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SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector news

Management's Discussion and Analysis of Financial Condition and Results of Operations

10/28/2021 | 11:16am EST


Michigan Electric Transmission Company, LLC, a non­affiliated company



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Manufactured gas plant


The Michigan Occupational Safety and Health Administration


Midcontinent Independent System Operator, Inc.


To place a generating unit into a state of extended reserve shutdown in which the unit is inactive and unavailable for service for a specified period, during which the unit can be brought back into service after receiving appropriate notification and completing any necessary maintenance or other work; generation owners in MISO must request approval to mothball a unit, and MISO then evaluates the request for reliability impacts


Michigan Public Service Commission


Megawatt, a unit of power equal to one million watts


National Ambient Air Quality Standards


National Pollutant Discharge Elimination System, a permit system for regulating point sources of pollution under the Clean Water Act


Part 201 of Michigan's Natural Resources and Environmental Protection Act of 1994, as amended


New Source Review, a construction-permitting program under the Clean Air Act


Other Post-Employment Benefits

OPEB Plan Postretirement health care and life insurance plans of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries



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The Occupational Safety and Health Administration


Polychlorinated biphenyl


The U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration

Power purchase agreement

Power supply cost recovery


The Public Utility Regulatory Policies Act of 1978


The Federal Resource Conservation and Recovery Act of 1976


Renewable energy credit

Regions Bank
A subsidiary of Regions Financial Corporation, a non-affiliated company


Retail Open Access, which allows electric generation customers to choose alternative electric suppliers pursuant to Michigan's Public Acts 141 and 142 of 2000, as amended


U.S. Securities and Exchange Commission


A financing method authorized by statute and approved by the MPSC which allows a utility to sell its right to receive a portion of the rate payments received from its customers for the repayment of securitization bonds issued by a special-purpose entity affiliated with such utility

Tax Cuts and Jobs Act of 2017



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T.E.S. Filer City
T.E.S. Filer City Station Limited Partnership, a VIE in which HYDRA­CO Enterprises, Inc., a
wholly owned subsidiary of CMS Enterprises, has a 50-percent interest

Variable interest entity



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Filing Format
This combined Form 10-Q is separately filed by CMS Energy and Consumers.
Information in this combined Form 10-Q relating to each individual registrant is
filed by such registrant on its own behalf. Consumers makes no representation
regarding information relating to any other companies affiliated with CMS Energy
other than its own subsidiaries.
CMS Energy is the parent holding company of several subsidiaries, including
Consumers and CMS Enterprises. CMS Energy was also the parent holding company of
EnerBank until October 1, 2021 when EnerBank was merged with Regions Bank. None
of CMS Energy, CMS Enterprises, EnerBank, nor any of CMS Energy's other
subsidiaries (other than Consumers) has any obligation in respect of Consumers'
debt securities or preferred stock and holders of such securities should not
consider the financial resources or results of operations of CMS Energy,
CMS Enterprises, EnerBank, nor any of CMS Energy's other subsidiaries (other
than Consumers and its own subsidiaries (in relevant circumstances)) in making a
decision with respect to Consumers' debt securities or preferred stock.
Similarly, neither Consumers nor any other subsidiary of CMS Energy has any
obligation in respect of securities of CMS Energy.
This report should be read in its entirety. No one section of this report deals
with all aspects of the subject matter of this report. This report should be
read in conjunction with the consolidated financial statements and related notes
and with MD&A included in the 2020 Form 10-K.
Available Information
CMS Energy's internet address is www.cmsenergy.com. CMS Energy routinely posts
important information on its website and considers the Investor Relations
section, www.cmsenergy.com/investor-relations, a channel of distribution.
Information contained on CMS Energy's website is not incorporated herein.
Forward-Looking Statements and Information
This Form 10­Q and other CMS Energy and Consumers disclosures may contain
forward-looking statements as defined by the Private Securities Litigation
Reform Act of 1995. The use of "might," "may," "could," "should," "anticipates,"
"believes," "estimates," "expects," "intends," "plans," "projects," "forecasts,"
"predicts," "assumes," and other similar words is intended to identify
forward-looking statements that involve risk and uncertainty. This discussion of
potential risks and uncertainties is designed to highlight important factors
that may impact CMS Energy's and Consumers' businesses and financial outlook.
CMS Energy and Consumers have no obligation to update or revise forward-looking
statements regardless of whether new information, future events, or any other
factors affect the information contained in the statements. These
forward-looking statements are subject to various factors that could cause
CMS Energy's and Consumers' actual results to differ materially from the results
anticipated in these statements. These factors include, but are not limited to,
the following, all of which are potentially significant:
•the impact and effect of the COVID-19 pandemic, the response to the COVID-19
pandemic, and the related economic disruption on CMS Energy's and Consumers'
workforce, operations, revenues, expenses, uncollectible accounts, energy
efficiency programs, pension funding, PSCR and GCR costs, capital investment
programs, cash flows, liquidity, maintenance of existing assets, and other
operating expenses


