Cms Energy Corporation · NYSE:CMS
Cms Energy — Wolfe Research Power & Gas Leaders Conference 2013
25 slides from Cms Energy's conference presentation, Sep 24, 2013
Slide 1: Growing Ratebase & Managing Costs
Wolfe Research Power & Gas Leaders Conference Growing Ratebase & Managing Costs September 25, 2013 Cross Winds Energy Park Consumers Smart Energy Program Gas Combined Cycle Plant
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: CMS Business Model
CMS Business Model EPSa Results 7% 11th year of top performance $1.55 5% Needed investment Consistent $1.45 performance financial$1.36 Customer driven $1.26 Ten-year visibility $1.21b Regulatory support Fair and timely regulation Self-funded $1.08 $0.96 Utility Customer Accelerated cost reductions $
Slide 4: Visible Investment – Ten-Year Plan
Visible Investment – Ten-Year Plan Clean Power Capacity Reliability Infrastructure $3 Billion $2 Billion $3.5 Billion $4 Billion Environmental New gas generation Consumers Smart Energy Gas distribution Renewable energy Ludington Pumped Storage Main replacements Propane switching Gas conversions Pipe
Slide 5: Visible Investment – Five Year Plan
Visible Investment – Five Year Plan 2013 – 2017 Plan Opportunity Level Faster Consumers < $7 Billion Pipe Smart replacements Energy $10 Pole replacements Billion More gas generation Customer base rates <2% >4% × . . . . at sustainable and affordable pace, in low-risk, “bite size” projects.
Slide 6: Visible Investment – Electric & Gas Major Projects
Visible Investment – Electric & Gas Major Projects Karn/Weadock Generating Complex, Environmental Compliance, Increased capacity Storage Plant, Reliability & Capacit Consumers Smart gy Park Energy Program Campbell Generating Plant, Environmental ord Natural Compliance Fired Plant & Storage Reliabili
Slide 7: Visible Investment – New Gas Pipeline
Visible Investment – New Gas Pipeline Project Summary 24.1 miles of 36” pipeline Completes looping of transmission system in Branch and St. Joseph counties Increased system capacity for gas storage and customer demand Increased reliability for pipeline integrity Capital investment of $120 million .
Slide 8: Visible Investment – Ludington Upgrade
Visible Investment – Ludington Upgrade Increase capacity by 15% Increase efficiency by 5% Operate for 30 years before next major overhaul $800 million investment over ten years $200 million upgrade $600 million maintenance Consumers Energy share $400 million . . . . underway.
Slide 9: Visible Investment – Capacity Needed
Visible Investment – Capacity Needed Installed Capacity Excl Classic 7 Classic 7 MW New Gas Plant Peak Demand with Reserve Margin 10,500 9,500 Market 8,500 Purchases 7,500 6,500 5,500 4,500 2013 2014 2015 2016 2017 2018 . . . . to meet reserve requirements.
Slide 10: Visible Investment – Gas Plant
Visible Investment – Gas Plant CON Filed 700 MW Combined cycle plant $750 Million investment Reliability to be maintained for customers Capacity needed to support future energy needs Investment in Michigan to provide jobs and economic benefits 2012 2013 2014 2015 2016 2017 Air Permit Submitted Appro
Slide 11: Customer Rates 2013-2017
Customer Rates 2013-2017 Annual Average Base Rate Increasesa 2% Inflation ~1% Electric ~1% Gas a Includes surcharges CapEx Criteria Value to Customers Reduce O&M Reduce Fuel Costs Mandated . . . . affordable and sustainable.
Slide 12: Cost Control – Trend of O&M Cost Savings
Cost Control – Trend of O&M Cost Savings Percent Change 25% Inflation -21% Cost Reductions Prior Plan -9% Accelerated Cost Reductions -6% New Plan -15% -25% Lines smoothed for illustrative purposes . . . . . accelerated; funding investment and reducing risk.
