Fitch Ratings has affirmed CMS Energy Corporations' and Consumers Energy Company's Long-Term Issuer Default Ratings (IDRs) at 'BBB' and 'A-', respectively.
The Rating Outlook for both entities is Stable. Fitch also affirmed both entities' Short-Term IDRs at 'F2'.
CMS Energy's ratings are driven by its predominantly regulated utility operations at Consumers Energy, which operates under constructive regulation in Michigan. FFO leverage is expected to remain supportive of ratings, peaking at 5.7x in 2027 before improving to 5.6x in 2028 and to 5.4x in 2029-2030.
Fitch expects Consumers Energy's credit metrics to be temporarily pressured during the construction phase of new generation assets and FFO leverage to average 4.7x through 2028, above Fitch's negative sensitivity. Leverage is higher than previously anticipated due to additional and expedited capex for new generation. Fitch expects FFO leverage to improve to 4.5x in 2029 once the assets are in service and included in rate base.
CMS Energy Corporation
Stable Utility Business: Fitch estimates CMS Energy will continue to derive over 95% of consolidated EBITDA from relatively low-risk, regulated electric and gas utility operations at Consumers Energy. Non-utility operations remain largely limited to the power generation and marketing operations at NorthStar Clean Energy.
Supportive Credit Metrics: Fitch estimates CMS Energy's leverage will remain supportive of ratings going forward, peaking at 5.7x in 2027 before improving to 5.6x in 2028 and to 5.4x over 2029-2030. CMS Energy's FFO leverage was elevated at 6.3x in 2025 due to pre-funding of some future capex. Forecasted leverage is also higher than Fitch's previous estimates due to the utility driven increase in capex plans and faster build at NorthStar to safe harbor tax credits through 2030, under the One Big Beautiful Bill Act.
However, increased equity guidance of about $3.8 billion through 2030, expected regulatory support at the utility and continued focus on cost reductions should help keep leverage commensurate with ratings. Parent-level debt (including 50% equity credit applied for hybrid debt and excluding securitization debt), is expected to average just over 20% of total consolidated debt through 2030.
Cost Reductions and NOLs: Fitch believes CMS Energy's continued focus on cost reductions supports a solid financial profile, reducing the negative near-term financial impact from the utility's large capex plans and macroeconomic pressures. In addition, the cash flow benefit from CMS Energy's net operating loss (NOL) carry forwards enables investment of more internal capital into utility operations while minimizing the need for external sources of capital. Fitch expects ongoing operating cost reductions to remain 1%-2% per year over the near term.
Consumers Energy Company
Capex Pressures Near-term Leverage: Consumers Energy's capex plans have been upsized to $24 billion for 2026- 2030, a 20% increase over the prior five-year plan. The increase is predominantly driven by new gas generation to replace retiring capacity and meet existing and anticipated load growth. Investment has been expedited to manage global supply chain constraints, which will pressure credit metrics since these assets have later in-service dates. FFO leverage is expected to average 4.7x through 2028 before improving to 4.5x in 2029 when these assets are in rate base. Continued regulatory support is key to the company's ability to deleverage.
An electric rate case was filed in December 2025, with a revised request of $423 million revenue increase based on a 10.25% ROE filed later. Consumers Energy has also requested a deferred asset treatment of significant vegetation management and ERP related spending. The current ALJ recommended rate increase and ROE is significantly lower than requested; however, staff recommendations are in line with recent rate cases. A decision is expected by early 2Q26. While not expected currently, a restrictive regulatory outcome, absent other mitigatory actions like credit supportive capital allocation, would keep leverage elevated for longer and could lead to negative rating actions.
Load Growth and Potential Capex: Fitch expects Consumers Energy to benefit from increasing energy demand from manufacturing activity and data centers. Fitch estimates retail sales will grow 2% to 3% annually through 2030. Fitch's current forecasts do not include major data center growth, beyond existing contracts. A further load increase is likely in the outer years given evolving data center activity in the state. While large load growth is cash flow accretive, the addition of large load customers would require additional capex.