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•the impact of new regulation by the MPSC, FERC, and other applicable
governmental proceedings and regulations, including any associated impact on
electric or gas rates or rate structures
•potentially adverse regulatory treatment or failure to receive timely
regulatory orders affecting Consumers that are or could come before the MPSC,
FERC, or other governmental authorities
•changes in the performance of or regulations applicable to MISO, METC,
pipelines, railroads, vessels, or other service providers that CMS Energy,
Consumers, or any of their affiliates rely on to serve their customers
•the adoption of or challenges to federal or state laws or regulations or
changes in applicable laws, rules, regulations, principles, or practices, or in
their interpretation, such as those related to energy policy, ROA, PURPA,
infrastructure integrity or security, cybersecurity, gas pipeline safety, gas
pipeline capacity, energy waste reduction, the environment, regulation or
deregulation, reliability, COVID-19 vaccination and testing requirements, health
care reforms (including comprehensive health care reform enacted in 2010),
taxes, accounting matters, climate change, air emissions, renewable energy, the
Dodd-Frank Act, and other business issues that could have an impact on
CMS Energy's, Consumers', or any of their affiliates' businesses or financial
•factors affecting operations, such as costs and availability of personnel,
equipment, and materials; weather conditions; natural disasters; catastrophic
weather-related damage; scheduled or unscheduled equipment outages; maintenance
or repairs; environmental incidents; failures of equipment or materials;
electric transmission and distribution or gas pipeline system constraints;
interconnection requirements; political and social unrest; general strikes; the
government and/or paramilitary response to political or social events; and
changes in trade policies or regulations
•the ability of Consumers to execute its cost-reduction strategies
•potentially adverse regulatory or legal interpretations or decisions regarding
environmental matters, or delayed regulatory treatment or permitting decisions
that are or could come before EGLE, the EPA, and/or the U.S. Army Corps of
Engineers, and potential environmental remediation costs associated with these
interpretations or decisions, including those that may affect Consumers' routine
maintenance, repair, and replacement classification under NSR regulations
•changes in energy markets, including availability and price of electric
capacity and the timing and extent of changes in commodity prices and
availability and deliverability of coal, natural gas, natural gas liquids,
electricity, oil, gasoline, diesel fuel, and certain related products
•the price of CMS Energy common stock, the credit ratings of CMS Energy and
Consumers, capital and financial market conditions, and the effect of these
market conditions on CMS Energy's and Consumers' interest costs and access to
the capital markets, including availability of financing to CMS Energy,
Consumers, or any of their affiliates
•the potential effects of the future transition from LIBOR to an alternative
reference interest rate in the credit and capital markets
•the investment performance of the assets of CMS Energy's and Consumers' pension
and benefit plans, the discount rates, mortality assumptions, and future medical
costs used in calculating the plans' obligations, and the resulting impact on
future funding requirements


