Slide 1: Investor Meetings June 2020
Investor Meetings June 2020 FOCUSED ON WORLD CLASS PERFORMANCE
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: Investment Thesis
CMS ENERGY Investment Thesis ll
Slide 4: Investment Thesis Takeaways
Investment Thesis . . . Investment Thesis Takeaways Prudent Liquidity Management • 2020 financings largely executed • No pension contributions required in 2020 Operational Excellence and Track Record • Increased productivity driven by the CE Way • Adaptive to changing conditions Top-Tier Regulato
Slide 5: Large and Aging System
Large and Aging System . . . Electric 25 years of distribution main replacement system is through our older than Enhanced Infrastructure peers Replacement Program Age of coal fleet is more >2,400 miles of gas than transmission pipeline; most 50 years built in the WWII era . . . requires significant
Slide 6: Utility Customer Investment Plan
Utility Customer Investment Plan . . . Investment Plan Rate Base Growth Renewables Prior New Electric ‘19-‘23 ‘20-‘24 Gas $24½ Capital Investment (Bn): Plan Plan +7% Renewables $ 1¾ $ 1¾ $17½ Electric Utility 5 5½ Gas Utility 5 5 Total $11¾ $12¼ 2019 2024 $25 Bn 10-Yr Plan with $3 - $4 Bn of Opportu
Slide 7: Michigan Offers Supportive Policy
Michigan Offers . . . Supportive Policy Premium Regulatory • Economic growth (tax policies, Tier Michigan skilled labor, balanced budgets) 2013 - Present 1 7 • Bipartisan Energy Law 2 10 2012 • Forward-looking test year (10-month rate case) 2008 3 18 • Energy efficiency incentive (20% of spend) 4 9
Slide 8: Michigan Energy Policy is Supportive
Michigan Energy Policy is Supportive . . . • Bipartisan Energy Law (2016 law enhanced 2008 law) • Forward-looking test year (10-month rate case) • Energy Efficiency incentive (20% of spend) • Renewable Portfolio Standard (RPS) • Constructive ROEs Michigan Public Service Commission Sally Talberg (I),
Slide 9: Our Entire Cost Structure
Our Entire Cost Structure . . . Cost Components Residential Bills as % of Wallet a 100% 100% (Electric & Gas) Down 90% Utility Bill 50 bps! Utility Bill ~ 4% ~ 3½% 80% Fuel and Power Costs TV & Phone ~ 4% TV & Phone ~ 4% Healthcare ~ 5% Healthcare ~ 8% 70% Food ~ 12% ~70% Food ~ 13% 60% ~70% Transpo
Slide 10: Financing Plan on Track
Financing Plan on Track . . . Planned 2020 Financing Existing Facilities Plan YTD (MM) $250 MM (MM) (Nov-2021) $2.3 Bn a Consumers Energy: $525 MM of net liquidity position First Mortgage Bonds $650 $1,234 “lowest ever” with no CP outstanding 40-yr at 2.50% (as of 3/31/20) Term Loan $300 $300 CMS Pa
Slide 11: Credit Metrics Maintained
Credit Metrics Maintained . . . Consumers Energy S&P Moody’s Fitch Ratings Drivers Senior Secured A Aa3 A+ • Strong financial position Commercial Paper A-2 P-1 F-2 • Growing operating Outlook Stable Stable Stable Highest cash flow Governance CMS Energy Practices Score (GA-1) • Return on regulated Se
Slide 12: Clean and Lean
Clean and Lean . . . 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 capacity, hig
Slide 13: Net Zero Goals
Net Zero Goals . . . Carbon Emissions Methane Emissions a b (Electric System) (Gas Delivery System) 2018 2024 2032 2040 2018 2025 2030 0 0 Classic 7 Karn 1&2 Campbell 1&2 Campbell 3 VSR c Continued c VSR & EIRPd Asset retirements Retirement Retirement Retirement Retirement EIRP d & enhanced Met
Slide 14: Managing Work Every Year
Managing Work Every Year . . . a EPS 2012 2013 2014 2015 2016 2017 2018 2019 $2.60 +7% +7% +7% Storms (9)¢ +7% +7% Weather & storms (16)¢ +7% Weather Weather (13)¢ & storms +7% Weather (13)¢ (13)¢ +7% Storms (10)¢ a Adjusted EPS (non-GAAP) . . . maximizes benefits for customers and investors. 14
Slide 15: Top of Mind
CMS ENERGY Top of Mind
Slide 16: Top of Mind
