE • PLANET • PROFIT PEOPLE PLANET PROFIT PERFORMANCE 6
Slide 7: Focus on Safety
CMS EVERGY > Foc us on Safety
Slide 8: Safety in the Workplace
Safety in the Workplace . . . Safety Performance 2019 Successes (Recordable Safety • Zero fatalities Incidents) • Ranked top quartile by EEI utility standards in 355 safety performance Down • Partnered with EEI to develop a new risk-based (70)% safety model with focus on proactively avoiding serious
Slide 9: Cyber and Physical Security Program
Cyber and Physical Security Program . . . Program Approach Program Focus • Integrated security program and organization • Protecting critical infrastructure, customer data • Covers both physical and cyber security and the safety of our employees are top priorities • Dedicated team focused on detecti
Slide 10: Diversity, Equity & Inclusion
Diversity, Equity & Inclusion . . . #1 company in Michigan and Top 50 Best Employers for #1 utility for Best Employers for Diversity 2020 Women 2020 by by Forbes® Magazine Forbes® Magazine >20% of employees are involved in one or more Employee Resource Groups Ranked Top 50 globally in Military Times
Slide 11: Employee Wellness Programs
Employee Wellness Programs . . . Live Well Program • Year-round engagement in employee wellness • Annual health visits • Mental and physical health awareness and education • Group physical activities Physical • Emotional • Financial • Professional • Social • Community • Employee participation incent
Slide 12: Building Our Talent Pipeline
Building Our Talent Pipeline 12
Slide 13: Building the Next Generation
Building the Next Generation . . . STEM & Robotics School-to-Work (STW) • Hometown, statewide and national focus (for electric line workers) • Focus is in middle & high school levels • Collaboration with community colleges • 200+ hired, 97% retention rate 6 co-workers recognized for their leadership
Slide 14: Working with Our Communities
Working with Our Communities . . . Gas Boot Camp Training Trust Agreement • 3-week training including physical assessment (with Power for America) and Safety Culture course • Entry-level natural gas training, service, appliance repair and gas fundamentals • Successful candidates offered full-time TB
Slide 15: Union Relationships at the Utility
Union Relationships at the Utility . . . Michigan State Utility Workers Council (MSUWC) 72% • ~3,500 employees represent employee O&M & construction engagement favorability score 37% unionized • >250 employees represent 80% call centers employee engagement favorability score • Sub of Utility Workers
Slide 16: Diversity, Equity & Inclusion
Diversity, Equity & Inclusion . . . “Ensuring every voice within the company is heard” Angela Thompkins DE&I STRATEGY Build and sustain a world class, Tripled our spend with diverse inclusive workforce and suppliers over the past 7 years and doubling our spend with diverse customer experience throug
Slide 17: Delivering for Our Customers
Delivering for Our Customers 17
Slide 18: Corporate Giving
Corporate Giving . . . Continued Giving 2019 Donations $6.0 MM People $11½ MM $115 MM in 2019 $1.3 MM Planet Cumulative Donations >$110 MM $4.2 MM Prosperity since 2009 $11½ MM in 2019 2020a Donations AND $6.5 MM donated $0 MM to local missions including COVID-19 relief efforts, 2009 2019 soci
Slide 19: Signature Community Grants
Signature Community Grants . . . Kinexus Youth Solutions Inc. In 2019: Bridges gap between available jobs and skilled workers by providing People Awards success skill development to >7K disadvantaged youth in state. Kalamazoo Regional Educational Service Agency Supports the Career Pathway Initiative
Slide 20: And Continue to Make Michigan a Better Place
And Continue to Make . . . Flint Housing Opportunities In 2019: Effort to upgrade and sell over three dozen vacant homes to first-time Prosperity Awards: homebuyers in Flint. Funding will aid in strengthening neighborhoods by transforming abandoned houses into affordable and attractive residences fo
Slide 21: Community Engagement Team
Community Engagement Team . . . 18 Community Affairs Managers Active in the community >350 local community events are invested in each year >100 Boards served on . . . uniquely positioned across the state. 21
Slide 22: Proactively Targeting New Businesses