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•the impact of the economy, particularly in Michigan, and potential future
volatility in the financial and credit markets on CMS Energy's, Consumers', or
any of their affiliates' revenues, ability to collect accounts receivable from
customers, or cost and availability of capital
•changes in the economic and financial viability of CMS Energy's and Consumers'
suppliers, customers, and other counterparties and the continued ability of
these third parties, including those in bankruptcy, to meet their obligations to
CMS Energy and Consumers
•population changes in the geographic areas where CMS Energy and Consumers
conduct business
•national, regional, and local economic, competitive, and regulatory policies,
conditions, and developments
•loss of customer demand for electric generation supply to alternative electric
suppliers, increased use of self-generation including distributed generation, or
energy waste reduction and storage
•increased renewable energy demand due to customers seeking to meet their own
sustainability goals
•the reputational or other impact on CMS Energy and Consumers of the failure to
achieve ambitions related to reducing their impact on climate change
•adverse consequences of employee, director, or third-party fraud or
non­compliance with codes of conduct or with laws or regulations
•federal regulation of electric sales, including periodic re­examination by
federal regulators of CMS Energy's and Consumers' market-based sales
•any event, change, development, occurrence, or circumstance that could impact
the 2021 IRP filing or give rise to the termination of the associated purchase
agreements, including any action by a regulatory authority or other third party
to prohibit, delay, impair, or deny approval for or consent to the 2021 IRP or
the consummation of the proposed acquisitions
•the availability, cost, coverage, and terms of insurance, the stability of
insurance providers, and the ability of Consumers to recover the costs of any
insurance from customers
•the effectiveness of CMS Energy's and Consumers' risk management policies,
procedures, and strategies, including strategies to hedge risk related to
interest rates and future prices of electricity, natural gas, and other
energy-related commodities
•factors affecting development of electric generation projects, gas
transmission, gas and electric distribution infrastructure replacement,
conversion, and expansion projects, including factors related to project site
identification, construction material pricing, schedule delays, availability of
qualified construction personnel, permitting, acquisition of property rights,
and government approvals
•potential disruption to, interruption of, or other impacts on facilities,
utility infrastructure, operations, or backup systems due to accidents,
explosions, physical disasters, global pandemics, cyber incidents, civil unrest,
vandalism, war, or terrorism, and the ability to obtain or maintain insurance
coverage for these events
•changes or disruption in fuel supply, including but not limited to supplier
bankruptcy and delivery disruptions


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•potential costs, lost revenues, reputational harm, or other consequences
resulting from misappropriation of assets or sensitive information, corruption
of data, or operational disruption in connection with a cyber attack or other
cyber incident
•potential disruption to, interruption or failure of, or other impacts on
information technology backup or disaster recovery systems
•technological developments in energy production, storage, delivery, usage, and
•the ability to implement technology successfully
•the impact of CMS Energy's and Consumers' integrated business software system
and its effects on their operations, including utility customer billing and
•adverse consequences resulting from any past, present, or future assertion of
indemnity or warranty claims associated with assets and businesses previously
owned by CMS Energy or Consumers, including claims resulting from attempts by
foreign or domestic governments to assess taxes on or to impose environmental
liability associated with past operations or transactions
•the outcome, cost, and other effects of any legal or administrative claims,
proceedings, investigations, or settlements
•the reputational impact on CMS Energy and Consumers of operational incidents,
violations of corporate policies, regulatory violations, inappropriate use of
social media, and other events
•restrictions imposed by various financing arrangements and regulatory
requirements on the ability of Consumers and other subsidiaries of CMS Energy to
transfer funds to CMS Energy in the form of cash dividends, loans, or advances
•earnings volatility resulting from the application of fair value accounting to
certain energy commodity contracts or interest rate contracts
•changes in financial or regulatory accounting principles or policies (e.g., the
adoption of the hypothetical liquidation at book value method of accounting for
certain non-regulated renewable energy projects)
•other matters that may be disclosed from time to time in CMS Energy's and
Consumers' SEC filings, or in other public documents
All forward-looking statements should be considered in the context of the risk
and other factors described above and as detailed from time to time in
CMS Energy's and Consumers' SEC filings. For additional details regarding these
and other uncertainties, see Part I-Item 1. Financial Statements-MD&A-Outlook
and Notes to the Unaudited Consolidated Financial Statements-Note 1, Regulatory
Matters and Note 2, Contingencies and Commitments; and Part II-Item 1A. Risk


