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What changed in CMS Energy's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CMS Energy's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+359 added−370 removedSource: 10-K (2024-02-08) vs 10-K (2023-02-09)

Top changes in CMS Energy's 2023 10-K

359 paragraphs added · 370 removed · 288 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

90 edited+18 added−13 removed23 unchanged
Biggest changeKarn 3 & 4 – Essexville 2 Units, 1975-1977 1,213 167 Hydroelectric Ludington – Ludington 6 Units, 1973 1,109 5 (370) 6 Conventional hydro generation 35 Units, 1906-1949 78 381 1,187 11 Gas combined cycle Jackson – Jackson 1 Unit, 2002 535 2,205 Zeeland – Zeeland 3 Units, 2002 533 3,456 1,068 5,661 Gas combustion turbines Zeeland (simple cycle) – Zeeland 2 Units, 2001 317 860 Wind generation Cross Winds ® Energy Park – Tuscola County 114 Turbines, 2014, 2018, and 2019 33 747 Lake Winds ® Energy Park – Mason County 56 Turbines, 2012 13 269 Gratiot Farms Wind Project – Gratiot County 60 Turbines, 2020 10 421 Crescent Wind Farm – Hillsdale County 60 Turbines, 2021 8 392 64 1,829 Solar generation Solar Gardens – Allendale, Cadillac, and Kalamazoo 16,852 Panels, 2016-2021 3 7 Total owned generation 5,736 18,752 Purchased power 7 Coal generation – T.E.S.
Biggest changeKarn 3 & 4 – Essexville 2 Units, 1975-1977 1,200 14 Hydroelectric Ludington – Ludington 6 Units, 1973 1,115 5 (349) 6 Conventional hydro generation 35 Units, 1906-1949 77 376 1,192 27 Gas combined cycle Covert Generating Station – Covert 7 3 Units, 2004 1,088 4,654 Jackson – Jackson 1 Unit, 2002 538 1,937 Zeeland – Zeeland 3 Units, 2002 532 3,418 2,158 10,009 Gas combustion turbines Zeeland (simple cycle) – Zeeland 2 Units, 2001 318 1,200 Wind generation Crescent Wind Farm – Hillsdale County 2021 150 356 Cross Winds ® Energy Park – Tuscola County 2014-2019 231 669 Gratiot Farms Wind Project – Gratiot County 2020 150 342 Heartland Farms Wind Project – Gratiot County 2023 — 1 Lake Winds ® Energy Park – Mason County 2012 101 242 632 1,610 Solar generation Solar Gardens – Allendale, Cadillac, and Kalamazoo 2016-2021 5 7 Total owned generation 6,906 19,751 Purchased power 8 Coal generation – T.E.S.
Also on CMS Energy’s website are CMS Energy’s and Consumers’: • Corporate Governance Principles • Articles of Incorporation • Bylaws • Charters and Codes of Conduct (including the Charters of the Audit Committee, Compensation and Human Resources Committee, Finance Committee, and Governance, Sustainability and Public Responsibility Committee, as well as the Employee, Board of Directors, and Third Party Codes of Conduct) CMS Energy will provide this information in print to any stockholder who requests it.
Also on CMS Energy’s website are CMS Energy’s and Consumers’: • Corporate Governance Principles • Articles of Incorporation • Bylaws • Charters and Codes of Conduct (including the Charters of the Audit Committee, Compensation and Human Resources Committee, Finance Committee, and Governance, Sustainability and Public Responsibility Committee, as well as the Employee, the Board, and Third Party Codes of Conduct) CMS Energy will provide this information in print to any stockholder who requests it.
Competition comes from GCC and transportation programs; system bypass opportunities for new and existing customers; and from alternative fuels and energy sources, such as propane, oil, and electricity. 27 Table of Contents NorthStar Clean Energy—Non-Utility Operations and Investments NorthStar Clean Energy, through various subsidiaries and certain equity investments, is engaged in domestic independent power production, including the development and operation of renewable generation, and the marketing of independent power production.
Competition comes from GCC and transportation programs; system bypass opportunities for new and existing customers; and from alternative fuels and energy sources, such as propane, oil, and electricity. 28 Table of Contents NorthStar Clean Energy—Non-utility Operations and Investments NorthStar Clean Energy, through various subsidiaries and certain equity investments, is engaged in domestic independent power production, including the development and operation of renewable generation, and the marketing of independent power production.