Proactively Targeting New Businesses . . . Customer Great State to Do Business Committed Load 2019 Economic Impact 2020a Deal of the Year Award ~$2 Bn (Glanbia Campus) Michigan investment - Mid-America Economic Development Council + ~ 3,000 jobs 2019 Top 20 2020 a Utilities in Economic Development -
Slide 23: Lowering Customers Bills
Lowering Customers Bills . . . Residential Billsa Residential Bills as % of Walletb 2013A 2020E 5-yr Plan (Electric & Gas) Flat bills with Utility Bill Down Utility Bill ~4% 50 bps Electric $108 $103 additional $7¼ Bn of ~3½% ~(5)% capital TV & Phone 4% TV & Phone 4% Flat bills with Healthcare 5% He
Slide 24: Customer Satisfaction Improved
Customer Satisfaction Improved . . . J.D. Power Scores Customer Experience Residential Business Customer Experience Index (CXi) #1 in 813 Midwest Customer Complaints 76 a 779 767 +167 pts 742 +140 pts >7K +142 pts +126 pts 37 639 646 625 616 b <1K 2012 2019 2012 2019 2012 2019 2012 2019 Electric Gas
Slide 25: People, Planet, Profit Performance
PEOPLE • PLANET • PROFIT PEOPLE PLANET PROFIT PERFORMANCE 25
Slide 26: Clean and Lean
Clean and Lean . . . Old Utility Model Clean and Lean Big Build Supply Fully utilize Modular Supply assets Retirement Excess supply Big Excess Build supply Demand Modular Actual Modular Demand EE & DR O&M O&M Excess supply Expected Demand Fuel Fuel Big Bets Lower Risk Results in excess capacity, hig
Slide 27: Clean Energy Strategy
Clean Energy Strategy . . . Next 5 Years By 2040 1 Bn Net Zero gallons of H2O saved carbon emissions 35% Zero Coal reduction of waste to landfills used to generate electricity 5,000 56% acres of Michigan land of electricity from renewable enhanced, restored or protected sources . . . focuses on both
Slide 28: Clean Energy Future
Clean Energy Future . . . Elimination of coal More renewable energy Innovative energy solutions Earn incentive Consumers Energy Capacity Mix mechanisms 11% 20% 22% 8% 12% 6% 8% 12% 11% 10% 14% Rate based or 10% earn FCM 28% 56% 56% 20% 42% 10% Today 2030 2040 a Renewables Coal Natural Gas Storage
Slide 29: Net Zero Plans
Net Zero Plans . . . Carbon Emissionsa Methane Emissionsb (Electric System) (Gas Delivery System) 2018 2024 2032 2040 2018 2025 2030 Classic Karn Campbell Campbell VSR c Continued Asset 7 retirement 1&2 retirement 1&2 retirement 3 retirement (17)% EIRP c VSR & EIRP retirements Methane Emissions
Slide 30: Cleaner Supply Mix
Cleaner Supply Mix . . . 2019 CMS Energy by Fuel Mix By 2040 Net Interchange Remaining Year of Power & Other Coal Units Retirement Status 2% Classic 7 2016 Coal Karn 1 & 2 2023 Recovery via 24% Campbell 1 & 2 2031 securitization Gas 44% Nuclear Campbell 3 2039 17% Net zero Pumped carbon a Storag
Slide 31: Declining Exposure to Coal
Declining Exposure to Coal . . . Coal % of Rate Basea Growing Utility Renewables b 20% 2016 (Estimated % EPS ) $3 - $6 Bn Classic 7 Investment retirement opportunity PLUS Incentives on PPAs 2023 and Demand <15% Karn 1&2 Response retirement <10% <10% ~9½% 2031 Campbell Campbell (4)% 1&2 1&2 2039 ~4%
Slide 32: Breathing Easier
Breathing Easier . . . Air Emissions Reduction Net Zero (2005-2019) Carbon Emissions by 2040 93% 86% 91% 96% 37% Added emission control equipment Shut down Classic 7 & added Jackson Gas Plant Sulfer Nitrogen Mercurya Particulate Matter Carbon Dioxide a Tracking began 2007 . . . doing our part to cle
Slide 33: Land & Water Usage
Land & Water Usage . . . Total Landfill Space Avoided Water Intensity (Total Tons) (Gal/MWh) (43)% ~2.5x 1,307,066 32,102 18,377 530,338 1992 - 2015 2019 2012 2015 2019 2014 . . . dramatically reduced. 33
Slide 34: Energy Efficiency
Energy Efficiency . . . Energy Efficiency Programs Electric Saved customers over $3 Bn on their energy bills since 2009 • From 1½% to 2% annually (by 2021) Equivalent to Next 5 years: Reduced usage by ~4,500 GWh since 2009 power1plant! a • • Spend ~$160 MM/yr a • Pre-tax incentive ~$33 MM/yr Recy
Slide 35: Consumers Energy EV Program
Consumers Energy EV Program . . . Five Components 400 approved to date Investment: $10 MM over a 3-year period Residential Charging beginning in 2019 1 Rebate up to $500; no limit on number of rebates Rebates: Residential and commercial chargers Rates: Time-of-use that encourages at-home Public/Work
Slide 36: Utility Renewables
