Cms Energy Corporation · NYSE:CMS
Cms Energy — Morgan Stanley Utilities Conference and UBS Natural Gas & Electric Utilities Conference 20 (February 2014)
39 slides from Cms Energy's conference presentation, Feb 27, 2014
Slide 1: Investor Meetings February 28, 2014
Exhibit 99.1 Investor February Cross Jackson Consumers Winds Gas Meetings 28,Smart Plant Energy 2014Energy Park Program
Slide 2: Morgan Stanley Utilities Conference, March 3, 2014
Morgan March Cross Jackson Consumers Winds 3,Stanley Gas 2014 Smart Plant Energy Utilities Energy ParkConference Program
Slide 3: UBS Natural Gas & Electric Utilities Conference, March 5, 2014
Consumers UBS March Cross Jackson 2014 Winds 5,Gas 2014 Natural Smart Plant EnergyEnergy Gas Park & Program Electric Utilities Conference
Slide 4: Forward-Looking Statements and Non-GAAP Information
ThisConsumers relevant from STATEMENTS INFORMATION” “FORWARD-LOOKING and herein The comparable CMS adjusted regulatory able 1 presentation to presentation time Energy to estimate legal basis. reflect to items GAAP time provides decisions. Management Energy’s AND the facts, from also is inand measure
Slide 5: CMS Mindset: 10-Year Adjusted EPS Growth
Mindset 10-Year 7% 6% 36¢ 2003 .Adjusted 2 . . .5%—7% CAGR 20¢ drives 2004 Actual . EPS ..2005 $1.78 consistent . .$1.08 (non-GAAP) $1.66 2006 5%—7% $1.02 “real” 2007$0.96 Peers 2008 excluding growth. 14% 4% 2009$1.74 96 MTM 2010 $0.90 $1.45 2011 in27% 2004-2006 $1.55 2012 84 $0.84 2013 $1.36 a $1.2
Slide 6: CMS Consistent Results and Model
CMS Consistent RESULTS Self-Imposed Sustainable Ten Investment Small, None Upside A. B. C. D. E. F. .G. 3 . ROA .Capacity PPA’s Credit Capex Sales Continuous .year—$15 benefits Energy “Bet bite Catalysts elimination expire rating >$15 Predictable The size “Needed base price customers MODEL Limits co
Slide 7: One CMS Model Delivers
Model One CMS Note: Peer .Source: 4 . . . Year EPS Group Energy Dividend Delivers Bloomberg, Three cumulative 3 7% 9 15 Growth Year . .22% .45 . periods Five growth ?37% 6 29 Year 105% ending 116 at Ten thena 5%-7% very Year 12/31/2013. 5-7 high Future endAnnual Consensus of all peers. Growth used f
Slide 8: Consumers Energy Overview
Consumers Fourth Overview Territory .Premium 5 . . . one largest of regulatory Energy largest combination investors . environment . . . utility and employers in the United in Michigan. States 1.8 million electric and 1.7 million gas customers 8,600 MW of owned and purchased generation capacity 312 T
Slide 9: Jackson Plant Purchase
Purchase The 540 Asset: Jackson, Price: Technology: Heat Connecting Retire Recover Replace Suspend Close .Creates 6 . . .MW Transaction provides rate late $155 small headroom with through CON; Michigan gas of –2015 8,800 million The Jackson coal Combined plant cleaner, substantial Thetford when “Dot
Slide 10: New Customers, Better Investors
New Customers Better Investors Lower Investment EPS No Other Electric Gas .Accelerate 7 . . block . Infrastructure & adds Gas Needed timing rates risk OCF Reliability benefit: Plant equity capacity Smart benefit: backfill growth Investments—$545 . . Energy .$165 and .$200 more makes Million Million
Slide 11: Regulatory Savings
Regulatory Savings (mils) Amount Securitize MPSC No Avoid .New $150 $390 $545 8 . . appeals . new investment rate Order from investment Classic cases Update complete purchase self-funded until 7. .self-funded, .2015 .of Jackson test year improving Plant; replacing rates. build
Slide 12: Rate Cases Eliminated
R.ate 9 Gas Electric 2013 Tax/Other $49 Cross Tax O&M .$100 2014 $0 . . Rate good Cases 2014 Winds Rate Case for Eliminated! Case customers Avoided Avoided . (prices) ... and investors (no ROE risk).
Slide 13: A. Visible 10-Year Investment Opportunity
A.. .Visible, 10-Year 2013-2022 $15 Opportunity $20 Generation (bils) Amount PPA ROA Higher .Rate >4 10 reflects Billion replacement Base return renewables Plan 6% 10-Year capacity catch-up Level Customer $1.7 .3 INVESTMENT needed Gasbase conversions torates reduce <2 Plan cost & .expansion .and . .