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Part I-Financial Information
Item 1.  Financial Statements
Index to Financial Statements
  Management's Discussion and Analysis of Financial Condition and Results of Operations           14
  CMS Energy Consolidated Financial Statements                                                    46
  Consolidated Statements of Income (Unaudited)                                                   46
  Consolidated Statements of Comprehensive Income (Unaudited)                                     48
  Consolidated Statements of Cash Flows (Unaudited)                                               50
  Consolidated Balance Sheets (Unaudited)                                                         52
  Consolidated Statements of Changes in Equity (Unaudited)                                        54
  Consumers Consolidated Financial Statements                                                     56
  Consolidated Statements of Income (Unaudited)                                                   56
  Consolidated Statements of Comprehensive Income (Unaudited)                                     57
  Consolidated Statements of Cash Flows (Unaudited)                                               59
  Consolidated Balance Sheets (Unaudited)                                                         60
  Consolidated Statements of Changes in Equity (Unaudited)                                        62
  Notes to the Unaudited Consolidated Financial Statements                                        63

        1:     Regulatory Matters                                                                 63
        2:     Contingencies and Commitments                                                      64
        3:     Financings and Capitalization                                                      69
        4:     Fair Value Measurements                                                            71
        5:     Financial Instruments                                                              74

        6:     Retirement Benefits                                                                75
        7:     Income Taxes                                                                       76
        8:     Earnings Per Share-CMS Energy                                                      77
        9:     Revenue                                                                            78
       10:     Cash and Cash Equivalents                                                          82
       11:     Reportable Segments                                                                83
       12:     Variable Interest Entities                                                         86
       13:     Exit Activities and Discontinued Operations                                        88



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CMS Energy Corporation
Consumers Energy Company
Management's Discussion and Analysis of Financial Condition and Results of
This MD&A is a combined report of CMS Energy and Consumers.
Executive Overview
CMS Energy is an energy company operating primarily in Michigan. It is the
parent holding company of several subsidiaries, including Consumers, an electric
and gas utility; and CMS Enterprises, primarily a domestic independent power
producer and marketer. CMS Energy was also the parent holding company of
EnerBank, an industrial bank located in Utah, until October 1, 2021 when
EnerBank was merged with Regions Bank as described below. Consumers' electric
utility operations include the generation, purchase, distribution, and sale of
electricity, and Consumers' gas utility operations include the purchase,
transmission, storage, distribution, and sale of natural gas. Consumers'
customer base consists of a mix of primarily residential, commercial, and
diversified industrial customers. CMS Enterprises, through its subsidiaries and
equity investments, is engaged in domestic independent power production,
including the development and operation of renewable generation, and the
marketing of independent power production. EnerBank provides primarily
unsecured, fixed-rate installment loans throughout the U.S. to finance home
In June 2021, CMS Energy entered into an agreement for EnerBank to merge with
Regions Bank. The merger was completed on October 1, 2021. CMS Energy received
proceeds of approximately $1.0 billion from the transaction and expects to
recognize a pre-tax gain of approximately $660 million in the fourth quarter of
2021, both of which may be impacted by customary post-closing adjustments.
CMS Energy intends to use the proceeds from the merger to fund key initiatives
in its core energy business related to safety, reliability, and its clean energy
CMS Energy and Consumers manage their businesses by the nature of services each
provides. CMS Energy operates principally in three business segments: electric
utility; gas utility; and enterprises, its non­utility operations and
investments. EnerBank is not included in the composition of CMS Energy's
reportable segments. EnerBank's results of operations are presented as income
from discontinued operations as a result of the merger described above.
Consumers operates principally in two business segments: electric utility and
gas utility. CMS Energy's and Consumers' businesses are affected primarily by:
•regulation and regulatory matters
•state and federal legislation
•economic conditions
•energy commodity prices
•interest rates
•their securities' credit ratings