Top of Mind • COVID-19 Response and Impact • Preliminary April Sales • Regulatory Matters • Non-Utility, Sensitivities and Pension 16
Slide 17: Response to COVID-19
Response to COVID-19 . . . Co-workers Customers Community • Enhanced safety protocols • Dedicated customer service • Dream Maker Fund • Work from home (office) representatives helping to • $1 MM for local small • Direct job-site reporting navigate stimulus programs businesses (field) • Suspended shu
Slide 18: Key COVID-19 Financial Risks
Key COVID-19 Financial Risks . . . Potential Impacts Mitigating Factors Utility • Lower sales volume from commercial • Higher margin residential usage and industrial • Regulatory deferral mechanisms • Increased uncollectible accounts • Operational flexibility/waste elimination • Sequestration/quaran
Slide 19: Preliminary April Sales Challenged
Preliminary April Sales Challenged . . . a 2019 Electric & Gas Rate Mix 2020 EPS Sensitivities b 1% Full Year Δ in Volume Auto Other Electric Gas Other 2% Industrial 2% Residential ~ 3+¢ 2 ¢ 11% Commercial ~ 2 ½ Industrial ½ + Impact of Observed Electric Trends (since March) Residential Electric Com
Slide 20: 2020 EPS
2020 EPS . . . a First Quarter Nine Months To Go 11¢ 4¢ - 8¢ $2.64 - $2.68 14¢ 4¢ 1¢ - 5¢ 6% - 8% $2.49 12¢ 8¢ (1)¢ (23)¢ Select COVID-19 Risks: •Sales ~(3)¢ - (4)¢/ mo. Reference: •Historical flex range ~10¢ - 15¢ First First Quarter Quarter $0.75 $0.86 2019 Weather Absence of Rates & Usage, Absenc
Slide 21: Regulatory Outlook
Regulatory Outlook . . . 2019 2020 Regulatory / Policy 4/15: 2016 Energy COVID-19 order Law fully U-20757 implemented for deferred accounting Electric 2/27: Filed $244 MM a Dec. Expected U-20697 final order 10.5% ROE GasGas 9/26: 12/16: Final order Filed $245 MM b Oct. Expected U-20322 U-20650
Slide 22: Solid Rate Case History
Solid Rate Case History . . . Electric Rate Base a Gas Rate Base (Bn) (Bn) 2013A 2020E 2013A 2020E b b Residential Electric Bill $108 $103 Residential Gas Bill $88 $61 (Weather-normalized) (Weather-normalized) ~(5)% ~(30)% $12.8 $7.4 Request $6.4 Request $11.1 2/27/20 12/16/19 $10.7 $10.7 Settled
Slide 23: Utility Renewables
Utility Renewables . . . Renewable Portfolio Standard Integrated Resource Plan (15% RPS) (20-Year IRP) • 525 MW of Wind • 1,100 MW of Solar • $1 Bn of Capital Investment a • 550 MW Rate Base, ~$600 MM • 550 MW PPA, Earn WACC • Approved in the REP Filing (5.88% x PPA Price) • Projects (COD): • $600 M
Slide 24: DIG (750 MW) & Peakers (200 MW)
“DIG” (750 MW) & Peakers (200 MW) . . . Planning Year (MISO) a Pre-Tax Income Opportunities (MM) 2020 Through 2023 $ 100 Contracted Capacity 100% ~$90 90 (~$2.00/kw-month) 80 Energy >95% 70 $7.50 b • LCR upheld by MI Supreme Court 60 • MISO Zone 7 PY 2020/2021 cleared at CONE 50 $45 ~$45 40 $38 $38
Slide 25: 2020 Sensitivities
2020 Sensitivities . . . Full-Year Impact a Sensitivity EPS OCF (¢) ($ MM) Salesb Electric (~36,500 GWh) + 1% + 6 + 25 Gas (~300 Bcf) + 5 + 13 + 50 Gas prices (NYMEX) + 50¢ + 0 + 55 Utility Earned ROE Electric + 10 bps + 1½ + 6 Gas + 10 + 1 + 4 Interest rates + 25 bps <1 2 Effective Tax Rate (16%) +
Slide 26: Post Retirement Benefit Plans
Post Retirement Benefit Plans . . . a Pension OPEB (Bn) (Bn) Asset Allocation Asset Allocation Equity 55% Equity 48% Fixed-income 39% Fixed-income 33% Multi-asset 6% Multi-asset 19% Expected rate of return 6.75% Expected rate of return 6.75% ~$3.0 $531 MM contribution in ~$2.5 January 2020 $1.5 $1.2
Slide 27: CMS Overview
CMS ENERGY CMS Overview
Slide 28: CMS Energy Overview
CMS Energy Overview Corporate Structure Key Information CMS Energy 2019 Financial Statistics (NYSE: CMS) Based in Jackson, MI a Employees (37% unionized) Consumers Energy Enterprises EnerBank Revenue 2019 Adjusted net income b Avg. Rate Base 91% of c Operating Growth for past 17 years Income Gas $6.
