Slide 1: Investor Meetings March 2020
Investor Meetings March 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: CMS Overview
CMS ENERGY CMS Overview
Slide 4: 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 5: 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 6: 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 order Power • Rais
Slide 7: Compelling Investment Thesis
Compelling Investment Thesis . . . Aging Infrastructure Clean Energy Leader Constructive Regulation Strong Cash Flow & Affordable Prices Balance Sheet Diversified Service Territory . . . adaptive to changing conditions. 7
Slide 8: 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 9: 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 10: 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 11: 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 Opport
Slide 12: 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 13: 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 14: Strong Economic Development
Strong Economic Development . . . Economic Development Residential Customer Growth Economic Grand Avg. Annual Indicators: MI Avg. Electric Customer Count Sales Growth c Rapids U.S. Building Permits a 229 % 139% 128% 0.7% ~1% 0.6% Population Growth 8% 1% 6% 2010→2018 0.5% 0.4% Unemployment* 3.0 % 4.0
Slide 15: 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 Stable Stable Stable • Growing operating Outlook cash flow Highest Governance CMS Energy Practices Score (GA-1) • Return on regulated Se
Slide 16: Consistent Growth Through Changing Circumstances
Consistent Growth Through . . . 7% CAGR b a EPS +6% to +8% Dividend +7% Weather Recession Recession Help Hurt _____ _____ a Adjusted EPS (non-GAAP) b Non-GAAP Cold 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Feb. 2020 Cold Mild Hot Warm Mild Cold Summer- Hot
Slide 17: Managing Work Every Year
Managing Work Every Year . . . EPS a 2012 2013 2014 2015 2016 2017 2018 2019 $2.60 Reinvestment +7% Cold January $2.40 +7% Cost Weather & Storms Offsets Storms $2.20 +7% Mild Hot Summer Summer +7% $2.00 Cost productivity above plan +7% Cost productivity Cost $1.80 +7% above plan productivity Storms
Slide 18: 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
Slide 19: Top of Mind
CMS ENERGY Top of Mind
Slide 20: Top of Mind
Top of Mind • Regulatory Matters • 2020 Priorities and EPS Guidance • 5-yr Capital Plan Update • Financing Plan • Clean Energy Plan & ESG Matters 20
Slide 21: Regulatory Outlook
Regulatory Outlook . . . 2019 2020 Regulatory / Policy 2016 Energy Law fully implemented Electric 2/27: a Filed $244 MM 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 final order 10.5% ROE a Including $36 MM of Calc. C
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) ~(5)% (Weather-normalized) ~(30)% $12.8 $7.4 Request $6.4 Request $11.1 2/27/20 12/16/19 $10.7 $10.7 Settled
Slide 23: 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 24: 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 25: 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 26: 2020 Guidance
2020 Guidance . . . a Adjusted EPS (non-GAAP) Utility $2.84 – $2.88 Enterprises 0.08 – 0.10 EnerBank 0.18 – 0.20 Parent and other (0.46) – (0.50) Consolidated EPS $2.64 – $2.68 +6% to +8% _____ a Adjusted EPS (non-GAAP) . . . built on 2019’s actual performance. 26
Slide 27: 2020 EPS
2020 EPS . . . a $2.64 – $2.68 +6% to +8% (2) - 2¢ $2.49 6¢ 17¢ (6)¢ Approved: b Gas (U-20322) $157 MM REP (U-18231) $25 MM Pending: Gas (U-20650) $245 MM 2019 Normal Cost Rates & Usage, Tax 2020 Weather Savings Investments & Other _____ a Adjusted EPS (non-GAAP) b $13 MM of Calc. C included in ra
Slide 28: 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 Opport
Slide 29: 2020 Financing Plan
2020 Financing Plan . . . Plan YTD a Issuances: (MM) (MM) Potential Consumers Energy: refinancing First Mortgage Bonds $650 $ -- • Supports Utility investment, Term Loan 300 300 including pension funding CMS Parent: New Debt $325 $ -- • Senior unsecured & hybrids Term Loan 300 300 • Short-term bridg
Slide 30: 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 31: 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 32: 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 33: 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 & EIRP Asset retirements Retirement Retirement Retirement Retirement EIRP & enhanced Meth
Slide 34: Breathing Easier
Breathing Easier . . . Air Emissions Reduction Net Zero Carbon Emissions (2005-2018) by 2040 94% 87% 94% 96% 38% 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 35: 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 36: 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 STEPHEN E. EWING WILLIAM D. HARVEY MYRNA M. SOTO Members Year average JOHN G. SZNEWAJS LAURA H. WRIGHT SUZANNE
Slide 37: ESG Disclosures
ESG Disclosures . . . • CMS Energy & Consumers Energy Websites • SEC Filings (10-K & Proxy) • 2019 Sustainability Report • 2019 Carbon Disclosure Project - Report Scope 1, 2 & 3 Emissions - Water • 2019 EEI ESG & Sustainability Report • Latest Climate Assessment Report - Considers TCFD Guidelines Yo
Slide 38: Appendix
Appendix
Slide 39: 2019 Utility Sales Mix
2019 Utility Sales Mix . . . b Electric Sales a Gas Sales 1% Δ in Volume 1% Δ in Volume Full-year 2020 Full-year 2020 Residential ~3+¢ Residential ~2 ¢ Commercial ~2 Commercial ~½ Industrial ~½ + Total ~2½¢ Total ~6 ¢ ~16% ~8% ~26% ~28% ~20% ~36% ~19% ~36% ~72% ~48% ~53% ~38% Volumes Revenue Volumes
Slide 40: CMS and Consumers Financing and Liquidity
CMS and Consumers Financing and Liquidity Plan YTD Liquidity Facilities (MM) (MM) Consumers Energy: 3.5% priced, First Mortgage Bonds $650 $575 scheduled $250 MM to close 3/26 Term Loan $300 $300 mid-2021 CMS Parent: $850 MM mid-2023 New Debt $325 $300 Term-loan Up to L+50 $550 MM Planned Equity $25
Slide 41: 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 Benef
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 Source: 2019 10-K, including PPA’s Storage . . . supports our Clean Energy Goal. 42
Slide 43: 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 44: Utility Customer Investment Plan
Utility Customer Investment Plan . . . Investment Plan Upside Opportunities Prior New New 10-Yr Plan ‘19-‘23 ‘20-‘24 10-Yr (Bn) Capital Investment (Bn): Plan Plan Plan a Electric Reliability New Utility Renewables $ 1¾ $ 1¾ $ 4 Grid Modernization Electric Utility 5 5½ 11 Gas Distribution Gas Utility
Slide 45: CMS Performance
CMS Performance . . . Total Shareholder Return EPS Performance a Dividend Yield b a EPS Growth a Guidance Actual ~8½% - 11½% 2019 $2.46 - $2.50 $2.49 +7% >10% 2018 $2.29 - $2.33 $2.33 +7% 6% - 8% 2017 $2.13 - $2.17 $2.17 +7% 2016 $1.97 - $2.01 $2.02 +7% 7.0% 2015 $1.85 - $1.89 $1.89 +7% 20
Slide 46: Declining Exposure to Coal
Declining Exposure to Coal . . . Coal % of Rate Base Renewables % of Rate Base a 20% $3 - $6 Bn 2016 investment Classic 7 opportunities retirement 2023 Karn 1&2 <10% Campbell 2031 (4)% 1&2 5% Campbell 2039 (5½)% 3% 3 0% 2016 Today 2040 2016 Today 2040 a Coal rate base based on calendar year; total r
Slide 47: GAAP Reconciliation
GAAP Reconciliation
Slide 48: 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 49: 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