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The Triple Bottom Line
CMS Energy's and Consumers' purpose is to achieve world class performance while
delivering hometown service. In support of this purpose, the companies employ
the "CE Way," a lean operating model designed to improve safety, quality, cost,
delivery, and employee morale.
CMS Energy and Consumers measure their progress toward the purpose by
considering their impact on the "triple bottom line" of people, planet, and
profit, which is underpinned by performance; this consideration takes into
account not only the economic value that the companies create for customers and
investors, but also their responsibility to social and environmental goals. The
triple bottom line balances the interests of the companies' employees,
customers, suppliers, regulators, creditors, Michigan's residents, the
investment community, and other stakeholders, and it reflects the broader
societal impacts of the companies' activities.
                     [[Image Removed: cms-20210930_g1.jpg]]
Consumers' Sustainability Report, which is available to the public, describes
the company's progress toward world class performance measured in the areas of
people, planet, and profit.
People: The people element of the triple bottom line represents CMS Energy's and
Consumers' commitment to their employees, their customers, the residents of
local communities in which the companies do business, and other stakeholders.
The safety of employees, customers, and the general public is a priority of
CMS Energy and Consumers. Accordingly, CMS Energy and Consumers have worked to
integrate a set of safety principles into their business operations and culture.
These principles include complying with applicable safety, health, and security
regulations and implementing programs and processes aimed at continually
improving safety and security conditions. Since 2010, Consumers' OSHA recordable
incident rate has decreased by over 53 percent.
In response to the COVID-19 pandemic, CMS Energy and Consumers have issued a
response plan that is focused on the health, safety, and well-being of their
co-workers, customers, and communities. CMS Energy and Consumers have aligned
with safety and health guidelines from the CDC, OSHA, MIOSHA, and the Michigan
Department of Health and Human Services in order to protect their employees,
customers, and contractors to ensure the continued delivery of critical energy
services. To align with, and in addition to, these guidelines, CMS Energy and
Consumers have:
•worked with local health departments and hospital systems to facilitate and
encourage employee vaccinations
•implemented policies for employees entering homes or businesses to protect
them, customers, and the public
•implemented plans to safely provide access to company facilities and put into
practice enhanced cleaning protocols


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•provided paid leave to employees required to self-quarantine, offered
additional paid leave to employees to alleviate child care-related burdens, and
implemented other interim workforce policies to offer flexibility and reduce
employee concerns
•developed programs and committed resources to assist customers, Michigan
residents, and small businesses as they return to normal operations
In addition, while CMS Energy and Consumers have not yet experienced significant
labor or supply chain disruption as a result of the COVID-19 pandemic, they
continue to monitor and take steps to mitigate against future impacts in order
to continue to provide safe and reliable service to customers.
CMS Energy and Consumers also place a high priority on customer value and on
providing a hometown customer experience. Consumers' customer-driven investment
program is aimed at improving safety and increasing electric and gas
reliability, which has resulted in measurable improvements in customer
Central to Consumers' commitment to its customers are the initiatives it has
undertaken to keep electricity and natural gas affordable, including:
•replacement of coal-fueled generation and PPAs with a cost-efficient mix of
renewable energy and energy waste reduction and demand response programs
•targeted infrastructure investment to reduce maintenance costs and improve
reliability and safety
•supply chain optimization
•information and control system efficiencies
•employee and retiree health care cost sharing
•workforce productivity enhancements
In addition, Consumers' gas commodity costs declined by 60 percent over the last
ten years, due not only to a decrease in market prices but also to Consumers'
improvements to its gas infrastructure and optimization of its gas purchasing
and storage strategy. These gas commodity savings are passed on to customers.
Planet: The planet element of the triple bottom line represents CMS Energy's and
Consumers' commitment to protect the environment. This commitment extends beyond
compliance with various state and federal environmental, health, and safety laws
and regulations. Management considers climate change and other environmental
risks in the companies' strategy development, business planning, and enterprise
risk management processes.
CMS Energy and Consumers continue to focus on opportunities to protect the
environment and to reduce their carbon footprint. As a result of actions already
taken by CMS Energy and Consumers, the companies have:
•decreased their combined percentage of electric supply (self-generated and
purchased) from coal by 21 percentage points since 2015
•reduced carbon dioxide emissions by over 35 percent since 2005
•reduced the amount of water used to generate electricity by over 30 percent
since 2012
•reduced landfill waste disposal by over 1.5 million tons since 1992
•reduced methane emissions by 16 percent since 2012
Additionally, Consumers has reduced its sulfur dioxide, nitrogen oxide,
particulate matter, and mercury emissions by approximately 90 percent since