Slide 29: Consumers Energy
Consumers Energy . . . 4th Largest Combination Utility • Electric Utility 1.8 million electric customers 8,241 MW of capacity • Gas Utility 1.8 million gas customers 309 bcf gas storage (#1 in the U.S.) • Serving 6.7 million Michigan residents Consumers Energy Planet Goals Near-Term By 2040 gallons
Slide 30: CMS' 2019 Performance Exemplifies People, Planet, Profit, Performance
CMS’ 2019 Performance Exemplifies . . . PEOPLE PLANET PROFIT PERFORMANCE a • Ranked #1 for customer • Approval of • 17 years of +7% EPS • Constructive regulatory satisfaction in Midwest Integrated Resource growth outcomes with electric residential gas by JD Plan settlement and gas Power • Raised div
Slide 31: Electric System Investment
Electric System Investment . . . Current Generation Capital Investment (Bn): Plan Existing Fleet Electric Utility $ 5½ $1 Bn New Utility Renewables 1¾ Gas Utility 5 New Renewables Total $12¼ $1¾ Bn System Reliability & Maintenance ~$2¾ Bn New Business & Support a $1¾ Bn a Support includes IT, Fleet
Slide 32: Gas System Investment
Gas System Investment . . . Current Capital Investment (Bn): Plan Compression and Storage Electric Utility $ 5½ $½ Bn #1 Underground New Utility Renewables 1¾ storage Gas Utility 5 Total $12¼ Pipelines $1 Bn #5 Transmission #5 Distribution miles miles a Distribution & Support U.S. LDC Rank, Source:
Slide 33: Utility Customer Investment Plan
Utility Customer Investment Plan . . . Investment Plan Rate Base Growth Renewables Prior New Electric ‘19-‘23 ‘20-‘24 Gas $24½ Capital Investment (Bn): Plan Plan +7% Renewables $ 1¾ $ 1¾ $17½ Electric Utility 5 5½ Gas Utility 5 5 Total $11¾ $12¼ 2019 2024 $25 Bn 10-Yr Plan with $3 - $4 Bn of Opportu
Slide 34: Utility Renewables
Utility Renewables . . . Renewable Portfolio Standard Integrated Resource Plan (15% RPS) (20-Year IRP) • 525 MW of Wind • 1,100 MW of Solar • $1 Bn of Capital Investment a • 550 MW Rate Base, ~$600 MM • 550 MW PPA, Earn WACC • Approved in the REP Filing (5.88% x PPA Price) • Projects (COD): • $600 M
Slide 35: Clean Energy Future
Clean Energy Future . . . Elimination of Coal More Renewable Energy Innovative Energy Solutions Consumers Energy Capacity Mix Earn incentive mechanisms 11% 20% 22% 8% 12% 6% 8% 12% 11% 10% 14% Rate based 10% or 28% earn FCM 56% 42% 20% 10% Today 2030 2040 a Renewables Coal Natural Gas Storage
Slide 36: CMS Enterprises
CMS Enterprises . . . DIG & Other Renewable Platform • ~1,000 MWs of plants in MI Operating Projects: • 27 MWs of solar • DIG long-term energy (>95% • 64 MWs biomass contracted) & short-term capacity • 105 MWs of wind (100% contracted) (15-year PPA with GM) • Filer City PPA with the Utility • Nearly
Slide 37: CMS' Trading Performance
CMS’ Trading Performance . . . Stock Performance Total Shareowner Return a b CMS CMS UTY UTY S&P 500 S&P 500 400% 350% 300% 301% 467% 250% 200% 190% 110% 150% 100% 98% 65% 50% 30% 0% -50% '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 1 Year 3 Year 5 Year 10 Year a 10-year stock performance as of Decem
Slide 38: Appendix
CMS ENERGY Appendix
Slide 39: Michigan Legislative Environment
Michigan Legislative Environment . . . Governor State Senate Gretchen Whitmer 16 38 22 Democrat 2018 Election: Democrats +5 seats 4-year terms, concurrent with Governor’s term, 2-term limit Energy policy is State House not a key issue Key Issues: 52 110 58 • Infrastructure • Health Care • Education
Slide 40: 2020 Priorities