Slide 14: Capital Investment Amount
Capital Amount $7.4 +$1 A.) Estimated 2 .0 11.014 . .Was Bil Now up 2015 Investment $0.4 $7 (bils) $8 2019 2016 B.) billion; $1.8 $6.3 Depreciation 2017 . w/Thetford .$545 .2018 . million 2019 $800 w/o 2020 savings Million Thetford 2021 from 2014 2022 Jackson Depreciation 2023 IPP more $600than Mill
Slide 15: Investment Amount Catch-Up
Investment 12 Amount Catch Restructuring Peers $1.5 2013 CMS 2003 .Source: . . . creates Pct 2004 Up 10K; (bils) of2005 Catch-Up Market unique actual $1.8 2006opportunity; Cap amounts .2007 . .Cap . 2008 Inv through with OCF 20092012 OCF Liquidity 2010already smoothed 2011CMS 2012 stronger for 21% 2
Slide 16: B. Expiring PPAs and Planned Capacity
B.. .Expiring 13 10,000 MW Planned Capacity Classic Palisades MCV Current 2013 CE Net Jackson Smart Replace .Provides .Portfolio Peak will 2014 PPA Energy, 9,000 7Supply Plant PPA Demand incremental Shortfall provide Demand Mothballed PPA Termination 2015 PPA’S Capacity contracts 8,000 Termination E
Slide 17: C. Credit Ratings
C.. .Credit Scale Fitch A+ BBB Consumers CMS Present Outlook Consistent Reflects Less Customer Constructive .Good 14 A1 . just Risk Baa2 Moody’s Unsecured S&P Energy APrior Stable upgraded. A2 RATINGS Focus Performance /BBB- Secured A- Regulation 2002 Policy S&P Stable A3 Baa3 BBB+ Moody’s . .Stable
Slide 18: D. Sales and Michigan Economic Indicators
D.. .SALES Economic Rapids Grand Unemployment December GDP Population .thru 15 . July best (real) Michigan 2012 inIndicators 2013 Growth 2010 Midwest. 5.6% Census thru U.S . . 2012 8.4% . . 2 014 6.7% 2 11 7
Slide 19: E. Capacity Price Upside
E.. $0.50 Future Today Capacity $5 +$30 $35 $55 +$50 (mils) .< $7.50 $4.50 16 .CAPACITY . could Scenarios price add ($ value Price kWMarket to perthemonth) 700 Increases MW “DIG” . . . . plant.
Slide 20: F. Retail Open Access
F.. Retail 0.02% 1.8 Governor Lower Policy .$150 17 . .Million change million has 310 industrial Open wants big “ROA” Consumers could cost impact Access affordable rates opportunity allow Electric on by Policy Energy for competitiveness 10% residential Customers lower (ROA) or Customers allindustria
Slide 21: Michigan Governor's Energy Goals
Michigan’s Governor’s Regulatory Eliminate Adaptability Reliability Top Residential Affordability Competitive Environmental Reduce Increase (from .Michigan 18 . . . half quartile will themercury, coal, renewables performance continue right) Governor Energy energy Support bills Energy 2025 performanc
Slide 22: Governor and Council Views on Choice Rates
Question: “Choice rates, Governor .The 19 . . . Jackson Governor choice essentially creates Rick “You isCity not on Snyder seem atrying Retail Council lot theof to solution to challenges Open agree arbitrage voted Access. with to unanimously industrial and utilities’ markets.” . problems . . competi
Slide 23: G. Self-Initiated Cost Control
G.. .Self-Initiated Average CMS Major +1% +2% +6% -2% Peers Reinvestment 2006-2012 .-10% 20 . -3% . Flat 2013 holds Annual -2% Storms 2012 -6% down w/o O&M COST 2013 rates Storm2014 Change and Control Changes allows 2014-2018 . . .Major better . 2013 system Actual/Plan reliability. -8% Storms
Slide 24: G. Continuous Cost Reduction
G.. .Continuous Past Future $100k 7,600 Headcount 600 2010 Each People Fuel Benefits .2002-2012 21 .1,000 Progress .Mix 7,200 2012 aExamples Productivity way Future MW $60k Actions of Employees COST life Savings at completed =CMS. Reduction $64 Annual 2016 million $25 Retire (mils) . . 2013 . . Coal
Slide 25: 2014 Guidance and Reinvestment
CMS Icy Than Storm(total (mils) 2014 Guidance 2012 Reinvested 2013 $1.66 .Reinvestment 22 . . .Late delivere Cold Hot Mild O&M Mindset +7%December Summer Winter Summer earlier Insurance Forecast for (January-October) . . customers . .& Cost B/(W) $50 Savings M) AND$(37) Amount investors. 16 Sales (m
Slide 26: Operating Cash Flow