Consumers Energy will file an Integrated Resource Plan in 2H26, which could highlight the need for additional investments for system resource adequacy . Continued ability to fund and recover associated investments in a credit-supportive manner would remain key to the ratings. Michigan's energy legislation allows for expanded incentives and improved economics for power purchase agreements (PPAs), providing investment flexibility. Continued ability to monetize tax credits on renewable projects and parent equity could provide further support.
Large Load Tariff: In November 2025, MPSC approved a specialized tariff for customers with new load exceeding 100 MW and set standards for contracts aimed at protecting customers against possible subsidization of data center costs. While individual rate design is subject to future rate case decisions, Fitch believes the order alleviates uncertainty in attracting and structuring new data center contracts and provides ratepayer protection in future rate cases. Key elements include minimum 15-year contracts and 80% minimum billing demand. To protect against stranded costs, a four-year termination notice and an exit fee with 50% default collateral, reduced over time is required.
Michigan Regulation Remains Supportive: Fitch believes the regulatory framework remains constructive from a credit perspective, allowing for full pass-through of fuel costs and purchased power, forward-looking test years and a timely 10-month rate case resolution. Furthermore, Consumers Energy's authorized ROE of 9.8% for gas and 9.9% for electric compares favorably with industry averages. Fitch expects continued annual rate case filings. In June 2025, MPSC allowed a storm deferral account for recovery of costs incurred during the year, a positive for the storm-prone service territory.
Other Rate Case Activity: In December 2024, Consumers Energy filed a gas rate case requesting a $208 million increase, with a 10.25% return on equity (ROE) and a test year ending in October 2026. In September 2025, The Michigan Public Service Commission (MPSC) delivered a largely constructive decision authorizing a $158 million revenue increase, with a 9.8% allowed ROE, 10bps lower than previously authorized but still constructive and in line with a peer utility. In December 2025, Consumers Energy filed a gas rate case requesting a $240 million increase, with a 10.25% ROE. A decision is expected in 3Q26.
Coal Retirement Delayed: Consumers Energy's 1.4GW Campbell coal plants, scheduled to retire in May 2025, have been ordered to continue operations under various 90-day emergency orders by the Department of Energy. FERC's August 2025 decision is largely favorable as it allocates costs across MISO, which could alleviate increasing affordability concerns for the utility's customers in Michigan. However, while deferral has been allowed, FERC has not yet approved specific tariffs for recovery of costs. Fitch expects a constructive decision but there is no timeline for an outcome. The mechanism and timing of recovery would be key to prevent further pressure on leverage.
Parent/Subsidiary Linkage: There is parent-subsidiary rating linkage between CMS Energy and Consumers Energy. Fitch believes CMS Energy's consolidated credit profile is weaker than Consumers Energy's standalone credit profile (SCP). Emphasis is placed on the latter's status as a regulated entity. Legal ring-fencing is considered porous, given the general protections afforded by economic regulation. Access and control are also evaluated as porous. CMS Energy centrally manages the treasury function; however, both entities issue their own long-term debt. Fitch will limit the difference between the Long-Term IDRs of CMS Energy and Consumers Energy to two notches.
Peer Analysis
CMS Energy's credit profile is comparable to peer utility holding company DTE Energy Company (DTE; BBB/Stable), as both operate gas and electric utilities in a single state, Michigan. Other utility parents, Xcel Energy Inc.
(BBB+/Stable) and WEC Energy Group, Inc. (BBB+/Stable) operate multistate regulated utilities, which partly drives their higher ratings.
However, a constructive regulatory environment in Michigan supports CMS Energy's business risk profile, which Fitch views as comparable with Wisconsin and Minnesota peer's operations.
CMS Energy's FFO leverage is expected to peak at 5.7x in 2027, before improving to 5.4x in the outer years of the forecast period, which is weaker than 5.1x through 2028 at WEC and DTE, and 4.9x through 2028 at Xcel.
Consumers Energy's credit profile is comparable to peers like DTE Electric Company (DTEE; A-/Stable), Northern States Power Company-Minnesota (NSP-Minnesota; A-/Stable) and Northern States Power Company-Wisconsin (NSP-Wisconsin; A-/Stable), and Public Service Company of Colorado (A-/Stable). All four are regulated utilities with single state operations albeit in generally constructive environments.