2020 Priorities . . . People Planet Profit • Top decile safety performance • Continue progress in reduction • Consistent industry-leading – Implement gas safety of CO2 and methane emissions financial performance management system (API 1173) • Solid investment grade credit – Eliminate 9,250 gas vinta
Slide 41: Breathing Easier
Breathing Easier . . . Net Zero Air Emissions Reduction Carbon Emissions by 2040 (2005-2019) 93% 86% 91% 96% 37% Added emission control equipment! Shut down Classic 7 & added Jackson Gas Plant! Sulfur Nitrogen Mercury* Particulate Carbon Dioxide Oxide Matter Dioxide *Tracking began 2007 . . . doing
Slide 42: CMS Energy Fuel Mix
CMS Energy Fuel Mix . . . 2019 CMS Energy by Fuel Type a 17% Nuclear 44% Gas 24% Coal 11% 2% Renewables 2% Net Interchange Pumped Power & Other a Storage Source: 2019 10-K, including PPA’s . . . supports our Clean Energy Goal. 42
Slide 43: 2019 Mix of Coal
2019 Mix of Coal . . . Revenue Keep in Mind… (MM) Electric $ 4,439 Our electric Utility is just one Gas 1,937 Electric portion of Consumers Energy... Total Revenue $6,376 Electric Assets (MM) Generation $ 5,942 …generation makes up just a Transmission, Dist. & Other 10,216 Generation portion of the
Slide 44: Energy Efficiency
Energy Efficiency . . . Electric Gas • From 1.5% to 2.0% annually (by 2021) • 1% annually • Next five years: • Next five years: – Spend ~$160 MM/ yr – Spend ~$61 MM/ yr – Pre-tax incentive ~$33 MM/ yr a – Pre-tax incentive ~$14 MM/ yr a $1 of spend is equal to ~$3 customer savings a Expected to achi
Slide 45: Diversity and Inclusion
Diversity and Inclusion . . . Working hard to create inclusive workplaces, reach diverse customers and have strong supplier diversity. utilities. Ranked #5 on the DiversityInc 2018 list of top Leading by example – Board comprised of 45% female leaders. Recognized nationally by Professional Woman’s
Slide 46: Exceptional Governance
Exceptional Governance . . . Board of Directors JOHN G. RUSSELL PATRICIA K. POPPE JON E. BARFIELD DEBORAH H. BUTLER with Diverse Backgrounds Independent By the Numbers Chair KURT L. DARROW WILLIAM D. HARVEY MYRNA M. SOTO JOHN G. SZNEWAJS Members Year average LAURA H. WRIGHT SUZANNE F. SHANK RONALD J
Slide 47: ESG Disclosures
ESG Disclosures . . . • CMS Energy & Consumers Energy Websites • SEC Filings (10-K & Proxy) • 2019 Carbon Disclosure Project - Report Scope 1, 2 & 3 Emissions - Water • Climate Assessment Report - Considers TCFD Guidelines • 2019 EEI ESG & Sustainability Report You can find other related links regar
Slide 48: GAAP Reconciliation
GAAP Reconciliation
Slide 49: Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quarter
CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income by Quarter (Unaudited) In Millions, Except Per Share Amounts 2020 1Q Net Income Available to Common Stockholders $ 243 Reconciling items: Electric utility and gas utility 15 Tax impact (4) Enterprises 1 Tax impa
Slide 50: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) GAAP GAAP 2019 over 2019 over 2003 2018 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 CAGR Growth Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $
Slide 51: Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income
CMS ENERGY CORPORATION Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income (Unaudited) In Millions, Except Per Share Amounts Three Months Ended Twelve Months Ended 12/31/19 12/31/18 12/31/19 12/31/18 Net Income Available to Common Stockholders $ 167 $ 108 $ 680 $ 657 Reconciling items