Utility Renewables . . . Renewable Portfolio Standard Integrated Resource Plan (15% RPS) (20-Year IRP) • 525 MWs of wind • 1,100 MWs of solar • 550 MWs rate base, ~$600 MM • $1 Bn of capital investmenta • 550 MWs PPA, earn WACC (5.88% x PPA price) • Approved in the REP filing • $600 MM of capital in
Slide 37: Growing Enterprises Renewables
Growing Enterprises Renewables . . . Renewable Platform • Aviator, 525 MWs of contracted wind • 51% cash equity ownership (tax equity utilized) • Funded with cash on hand, no new equity • Offers utility-like returns with creditworthy counterparties • Operating projects: Flambeau • 27 MWs of contract
Slide 38: People, Planet, Profit Performance
PEOPLE • PLANET • PROFIT PEOPLE PLANET PROFIT PERFORMANCE 38
Slide 39: Exceptional Governance
Exceptional Governance . . . Board of Directors JOHN G. RUSSELL PATRICIA K. POPPE JON E. BARFIELD DEBORAH H. BUTLER with Diverse Backgrounds Independent Chair KURT L. DARROW WILLIAM D. HARVEY MYRNA M. SOTO JOHN G. SZNEWAJS By the Numbers 11 Members ~6 LAURA H. WRIGHT SUZANNE F. SHANK RONALD J. TANSK
Slide 40: Commitment to DE&I at Board Level
Commitment to DE&I at Board Level . . . Women’s Share of Board Seats PoC’s Share of Board Seats 45% 27% 19% 26% a a CMS S&P 500 CMS S&P 500 a Spencer Stuart - Institutional Investor Focus 2020: Board Composition; people of color (PoC) universe includes top 200 publicly traded companies . . . surpass
Slide 41: Board Experience and Diversity
Board Experience and Diversity . . . Diversity Experience 61 Average age Senior Leadership Financing Accounting or Fin. Reporting 100% 100% Regulatory Environment & Governmental Affairs 100% 45% Female Risk Management Customer Experience 82% 82% Info. Tech. / Safety & Security 73% 27% People of colo
Slide 42: Committee Membership Makeup
Committee Membership Makeup . . . Contributions >$10K need Member Board approval 100% Chairperson Independent Governance, Compensation & Sustainability, & Name Audit Human Resources Executive Finance Public Responsibility Jon E. Barfield Deborah H. Butler Kurt L. Darrow William D
Slide 43: Committee Responsibilities
Committee Responsibilities Oversees: Audit • Integrity of financial statements & information 7 meetings in 2019 Compliance with legal & regulatory requirements Risk management policies, controls & exposures • Reviews: Performance of internal audit function Compensation & • Review & Approve: Executiv
Slide 44: Compensation
Compensation . . . Compensation Mix for CEO 2020 Operational Goals • Employee Safety Based on EPS (70%) & OCF (30%) • Employee Empowerment Index Base • Customer Experience Index (CXi) Salary 16% • Electric Reliability - SAIDI Long-term Annual Incentive Incentive 100% pledged • Generation Customer Va
Slide 45: Risks are Carefully Considered
Risks are Carefully Considered . . . Risks Mitigation Efforts • Participation in legislative and regulatory policy Regulatory Environment development Climate • Retired 7 coal plants, and plans to retire remaining 5 plants in Carbon Emissions fleet (Regulation) • Energy Efficiency, Demand Response, a
Slide 46: Consistent Growth Through Changing Circumstances
Consistent Growth Through . . . a 7% CAGR +6% to +8% EPSa +7% Dividend Weather Recession Recession Help Hurt 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Cold Mild Warm Warm Mild Cold Summer- Hot Hot Warm Mild Polar Cold Feb Warm Warm Hot Storms winter su
Slide 47: CMS' Trading Performance
CMS’ Trading Performance . . . Stock Performancea Total Shareowner Returnb 350% CMS CMS UTY UTY 300% 301% S&P S&P 468% 250% 200% 190% 150% 100% 110% 98% 50% 65% 0% 30% -50% '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 1-yr 3-yr 5-yr 10-yr a b 10-year stock performance as of December 31, 2019 Dividend
Slide 48: Investment Thesis
Investment Thesis . . . Investment Thesis Takeaways Prudent Liquidity Management • 2020 financings largely completed • No pension contributions required in 2020 Aging Operational Excellence and Track Record Infrastructure • Increased productivity driven by the CE Way Clean Energy Constructive Lead
Slide 49: GAAP Reconciliation
CMS EVERGY > GAAPRec onciliation
Slide 50: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) GAAP 2019 over 2003 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 CAGR Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20 $0.91 $1.28 $1.58 $1.4