Slide 1: Investor Meeting December 6, 2017
Investor Meeting December 6, 2017 CMS MODEL: CONSISTENT PAST WITH A SUSTAINABLE FUTURE
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: EPS Results and Guidance
EPS Results and Guidance . . . a PROFIT First Nine Months 2017 at $1.66: up 8% from 2016 weather-normalized 2017 Full-Year guidance raised: • to $2.15 - $2.18, up 6% to 8% 2018 Full-Year guidance introduced: • at $2.29 - $2.33, up 6% to 8% Future long-term annual growth: • at 6% to 8% _____ a Adjust
Slide 4: Clean and Lean
Clean and Lean . . . PLANET Old Utility Model Clean And Lean Big Build Supply Supply Fully utilize Modular Retirement assets Excess supply Big Excess Build supply Modular Actual Modular Demand Demand EE & DR Excess O&M O&M supply Expected Demand Fuel Fuel Big Bets Lower Risk Results in excess capaci
Slide 5: Renewables
Renewables . . . PLANET Wind New Tariff Solar • Cross Winds II • Large industrial program • Solar Gardens • Expected COD: Jan 2018 • 44 MW • Purchase 20% to 100% of • Residential rooftop energy use solar program • Cross Winds III • Expected COD: Jan 2020 • Fully bundled service • MPSC evaluating net
Slide 6: Reducing Coal Intensity
Reducing Coal Intensity . . . a PLANET a Coal Energy Renewable Energy b 49% Demand from Shut down customers coal c Meets 22% RPS d 15% 15% b 10% 3% 2005 2016 Future 2005 2016 2021 Future _____ _____ a_ _ _ _ _Energy CMS a Consumers Energy b_ Includes _ _ _ _ Classic 7, includes PPA contracts b Inclu
Slide 7: CMS Energy Coal Reduction
CMS Energy Coal Reduction PLANET Future Opportunities Wind, Filer City, & Pre - Classic 7 Post - Classic 7 Potential Coal Shutdown Gwh % Coal Gwh % Coal Gwh % Coal Coal 10,245 8,851 6,181 Other 12,417 12,417 15,207 Total 22,662 45% 21,268 42% 21,388 29% PPAs* 19,495 (21) 19,495 (20) 19,495 (14) Tota
Slide 8: Long-Term Regulatory Planning
Long-Term Regulatory Planning . . . Second Half 2017 2018 Customer Benefits Energy Law Transparency 11/21: Capacity Q2: File long-term charge set at generation plan 115% of CONE (IRP) Gas Safety 7/31: Final order; 10/31: Filed 1/1: Gas By 8/31: $29 MM; ROE 10.1% new case, investment Final order +$18
Slide 9: Customer Investment
Customer Investment . . . Capex $ (Bn) Gas 8 Electric 10 Electric Distribution Gas Infrastructure & Maintenance Total Plan 18 $18 billion Opportunities 7 Supply Plan With Ops $25 . . . driven by a large and aging system. 8
Slide 10: Electric Supply Investments
Electric Supply Investments . . . Current Clean & Lean Renewables in Plan Supply Opportunities Electric Gas Infra. & Palisades Dist. expires 2022 Maint. PPAs MCV expires Supply 2025 $4 Bn In the Plan Average age of coal plants >50 Owned years; potential Renewables (15% RPS) $1 Bn future shutdowns
Slide 11: Electric Distribution Investment Opportunities
Electric Distribution Investment Opportunities . . . LVD System $200,000 to rebuild one mile Electric Dist. Gas $4 Bn $6 Bn Infra. & Maint. ~5,000 per year in plan $3,500 per pole replacement Supply Substations $1 MM avg per upgrade $1 Bn ($7 - $8 MM to replace) HVD System ~33% are past 60 year life
Slide 12: Age of Electric Distribution
Age of Electric Distribution . . . Electric Dist. Gas $6 Bn Infra. & Replacements needed to renew our system Maint. Supply 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Consumers Energy Source: FERC Form 1, remaining book value divided by original cost . . . requires substantial investment to
Slide 13: Electric System Investment
Electric System Investment . . . Electric Supply Dist. Gas $4 Bn $6 Bn Infra. & Maint. Supply $4 Bn HVD System $1 Bn LVD System $4 Bn Substations $1 Bn . . . consists of needed and modular projects. 12
Slide 14: Gas System Investment
Gas System Investment . . . Compression and Storage Gas $1 Bn Electric Infra. & Dist. Maint. $8 Bn #1 Underground Supply storage Transmission #5 Transmission $4 Bn #5 Distribution miles miles Distribution $3 Bn U.S. LDC Rank, Source: DOT . . . up 40% from the last 10 years. 13
Slide 15: Gas Transmission
Gas Transmission . . . Projects in Plan Gas Electric Infra. & Saginaw Trail (2800) Dist. Maint. 94 miles, 24” $8 Bn $636 MM Supply Mid-Michigan (100A) 54 miles, 36” $385 MM South Oakland (3100) 22 miles PIC TURE 1,670 miles of transmission pipelines . . . significant investment over time. 14