Slide 13: Cost Control – Strong Customer Focus
Cost Control – Strong Customer Focus Average O&M Annual Change 7% Avg. Utilities Inflation 2% 2% Avg. -10% -4% Utilities Consumers -0.5% -2% -2% Reinvested -6% -8% 2006-2012 2012 2013E 2013-2017E Annual Average 2012 Base Examples of Cost Reductions Annual Future(mils) Classic 7 mothballed $20 Produc
Slide 14: Cost Control – Strong Customer Focus
Cost Control – Strong Customer Focus Electric Non-fuel O&M Cost Examples of Cost Reductions Annual Change 2012 over 2006 Three voluntary separation programs Pension prefunding Health care sharing Labor agreements Peer Average up 7% SAP efficiencies Productivity up 41% -0.5% Consumers Source: SNL dat
Slide 15: Cost Control – Structural Benefit Changes
Cost Control – Structural Benefit Changes Benefit Costs 2012 over 2009 CAGR Peers 2005 +5% -4% 2009 -2 -2% 2011 -6% 2012 -6% -8 2013 CMS Source: SNL, Form 1 Electric O&M Benefits Benefit Changes Timeline New salaried and union employees to DC pension Union employees, health care cost sharing Increas
Slide 16: Enhanced Near-Term Strategy
Enhanced Near-Term Strategy Prior New Rate case filings Annual Avoid until 2015 (test year) Lowers ROE Subject to review 10.3% into 2015 Risk Customer base rate increases < 2% 0% thru 2014, < 2% after Helps Investment (2013-17) $7 billion $7 billion Customers (“Free” 700 MW GCC) O&M costs (2013-17)
Slide 17: Five Key Takeaways
Five Key Takeaways EPS a Growth $1.70 7% +7% 5% +7% +8% +12% +4% +12% +7% Target 5%—7% +11% Actual = 7% Target 6%—8% Actual = 8% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Growth 5%-7% real growth Dividend growth in line with earnings Gross operating cash flow up $0.1 billion per year Tr
Slide 18: Appendix
Appendix ao eRe
Slide 19: Rate Case Elimination
Rate Case Elimination 2013 2014 2015 2016 ELECTRIC Avoid File annual On Track rate case New Michigan Gas Plant Energy Policy CON filed July 12 Securitization Air Permit approved July 26 CON Case Tax Securitization filing September 9th GAS Tax Accounting Request File annual Avoid approved September 1
Slide 20: Michigan's Energy Policy
Michigan’s Energy Policy Issues ROA 10% Cap – cost bundled customers $150 annually Energy efficiency – 50% of load growth Renewable energy – customer cost coming down Other regulatory and policy recommendation “Appendix A” Timeline Seven public forums, Jan-Apr Company submitted answers May-Jun Analy
Slide 21: Catalyst #3 – Michigan Economic Performance
CATALYST#3 – Michigan Economic Performance Gross Domestic Product – 2010 through 2012 WA ND 5th MT 8.1 6.7 31.0 MN Best 8.2 ME OR SD WI 11% 2.7 13.8 ID 4.7 5.9 VT NH 2.1 WY MI NY IA 8.2 6.1 (3.5) NE 11.0 6.6 MA 6.6 7.4 7.9 IL PA NV UT CO 5.9 IN OH 5.9 NJ CT RI 2.9 KS 12.3 7.3 1.0 2.4 8.7 6.2 7.3 MO
Slide 22: EPS Growth – Net NOLs and Tax Credits
EPS Growth Net NOLs and Tax Credits $0.8 $0.7 $0.7 $0.4 $0.4 $0.2 $0.1 2011 2012 2013E 2014E 2015E 2016E 2017E Gross NOLs (bils) $1.5 $1.2 $1.1 $0.3 $0.2 $0 $0 “Block” Equity a 0 0 0 0 0 0 0 a Maintain existing DRIP and continuous equity program . . . . self-funded.
Slide 23: New Cost Savings
New Cost Savings Gas Rate Case Avoideda Electric Rate Case Avoideda $100 Benefits $49 Benefits Tax Tax/Other Cross Winds $0 $0 2014 2014 a Until 2015 test year . . . . fund elimination of next gas and electric cases!
Slide 24: GAAP Reconciliation
GAAP Reconciliation ao eRe
Slide 25: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 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 After-tax items: Electric and gas utility 0.21(0.39) —(0.07) 0.0
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