Cms Energy Corporation · NYSE:CMS

Cms Energy — Wolfe Research Power & Gas Leaders Conference 2014

28 slides from Cms Energy's conference presentation, Sep 17, 2014

  1. Slide 1: Wolfe Research Power & Gas Leaders

    Content • How it Works • Investment (New) • Upsides (Updates) • Partners Wolfe Research Power & Gas Leaders September 17, 2014 Ludington Pumped Storage Jackson Gas Plant Cross Winds  Energy Park Fourth largest in the world Lowest acquisition cost ever #1 in renewables in the Great Lakes area

  2. Slide 2: Forward-looking statements disclaimer

    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

  3. Slide 3: How It Works -- Growing Forward Strategy

    HOW IT WORKS --“Growing Forward” Strategy . . . . Consistent financial performance Fair and timely regulation Utility Customer investment value Safe, excellent operations . . . . drives consistent, predictable year-over-year growth. 2

  4. Slide 4: How It Works -- Sustainable EPS Growth

    HOW IT WORKS -- Sustainable EPS Growth . . . . a a EPS $2 +7% +7% $1.78 +5% $1.66 $1.76 $1.55 +6% $1.66 $1.45 $1.55 $1.63 $1.78 $1.52 $1.73 $1.36 $1.44 Original guidance $1.35 0 2010 2011 2012 2013 2014 Beyond _____ a Adjusted EPS (non-GAAP) . . . . 5% to 7% each year without “resets”. 3

  5. Slide 5: Investment -- Catch-Up

    INVESTMENT -- “Catch-Up” . . . . Amount (billions) $1.8 $1.5 per year Peers CMS Investment Criteria:  Reduces fuel cost  Lowers O&M  Adds customer value  Meets state & federal mandates 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 _____ Sourc

  6. Slide 6: Investment -- Ten-Year Plan Expanding

    INVESTMENT -- Ten-Year Plan Expanding . . . . 2013-2022 Opportunity Level 10-Year Plan Amount (bils) Generation capacity • PPA replacement $1.7 $20+ Billion • ROA return $15Billion $15 Billion Higher renewables Gas conversions & expansion .3 1.0 Electric reliability 2.0 Total Opportunities $5.0 Upsi

  7. Slide 7: Investment -- Customer-Driven

    INVESTMENT -- Customer-Driven . . . . Clean Power Capacity Reliability Infrastructure Opportunity $2.3 Billion $1.6 Billion $4.2 Billion $5.4 Billion $5 Billion Environmental Jackson gas plant Consumers Smart Energy Gas distribution Gas combined cycle Renewable energy Gas transmission Gas storage Pr

  8. Slide 8: Investment -- Refocusing on the Gas Business

    INVESTMENT -- Refocusing on the Gas Business . . . . Gas System Gas Investment (Cumulative 5-Year Plan) • #4 largest gas utility in U.S. Amount (bils) $ 3.0 • 50,000 miles of distribution pipes $2.6 2.5 86% $2.3 • 1,700 miles of transmission lines 2.0 • 300 bcf gas storage 1.5 $1.4 • 3.5% of all gas

  9. Slide 9: Investment -- Gas Infrastructure

    INVESTMENT -- Gas Infrastructure . . . . New Customers Inspection Storage Includes conversions 50,000 New customers 1,700 Miles 23 Wells $200 Million $100 Million $100 Million Transmission Compression Main Replacement Commission approved 32 Miles 19,000 + Horsepower 800 Miles $200 Million $400 Milli

  10. Slide 10: Investment -- Cleaner Generation

    INVESTMENT -- Cleaner Generation . . . . Diverse Capacity Balanced Portfolio Renewables Clean Coal 2005 Capacity % Gas 10% Renewables 6% 29% Karn Generating Coal Lake Winds Energy Park Plant, 515 MW 11% Pumped Storage 100 MW Oil Renewables 3% Pumped Storage Nuclear 41% Purchases Cross Winds Energy

  11. Slide 11: Investment -- Capacity Opportunities

    INVESTMENT -- Capacity Opportunities . . . . Ten-year Capacity Growth Further MW 11,000 Not in plan Upside 10,000 900 PPA’s Expire MW PPA ~8,600 MW 1,240 MW 580 PPA 2,600 780 MW 7,500 capacity Owned ~30% 8,820 ~800 MW 410 MW Owned Shortfall 6,000 540 MW 5,000 Today Jackson Plant ROA Palisades PPA MC

  12. Slide 12: Investment -- MISO Zone 7 Capacity

    INVESTMENT -- MISO Zone 7 Capacity . . . . As of June 2, 2014 MISO Zones (in GW) 24.8 2.0 22.8 Reserves 3.2 7 Demand 21.6 2016 Resources 2016 Resource Expected Shortfall _____ Requirement Source: MISO . . . . shortfall expected to be 2,000 MW in 2016. 11

  13. Slide 13: Upsides -- Capacity Price Increases

    UPSIDES -- Capacity Price Increases . . . . Today Future Scenarios Recent Contracts (mils) (mils) $55 • DIG “energy” contract +$50 • 9 years • 250 MW @ $4.06 kW per month $35 +$30 Upside: Capacity and energy contracts layered $5 in over time Capacity price < $0.50 $4.50 $7.50 ($ kW per month) . . .