Fitch forecasts Consumer Energy's FFO leverage to remain elevated, averaging 4.7x near term, the improving to 4.5x over 2029-2030. This is better than the average 4.6x through 2028 projected for the pure gas utility, DTE Gas Company (BBB+/Stable). Financial metrics at other electric peers are stronger, with leverage forecast to average 3.8x through 2028 at DTEE, 4.0x-4.4x for NSP-Wisconsin, and 3.5x-4.0x for NSP-Minnesota through 2029, making them well positioned for their ratings.
Rating Sensitivities
CMS Energy Corporation
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
FFO leverage expected to exceed 5.8x on a sustained basis.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
FFO leverage expected to be less than 4.8x on a sustained basis.
Consumers Energy Company
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
FFO leverage expected to exceed 4.5x on a sustained basis;
A material deterioration of the Michigan regulatory environment;
A downgrade to CMS Energy's Long-Term IDR.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
A positive rating action on Consumers Energy would also require an equally positive rating action on its parent, CMS, under Fitch's Parent and Subsidiary Linkage Criteria;
FFO leverage expected to be less than 3.5x on a sustained basis.
Fitch believes liquidity for CMS Energy and Consumers Energy is adequate.
CMS Energy has a $750 million unsecured RCF maturing in November 2030, upsized from $550 million in 2025. As of Dec. 31, 2025, CMS Energy had $715 million available under its RCF. CMS Energy also had a fully utilized LC of $50 million as of Dec. 31, 2025.
Consumers Energy's $500 million CP program is supported by its $1.1 billion RCF maturing November 2030, almost fully undrawn as of Dec. 31, 2025. It also had a separate $300 million RCF, fully available and $10 million available out of its $350 million LC facilities. NorthStar Clean Energy had $5 million available on its $250 million RCF maturing in 2028 and $ 7 million available out of its $58 million LC limit as of Dec. 31, 2025.
CMS Energy had $509 million in unrestricted cash at Dec. 31, 2025, $25 million of which was at Consumers Energy. CMS Energy has maturities of $377 million in 2026, $625 million in 2027 and $1,235 million in 2028, excluding Consumers Energy. Consumers Energy has bond maturities of $115 million in 2026, $135 million in 2027, $725 million in 2028 and $1,150 million in 2029.
Fitch's views these maturities as manageable given the history of successful refinancing and expected continued access to capital markets. As of Dec. 31, 2025, CMS Energy and Consumers Energy were compliant with their consolidated debt/capitalization covenants of 70% and 65%, respectively.
Fitch's Key Rating-Case Assumptions
Constructive regulatory environment in Michigan with authorized ROEs for both electric and gas utility operations in line with recent rate cases;
Electric rate case decision in 2Q26 and gas rate case decision in 3Q26, constructive in line with other recent rate cases;
Annual rate case filings;
Largely flat annual natural gas sales growth;
Electric sales growth ranging 2%-3% over 2026-2030;
Total utility and CMS capex in line with management's assumptions;
Dividend growth averaging 5% per year;
Normal weather;
Annual equity issuances of around $700 million near term and subsequently around $750 million annually through 2030 in addition to the ongoing DRIP, in line with management assumptions;
Tax credit transfers of $1.3 billion over 2026-2030 for CMS
Corporate Rating Tool Inputs and Scores
CMS Energy Corporation
Fitch scored the issuer as follows, using our Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP):
Business and financial profile factors (assessment, relative importance): Management (bbb, Lower), Sector Characteristics (a-, Higher), Market and Competitive Positioning (a-, Moderate), Diversification and Asset Quality (a-, Moderate), Company Operational Characteristics (bbb+, Moderate), Profitability (bbb-, Lower), Financial Structure (bbb-, Higher), and Financial Flexibility (bbb+, Moderate).
The quantitative financial subfactors are based on standard CRT financial period parameters: 20% weight for the latest historical year 2025, 40% for the forecast year 2026 and 40% for the forecast year 2027.