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The 2016 Energy Law:
•raised the renewable energy standard to 12.5 percent in 2019 and 15 percent in
2021; Consumers met the 12.5-percent requirement in 2019 and 2020 and expects to
meet the 15-percent requirement in 2021 and future years with a combination of
newly generated RECs and previously generated RECs carried over from prior years
•established a goal of 35 percent combined renewable energy and energy waste
reduction by 2025; Consumers achieved 25 percent combined renewable energy and
energy waste reduction through 2020
•authorized incentives for demand response programs and energy efficiency
programs, referring to the combined initiatives as energy waste reduction
•established an integrated planning process for new generation resources
Consumers' Clean Energy Plan details its strategy to meet customers' long-term
energy needs. The Clean Energy Plan was originally outlined in Consumers'
2018 IRP, which was approved by the MPSC in 2019. Under its Clean Energy Plan,
Consumers will meet the requirements of the 2016 Energy Law using its clean and
lean strategy, which focuses on increasing the generation of renewable energy,
helping customers use less energy, and offering demand response programs to
reduce demand during critical peak times.
In June 2021, Consumers filed its 2021 IRP with the MPSC, proposing updates to
the Clean Energy Plan. Within its 2021 IRP, which is subject to MPSC approval,
Consumers outlines its long-term strategy for delivering clean, reliable,
resilient, and affordable energy to its customers, including plans to:
•end the use of coal-fueled generation in 2025, 15 years sooner than initially
•purchase existing natural gas-fueled generating units, providing an additional
2,177 MW of nameplate capacity and allowing Consumers to continue providing
controllable sources of electricity to customers, and
•expand its investment in renewable energy, adding nearly 8,000 MW of solar
generation by 2040
These steps are expected to enable Consumers to meet and exceed the 2016 Energy
Law renewable energy requirements and fulfill increasing customer demand for
renewable energy. The 2021 IRP is also expected to allow Consumers to exceed its
breakthrough goal of at least 50 percent combined renewable energy and energy
waste reduction by 2030.
Consumers has a goal of achieving net-zero carbon emissions from its electric
business by 2040. This goal includes not only emissions from Consumers' owned
generation, but also emissions from the generation of power purchased through
long-term PPAs and from the MISO energy market. Consumers expects to meet
90 percent of its customers' needs with clean energy sources by 2040 through
execution of its 2021 IRP. Carbon offset measures including, but not limited to,
carbon sequestration, methane emission capture, and forest preservation and
reforestation may be used to close the gap to achieving net-zero carbon


Table of Contents Presented in the following illustration is Consumers' 2020 capacity portfolio and its future capacity portfolio as projected in the 2021 IRP. This illustration includes the effects of purchased capacity and energy waste reduction and uses the nameplate capacity of renewable energy sources:

                     [[Image Removed: cms-20210930_g2.jpg]]
1  Does not include RECs.
In September 2020, Michigan's Governor signed an executive order creating the
Michigan Healthy Climate Plan, which outlines goals for Michigan to achieve
economy-wide net-zero greenhouse gas emissions and to be carbon neutral by 2050.
The executive order aims for a 28-percent reduction below 2005 levels of
greenhouse gas emissions by 2025. Consumers has already surpassed the 28-percent
reduction milestone for its owned electric generation and previously announced a
goal of achieving net-zero carbon emissions from its electric business by 2040.
In addition to Consumers' efforts to reduce the electric utility's carbon
footprint, it is also making efforts to reduce the gas utility's methane
footprint. In 2019, Consumers released its Methane Reduction Plan, which set a
goal of net-zero methane emissions from its natural gas delivery system by 2030.
Consumers plans to reduce methane emissions from its system by about 80 percent
by accelerating the replacement of aging pipe, rehabilitating or retiring
outdated infrastructure, and adopting new technologies and practices. The
remaining emissions will be offset by purchasing and/or producing renewable
natural gas.
Additionally, to advance its environmental stewardship in Michigan and to
minimize the impact of future regulations, Consumers announced the following
five­year targets during 2018:
•to reduce its water use by one billion gallons
•to enhance, restore, or protect 5,000 acres of land
•to reduce the amount of waste taken to landfills by 35 percent
Consumers has met each of these targets and is evaluating new targets for the
coming years.
CMS Energy and Consumers are monitoring numerous legislative, policy, and
regulatory initiatives, including those to regulate greenhouse gases, and
related litigation. While CMS Energy and Consumers


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cannot predict the outcome of these matters, which could have a material effect
on the companies, they intend to continue to move forward with their clean and
lean strategy.
Profit: The profit element of the triple bottom line represents CMS Energy's and
Consumers' commitment to meeting their financial objectives and providing
economic development opportunities and benefits in the communities in which they
do business. CMS Energy's and Consumers' financial strength allows them to
maintain solid investment-grade credit ratings and thereby reduce funding costs
for the benefit of customers and investors, to preserve and create jobs, and to
reinvest in the communities they serve.
For the nine months ended September 30, 2021, CMS Energy's net income available
to common stockholders was $711 million, and diluted EPS were $2.46. This
compares with net income available to common stockholders of $597 million and
diluted EPS of $2.09 for the nine months ended September 30, 2020. In 2021, the
benefits from gas and electric rate increases and higher electric sales were
offset partially by higher distribution, transmission, generation, and
compression expenses and increased depreciation and property taxes, reflecting
higher capital spending. A more detailed discussion of the factors affecting
CMS Energy's and Consumers' performance can be found in the Results of
Operations section that follows this Executive Overview.
Over the next five years, Consumers expects weather-normalized electric and gas
deliveries to remain stable relative to 2020. This outlook reflects the effects
of energy waste reduction programs offset largely by modest growth in electric
and gas demand.
Performance: Impacting the Triple Bottom Line
CMS Energy and Consumers remain committed to achieving world class performance
while delivering hometown service and positively impacting the triple bottom
line of people, planet, and profit. During 2021, CMS Energy and Consumers:
•realized over $40 million in cost reductions by leveraging the CE Way and
through other initiatives
•achieved five-year planet goals, set in 2018, to save one billion gallons of
water; enhance, restore or protect 5000 acres of land in Michigan; and reduce
waste sent to landfills by 35 percent
•introduced a new three-year electric vehicle pilot program designed to help
fleet owners transition to electric vehicles
•expanded their renewable energy programs that assist both business and
residential customers in meeting their sustainability goals
•received recognition as #1 utility company in the U.S. for America's Best
Employers for Women and America's Best Employers for Diversity by Forbes®
CMS Energy and Consumers will continue to utilize the CE Way to enable them to
achieve world class performance and positively impact the triple bottom line.
Consumers' investment plan and the regulatory environment in which it operates
also drive its ability to impact the triple bottom line.
Investment Plan: Consumers expects to make capital investments of $25 billion
over the next ten years. Over the next five years, Consumers expects to make
significant expenditures on infrastructure upgrades and replacements and
electric supply projects. While it has a large number of potential investment
opportunities that would add customer value, Consumers has prioritized its
spending based on the criteria of enhancing public safety, increasing
reliability, maintaining affordability for its customers, and advancing its
environmental stewardship. Consumers' investment program is expected to result
in annual rate-base growth of six to eight percent. This rate-base growth,
together with cost-control measures, should allow Consumers to maintain
affordable customer prices.