  14. Slide 14: Upsides -- Economic Growth

    UPSIDES -- Economic Growth . . . . Examples of New Business Top Ten (MW) Electric Gas Combination Brembo 24 MW Enbridge Energy 19 GM Assembly 10 GM Assembly Durolast Roofing 10 MW 4 MW MSU FRIB 9 Betz Industries 8 MW Enbridge 19 MW WKW Roof Rack Systems 8 Continental Dairy 2 MW Betz Industries 8 Dar

  15. Slide 15: Upsides -- Grand Rapids Economic Results

    UPSIDES -- Grand Rapids Economic Results . . . . Economy Performance Manpower Employment Survey Grand Rapids Michigan U.S Best labor (Third Quarter Outlook) Building Permits* +42% +18% +9% market in nation % Increase staffing GDP (real) 2010 14 11 7 thru 2012 32% 29% Population 3 0 2 2010 Census thr

  16. Slide 16: Upsides -- Cost Control

    UPSIDES -- Cost Control . . . . Electric Non-fuel O&M Cost Average Annual O&M Change +6% 2013 over 2006 Peers Actual/Plan (exc 2013 major storms) +2% +2% Peers Peers Peers Peer Average up +6% CMS CMS CMS CMS CMS -1% -2% -2%a -2% -3%a Upside? -1% CMS _____ Plan a -8% Before reinvestment Conservativel

  17. Slide 17: Partners -- Constructive Regulation

    PARTNERS -- Constructive Regulation . . . . Commission Tier 1 State Ranking John Quackenbush (R), 1 5 Michigan Chairman Term Ends: July 2, 2017 2 10 Sally Talberg (I) 3 18 Term Ends: July 2, 2019 4 10 Greg White (I) Term Ends: July 2, 2015 5 6 _____ Barclays Research . . . . is supported by a qualit

  18. Slide 18: Partners -- Michigan Governor's Race

    PARTNERS -- Michigan Governor’s Race . . . . Rick Snyder Republican, Incumbent Mark Schauer Democrat, Challenger On Energy... Campaign Issues On ROA … • Education As Senate Democratic Leader, • Jobs “Choice creates a lot of Mark played a key role in the challenges and problems, successful passage of

  19. Slide 19: Partners -- Michigan Energy Law Update

    PARTNERS -- Michigan Energy Law Update . . . . • Adaptability • Reliability Update • Affordability • Environmental protection • Gov. signed new • 10% renewables rate design bill by 2015 • Senate workgroup • Energy efficiency formed to study standards 2015 Energy Law • File-and-implement improvements

  20. Slide 20: Key Takeaways

    Key Takeaways . . . . EPSa “Real” Growth (No “Resets”) Core Fundamentals $2 +7%  Sustainable 5%-7% EPS +7% growth +5% +7% +7% +6%  Ten-year visible, organic +7% investment +8% +12%  Near-term capacity opportunities +12% +4% Target 5% - 7% +7% Actual = 7%  Refocus on gas business +11%  Continuou

  21. Slide 21: Appendix

    Appendix

  22. Slide 22: Capital Expenditures

    Capital Expenditures 2013-2017 2018-2022 Total 2013 2014 2015 2016 2017 Subtotal Subtotal 2013-2022 (mils) (mils) (mils) (mils) (mils) (mils) (mils) (mils) New Generation (includes Renewables) $ 136 $ 222 $ 61 $ 213 $ 44 $ 676 $ 1,105 $ 1,781 Environmental 314 280 201 122 114 1,031 420 1,451 Gas 172

  23. Slide 23: Capacity Diversity

    Capacity Diversity . . . . Nuclear Oil 8% 6% Renewables 9% Coal 34% Pumped Storage 2014 11% Nuclear Gas Nuclear Oil 6% 10% 32% 8% Oil 6% Renewables Purchases 3% 3% Coal 24% Coal Renewables Pumped 41% 10% Storage 11% 2005 2017 Pumped Gas Storage Gas 29% 12% 37% . . . . evolving to cleaner generation

  24. Slide 24: Regulation & Self-Initiated Steps

    Regulation & Self-Initiated Steps . . . . Industrial Electric Rate House Bill 5476 (vs Midwest Average) Consumers higher than  • Signed into law on June 17th, 2014 Midwest peer avg 30%  • Directs MPSC to develop cost of service allocation and rate design methods 20%  Self-initiated Rate design, r

  25. Slide 25: 2015 Gas Rate Case

    2015 Gas Rate Case . . . . Overview Residential Gas Customer Cost Amount Amount (per day) (Mils) $3.00 Projected 9% Capital Investment $ 144  decrease! Cost & Other (56) $2.44 Request $ 88 $2.24 2016-2017 Investment 2.00 Recovery Mechanism $ 92 GCR 1.40 1.12 Existing Request (2012) (2015) 1.00 Rate

  26. Slide 26: Electric Distribution

    Electric Distribution . . . . Demand $ 1.0 Billion Circuits In service 2,253 Upgrade 603 Reliability $ 0.7 Billion Transformers In service 663,044 Capacity Replace 16,175 $ 0.3 Billion Total Poles $ 2.0 Billion Meters In service 1,554,309 In service 2,039,283 40 years old 761,711 Replace 1,732,393 R

  27. Slide 27: GAAP Reconciliation

    GAAP Reconciliation CMS ENERGY 26

  28. Slide 28: 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

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