Slide 16: Gas Distribution
Gas Distribution . . . Main Replacement Gas Electric Dist. Infra. & • Started in 2012 Maint. $8 Bn • 25-year program Supply • $75 MM capex per year Benefits Service Line Replacement Customer safety Reduced leaks • 185,000 replacements needed Lower future O&M • Only 2% complete • 20,000 per year a
Slide 17: 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¢ 10¢ 10 9¢ Back 6¢ -up 7¢ 6¢ 6¢ 5.5¢ 5¢ 5¢ 5 4¢ 4¢ Back -up Cross Winds 7¢ Big 5 Palisades Zeeland 4¢ 0 Combined Cycle Gas Plant Wind Coal Nuclear Residential So
Slide 18: Cost Reduction Strategy
Cost Reduction Strategy . . . Capital-Enabled Gas Replacements Pole-top Hardening Clean & Lean Structural/ Technology-Enabled Process Changes Smart Grid Mobility CE Way PPAs Customer Benefits • Safety Digital • Reliability Retirements • Better Service • Affordable Bills . . . largely funds customer
Slide 19: O&M Reduction Track Record
O&M Reduction Track Record . . . a Actual Cost Reduction New Annual Cost Savings (Peers 2016 over 2006) Three-Year Avg 2014 2017 - 2016 - 2019 Good Business Decisions (MM) (MM) • Attrition $ - 16 $ - 16 • Productivity (Coal Gas) - 20 - 5 • Enhanced capitalization - 10 - 4 • Smart Meters - 4 - 5 Peer
Slide 20: Platforms For Customer Satisfaction
Platforms For Customer Satisfaction Digital Customer Experience Field Mobility Smart Grid 19
Slide 21: Moments that Matter
Moments that Matter MOVING BILLING & PAYMENT OUTAGES • Average of 60K moves per month • Over 2.6M payments per month • 4.3M outage-related page views in 2016 20
Slide 22: Operational Excellence & Customer Satisfaction
Operational Excellence & Customer Satisfaction Performance since 2015 Cost Reduction Example Average Speed of Answer (ASA) Live Call Reductions (MM) has improved by 72% 5.5 Translates to $2.5 MM in Savings! First Contact Resolution (FCR) 3.5 has improved by 11% Combined Alert Enrollments have surpas
Slide 23: Our Entire Cost Structure
Our Entire Cost Structure . . . Cost Components Above Market Costs 100% 100% 90% PPA PPA 80% Down Fuel $166 MM or 7% Fuel 70% Fuel and Power Costs annually 2011 2016 60% ~70% _____ Source: FERC Form 1, 2016 & 2011 50% O&M Reductions in Rates O&M Operating Costs 40% $659 Down 30% Taxes $87 MM $572 or
Slide 24: Economic Development is Robust
Economic Development is . . . a Our Service Territory Outperforms Electric New Load Gas Grand Combination 6% of Sales Rapids MI. U.S. Building b +355% +197% +110% Permits ~2,000 Gwh Near-Term GDP 29 19 14 Pipeline 20102016 2017 Population 6 ½ 4 20102016 2016 Unemployment 4.0 4.3 4.2 2015 (9/17) __
Slide 25: GAAP Reconciliation
GAAP Reconciliation
Slide 26: Earnings By Quarter and Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings By Quarter and Year GAAP Reconciliation (Unaudited) (In Millions, Except Per Share Amounts) 2016 1Q 2Q 3Q 4Q YTD Dec Net Income Available to Common Stockholders Reported - GAAP $164 $124 $186 $77 $551 Pretax items: Electric and gas utility - - 11 * 11 Tax impact - - (
Slide 27: Summary of Consolidated Earnings Reconciliations
CMS ENERGY CORPORATION Summary of Consolidated Earnings Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income (In Millions, Except Per Share Amounts) Third Quarter Nine Months (Unaudited) (Unaudited) 2017 2016 2017 2016 Net Income Available to Common Stockholders $ 172 $ 186 $ 463 $ 474
Slide 28: Reconciliation of Cost Reductions
CONSUMERS ENERGY Reconciliation of Cost Reductions 2006 2016 (mils) (mils) CAGR 2006-2016 Maintenance & Other Operating Expenses (GAAP) $ (1,179) $ (1,090) -0.8% Less: Gas & Energy Efficiency -2.7% Other 0.5% Total Adjustments -2.2% Cost Reductions (3% a year) -3.0% CONSUMERS ENERGY Reconciliation o
Slide 29: Reconciliation of Distribution Cost per Customer
CONSUMERS ENERGY Reconciliation of Distribution Cost per Customer 2016 Cost Per Customer Maintenance & Other Operating Expenses (GAAP)- mils $ (1,090) Electric Customers (mils) 1.80 Maintenance & Other Operating Expenses per Customer $ (604) Less: Gas & maintenance & other operating expenses not ass
Slide 30: Reconciliation of Annual O&M Spend
CONSUMERS ENERGY Reconciliation of Annual O&M Spend 2016 (mils) Maintenance & Other Operating Expenses (GAAP) $ (1,090) Less: Energy Efficiency & Other $ 142 O&M Spend $ (948) Rounded $ (950) 29