CMS Energy : 2022 Consumers Energy Annual Report

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CMS EN E RGY & CONSUMERS ENERGY

ANNUAL

REPORT

2022

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Shareowners:

Thank you for your investment in CMS Energy. Our story and purpose remain grounded in our commitment to our customers, communities, co-workers and investors - World Class Performance Delivering Hometown Service.

As we continued to lead the clean energy transformation this year, our vision for Michigan's future was supported by successful settlements of our Clean Energy Plan (IRP) and gas and electric rate cases. These settlements provide certainty for our investments in clean energy and highlight the supportive regulatory construct in Michigan. Our IRP will deliver roughly $600 million in savings over our prior plan and reduces our carbon footprint by over 60% as we exit coal in 2025. In addition to these operational advancements, I'm happy to report that we delivered another year of strong financial performance in 2022, marking 20 years of meeting our adjusted earnings guidance.

Outlined below are accomplishments delivered by the CMS Energy team exemplifying our impact on the triple bottom line - People, Planet and Profit.

PEOPLE

• Awarded #1 Utility for America's Best Employers for Women
• Awarded #2 Utility for Best Employers for Workplace Diversity by Forbes
• Recognized within Military Times list of "Best for Vets: Employers"
• Achieved our 5-year goal to double spending with diverse suppliers, one year ahead of plan
• Placed in the top quartile across all industries for customer experience measured by CXi Forrester Index
• Secured more than $100 million of customer assistance in partnership with state and federal agencies to help keep customer bills affordable
• Attracted approximately 230 megawatts of new or expanding load - estimated to create about 6,300 jobs and bring more than $8 billion of investment to Michigan

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PLANET

• Landmark 2021 Clean Energy Plan approved, providing for the exit of coal generation and a 60% reduction in carbon emissions by 2025, while ensuring continued reliability through the acquisition of New Covert, a 1.2-gigawatt natural gas-fueled plant, the addition of 8 gigawatts of solar generation and 550 megawatts of battery storage through 2040
• Achieved subscription to build 1st tranche of Voluntary Green Pricing program - this generation project is expected to exceed 300 megawatts and result in more than $450 million in additional renewable capital investment
• Announced goal to power more than 1 million electric vehicles by 2030
• Committed to achieving net-zero greenhouse gas emissions by 2050 for our entire business, incorporating emissions from our natural gas system and including customers and suppliers
• Launched the MI Clean Air program to help customers offset their greenhouse gas emissions from natural gas use

PROFIT

• Delivered adjusted earnings per share of $2.89 - at the high end of the guidance range
• Increased annual dividend to $1.95 for 2023 - 17th increase in as many years
• Settled gas rate case with $170 million of rate relief
• Settled electric rate case with $161 million of rate relief
• Achieved $58 million in operations and maintenance savings and $117 million in capital cost savings by leveraging the CE Way

This completes another outstanding year for operational and financial performance, and the successes achieved over the past year point to a strong outlook in 2023. Thank you for your continued support.

Sincerely,

Garrick Rochow

President and CEO

This letter includes non-GAAP measures. Reconciliations to the most directly comparable GAAP measures are found immediately following this letter and on our website at cmsenergy.com.

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CMS ENERGY CORPORATION

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income

(Unaudited)

		In Millions, Except Per Share Amounts
		Twelve Months Ended
		12/31/22			12/31/21
Net Income Available to Common Stockholders	$	827	$	1,348
Reconciling items:
Disposal of discontinued operations gain		(5)			(657)
Tax impact		1			143
Discontinued operations income		-			(115)
Tax impact		-			27
Other exclusions from adjusted earnings**		8			(1)
Tax impact		(2)			*
Loss on fleet impairment		-			29
Tax impact		-			(7)
Voluntary separation program		12			-
Tax impact		(3)			-
Adjusted net income - non-GAAP	$	838	$	767
Average Common Shares Outstanding - Diluted
	290.0			289.5
Diluted Earnings Per Average Common Share
Reported net income per share	$	2.85	$	4.66
Reconciling items:
Disposal of discontinued operations gain		(0.01)			(2.27)
Tax impact		*			0.49
Discontinued operations income		-			(0.39)
Tax impact		-			0.09
Other exclusions from adjusted earnings**		0.03			(*)
Tax impact		(0.01)			*
Loss on fleet impairment		-			0.10
Tax impact		-			(0.03)
Voluntary separation program		0.04			-
Tax impact		(0.01)			-
Adjusted net income per share - non-GAAP	$	2.89	$	2.65

• Less than $0.5 million or $0.01 per share.
• Includes restructuring costs, business optimization initiative, and unrealized gains or losses from mark-to-market adjustments, recognized in net income related to NorthStar Clean Energy's interest expense.

Management views adjusted (non-Generally Accepted Accounting Principles) earnings as a key measure of the company's present operating financial performance and uses adjusted earnings for external communications with analysts and investors. Internally, the company uses adjusted earnings to measure and assess performance. Adjustments could include items such as discontinued operations, asset sales, impairments, restructuring costs, business optimization initiative, changes in accounting principles, changes in federal tax policy, regulatory items from prior years, unrealized gains or losses from mark-to-market adjustments, recognized in net income related to NorthStar Clean Energy's interest expense, or other items. The adjusted earnings should be considered supplemental information to assist in understanding our business results, rather than as a substitute for the reported earnings.

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