Table of Contents The 2021 IRP, which is subject to approval, would add over $1 billion of capital expenditures to the $13.2 billion that Consumers already expects to make from 2021 through 2025, which are presented in the following illustration:

                     [[Image Removed: cms-20210930_g3.jpg]]

Of this amount, Consumers plans to spend $10.0 billion over the next five years to maintain and upgrade its gas infrastructure and electric distribution systems in order to enhance safety and reliability, improve customer satisfaction, reduce energy waste on those systems, and facilitate its clean energy transformation. The gas infrastructure projects comprise $5.3 billion to sustain deliverability, enhance pipeline integrity and safety, and reduce methane emissions. The electric distribution projects comprise $4.7 billion to strengthen circuits and substations, replace poles, and interconnect clean energy resources. Consumers also expects to spend $2.4 billion on new clean generation, which includes investments in wind, solar, and hydro electric generation resources, and $0.8 billion on other electric supply projects. Regulation: Regulatory matters are a key aspect of Consumers' business, particularly rate cases and regulatory proceedings before the MPSC, which permit recovery of new investments while helping to ensure that customer rates are fair and affordable. Important regulatory events and developments not already discussed are summarized below. 2021 Electric Rate Case: In March 2021, Consumers filed an application with the MPSC seeking an annual rate increase of $225 million, based on a 10.5 percent authorized return on equity for the projected twelve-month period ending December 31, 2022. The filing requests authority to recover future investments associated with distribution system reliability, solar generation, environmental compliance, and enhanced technology. In July 2021, Consumers reduced its requested annual rate increase to $201 million.



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Looking Forward
CMS Energy and Consumers will continue to consider the impact on the triple
bottom line of people, planet, and profit in their daily operations as well as
in their long-term strategic decisions. Consumers will continue to seek fair and
timely regulatory treatment that will support its customer-driven investment
plan, while pursuing cost-control measures that will allow it to maintain
sustainable customer base rates. The CE Way is an important means of realizing
CMS Energy's and Consumers' purpose of achieving world class performance while
delivering hometown service.


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11/29Consumers Energy Again Provides Holiday Cheer with $750,000 for Gift Cards in Over 60 M..
11/22CONSUMERS ENERGY CO : Entry into a Material Definitive Agreement, Financial Statements and..
11/22CMS ENERGY CORP : Entry into a Material Definitive Agreement, Financial Statements and Exh..
11/18Consumers Energy Announces Three Solar Projects to Lead Michigan's Clean Energy Transfo..
11/18Consumers Energy Debuts New High-Tech Vehicles to Locate Natural Gas Leaks, Lower Emiss..
11/12CMS Energy Declares Quarterly Dividend on Cumulative Redeemable Perpetual Preferred Sto..
11/12CMS Energy's Utility Subsidiary, Consumers Energy, Declares Quarterly Dividend on Prefe..
11/09Consumers Energy, DTE Energy Offer Lifesaving Tips to Protect Against 'Silent Killer' C..
11/04CONSUMERS ENERGY : We Can Power 1 Million Electric Vehicles on Michigan Roads by 2030
11/04CMS ENERGY CORPORATION : Ex-dividend day for
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