Operating 23 Gross (bils) Amount $ Up (0.5) $2.2 Interest 2012 .NOLs .2.5 . $0.5 . self-funds $2.0 2.0 2013 operating &a$1.4 Billion Non-GAAP Credits 1.5 $2.1 Cash 2014 $1.45 1.0 $1.9 investment Flow cash 0.5 2015 $0.7 Working $1.7 0flowa Cash Growth $0.6 2016 $1.8 $0.4 and flow up 2017 capital $1.6
Slide 27: Key Takeaways
Key 24 5%-7% Growth Dividend Ten-year, Transparent Constructive Continuous On Predictable .Catalysts . . track . Takeaways attractive EPS for not growth $15 cost 12th growth regulatory inbillion future plan! .reductions premium .consecutive . . total investment climate shareowner (like year earnings
Slide 28: Appendix
Appendix
Slide 29: 2014 Adjusted EPS Guidance Drivers
2014 26 Enterprises Utility 7¢- $1.74 6? Weather 27¢ Sales (18)¢ Investment 2013 (18)¢—(22)¢ Storms .&. ..Other 1? 11¢ .2013 Adjusted Weather growth (3)¢ $1.66 Impact -$1.78 benefits) (15)¢ Full Higher and 14? up &EPS Productivity Parent 5% Sales Changes (non-GAAP) to Investment 7% over Debt Year201
Slide 30: Capital Expenditures 2014-2018
Capital 27 2014-2018 2013 (mils) Generation Distribution Other Investment Environmental Electric Gas New Renewables Consumers Ludington Total Base Infrastructure Customers Gas 2014 Base Choices Utility 96 88 (mils) Expenditures Base Reliability 102 60 Plant Capital Hydro Capital 2015 Plan 89 Choices
Slide 31: CMS Energy 2014 Cash Flow Forecast
2014 CMS Operating Other Capital Dividend AR (mils) Amount Consumers Enterprises Sources Interest Overhead Equity Pension Uses New Retirements DRP, Net Common Financing Cash aBank b 28Includes Facility short-term issues a$Cash flow at continuous Facility Energy working $infusion (2,540) expenditures
Slide 32: 2014 Annual Sales and Sensitivities
2014 29 Annual Status Sales (mils) ROE Electric .aGas .Reflect . . prices (291.0 reflect Sensitivities (authorized) aSensitivity Impact (37,017 (10.3%) 2014 (NYMEX) Bcf) strong (10.3%) sales + Gwh) +EPS .5risk 25 .+ forecast; . .bps + 0.07 25 OCF +mitigation. $1.00 1% +++0.01 0.03 +30 weather –+ $0.
Slide 33: Liquidity and Financing Activities
Liquidity 30 2013 Availability CMS 5-year $1.5 $548 150 500 Consumers $425 $325 $250 $20 .Filed . . .million 80 Billion strong Financing mils million, to Energy revolver—2018 172 issue (asand Energy equity of $50 3.95%, 3.375%, 4.7%, conservative. Activities 12/31/13) million FMB 2043 2043 2023 ARpe
Slide 34: GAAP Reconciliation
GAAP Reconciliation
Slide 35: Reported to Adjusted Earnings Reconciliation
Earnings 2003 (Unaudited) Reported After-tax Electric Enterprises Corporate Discontinued Asset Cumulative Mark-to-market Adjusted * (a) 32Less $1.25 2004 impairment than and Per excluding earnings items: interest 2005 0.74 $500 accounting gas Share operations utility impacts 0.62 2006 thousand charg
Slide 36: CMS Operating Cash Flow Reconciliation
CMS Reconciliation 2012 (mils) (unaudited) Consumers Enterprises Gross Other working Net (a) 33 excludes cash 2013 Energy operating Operating capital provided 2014 Project Operating $(59) of(411) activities 2015 Cash Gross million by Cash operating (335) Income 2016 Flow Operating Flows including 20
Slide 37: Reclassifications Presentation
Reclassifications 34 Presentation GAAP Operating Other Sources Interest Capital Dividends/tax Uses investing Equity New Retirements Financing Net aCash Includes short-term change Issues $at flow working Amount $(2,540) expenditures year and $350 activities 1,675 (dep Common $ cost from in 850 prefer
Slide 38: CMS Reclassifications Presentation
CMS 2014 Reclassifications Presentation non-GAAP Description Consumers Enterprises Sources Interest Overhead Pension Uses investing New Retirements Equity Common Financing Net Cash (a) 35 Includes short-term change Issues (a) Forecasted flow at Energy infusions programs year and $Contribution $activ
Slide 39: Consolidated Eliminations and Reclassifications
Consolidated 2014 Eliminations/Reclassifications/Consolidation Arrive Statements Consumers Description operating investing financing Net Cash 36 cash change Forecasted flow atatyear provided the activities and activities from of CMS in Amount end Consolidated CMS operating Cash cash $Consolidation 2