The Governance assessment of 'Good' results in no adjustment.
The Operating Environment assessment of 'aa-' results in no adjustment.
The SCP is 'bbb'.
To derive the IDR:
Application of Fitch's Parent Subsidiary Linkage Considerations Rating Criteria results in a(n) consolidated approach.
Consumers Energy Company
Business and financial profile factors (assessment, relative importance): Management (bbb, Lower), Sector Characteristics (a-, Higher), Market and Competitive Positioning (a-, Moderate), Diversification and Asset Quality (a, Moderate), Company Operational Characteristics (a-, Moderate), Profitability (bbb, Lower), Financial Structure (bbb+, Higher), and Financial Flexibility (a-, Moderate).
The quantitative financial subfactors are based on custom CRT financial period parameters: 50% weight for the forecast year 2029 and 50% for the forecast year 2030.
The Governance assessment of 'Good' results in no adjustment.
The Operating Environment assessment of 'aa-' results in no adjustment.
The SCP is 'a-'.
To derive the IDR:
Application of Fitch's Parent Subsidiary Linkage Considerations Rating Criteria results in a consolidated profile+2 approach.
Issuer Profile
CMS Energy is an energy holding company whose principal operating subsidiary is Consumers Energy Company, a regulated integrated electric and natural gas distribution utility in Michigan.
Summary of Financial Adjustments
CMS Energy's junior subordinated notes and preferred stock are given 50% equity credit;
Consumers Energy's securitization debt is removed from all financial metric calculations;
Consumers Energy's preferred stock is given 50% equity credit in the utility's financial metric calculations.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
Climate Vulnerability Signals
The results of our Climate.VS screener did not indicate an elevated risk for CMS Energy Corporation or Consumers Energy Company.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
RATING ACTIONS
Entity / Debt
Rating
Prior
Consumers Energy Company
LT IDR
A-
Affirmed
A-
ST IDR
F2
Affirmed
F2
senior secured
LT
A+
Affirmed
A+
senior unsecured
LT
A
Affirmed
A
preferred
LT
BBB+
Affirmed
BBB+
senior unsecured
ST
F2
Affirmed
F2
CMS Energy Corporation
LT IDR
BBB
Affirmed
BBB
ST IDR
F2
Affirmed
F2
senior unsecured
LT
BBB
Affirmed
BBB
junior subordinated
LT
BB+
Affirmed
BB+
Page
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VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
PARTICIPATION STATUS
The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.
APPLICABLE CRITERIA
Corporates Recovery Ratings and Instrument Ratings Criteria (pub. 03 Aug 2024) (including rating assumption sensitivity)
Corporate Hybrids Treatment and Notching Criteria (pub. 08 Apr 2025)
Parent and Subsidiary Linkage Rating Criteria (pub. 28 Jun 2025)
Corporate Rating Criteria (pub. 10 Jan 2026) (including rating assumption sensitivity)
Sector Navigators - Addendum to the Corporate Rating Criteria (pub. 10 Jan 2026)
APPLICABLE MODELS
Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).
Corporate Monitoring & Forecasting Model (COMFORT Model), v8.2.0 (08 Apr 2025, 09 Jan 2026, 09 Jan 2026)
ADDITIONAL DISCLOSURES
Dodd-Frank Rating Information Disclosure Form
Solicitation Status
Endorsement Policy
ENDORSEMENT STATUS
Consumers Energy Company EU Endorsed, UK Endorsed
CMS Energy Corporation EU Endorsed, UK Endorsed
DISCLAIMER & DISCLOSURES
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Fitch's international credit ratings produced outside the EU or the UK, as the case may be, are endorsed for use by regulated entities within the EU or the UK, respectively, for regulatory purposes, pursuant to the terms of the EU CRA Regulation or the UK Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019, as the case may be. Fitch's approach to endorsement in the EU and the UK can be found on Fitch's Regulatory Affairs page on Fitch's website. The endorsement status of international credit ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for structured finance transactions on the Fitch website. These disclosures are updated on a daily basis.
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