Consumers is a net purchaser of power and supplements its generation capability with purchases from the MISO energy market. At December 31, 2022, Consumers had future commitments to purchase capacity and energy under long-term PPAs with various generating plants. These contracts require monthly capacity payments based on the plants’ availability or deliverability.
Consumers is a net purchaser of power and supplements its generation capability with purchases from the MISO energy market. At December 31, 2023, Consumers had future commitments to purchase capacity and energy under long-term PPAs with various generating plants. These contracts require monthly capacity payments based on the plants’ availability or deliverability.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters. 29 Table of Contents Other Regulation The U.S. Secretary of Energy regulates imports and exports of natural gas and has delegated various aspects of this jurisdiction to FERC and the U.S. Department of Energy’s Office of Fossil Fuels. The U.S.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters. 30 Table of Contents Other Regulation The U.S. Secretary of Energy regulates imports and exports of natural gas and has delegated various aspects of this jurisdiction to FERC and the U.S. Department of Energy’s Office of Fossil Fuels. The U.S.
Consumers Consumers has served Michigan customers since 1886. Consumers was incorporated in Maine in 1910 and became a Michigan corporation in 1968. Consumers owns and operates electric generation and distribution facilities and gas transmission, storage, and distribution facilities. It provides electricity and/or natural gas to 6.7 million of Michigan’s 10 million residents.
Consumers Consumers has served Michigan customers since 1886. Consumers was incorporated in Maine in 1910 and became a Michigan corporation in 1968. Consumers owns and operates electric generation and distribution facilities and gas transmission, storage, and distribution facilities. It provides electricity and/or natural gas to 6.8 million of Michigan’s 10 million residents.
Michigan law allows electric customers in Consumers’ service territory to buy electric generation service from alternative electric suppliers in an aggregate amount capped at ten percent of Consumers’ sales, with certain exceptions. At December 31, 2022, electric deliveries under the ROA program were at the ten‑percent limit.
Michigan law allows electric customers in Consumers’ service territory to buy electric generation service from alternative electric suppliers in an aggregate amount capped at ten percent of Consumers’ sales, with certain exceptions. At December 31, 2023, electric deliveries under the ROA program were at the ten‑percent limit.
The needs of this market are driven by electric demand and the generation available. 28 Table of Contents CMS Energy and Consumers Regulation CMS Energy, Consumers, and their subsidiaries are subject to regulation by various federal, state, and local governmental agencies, including those described in the following sections.
The needs of this market are driven by electric demand and the generation available. 29 Table of Contents CMS Energy and Consumers Regulation CMS Energy, Consumers, and their subsidiaries are subject to regulation by various federal, state, and local governmental agencies, including those described in the following sections.
With these updates, Consumers expects to meet 90 percent of its customers’ needs with clean energy sources by 2040 through execution of its plan, which calls for replacing its coal-fueled generation predominantly with investment in renewable energy.
Consumers expects to meet 90 percent of its customers’ needs with clean energy sources by 2040 through execution of its Clean Energy Plan, which calls for replacing its coal-fueled generation predominantly with investment in renewable energy.
McIntosh (age 47) CMS Energy Vice President, Controller, and CAO 9/2021 – Present Vice President and Controller 6/2021 – 9/2021 Vice President 9/2015 – 6/2021 Consumers Vice President, Controller, and CAO 9/2021 – Present Vice President and Controller 6/2021 – 9/2021 Vice President 9/2015 – 6/2021 NorthStar Clean Energy Vice President, Controller, and CAO 9/2021 – Present Vice President and Controller 6/2021 – 9/2021 Vice President 9/2015 – 6/2021 There are no family relationships among executive officers and directors of CMS Energy or Consumers.
McIntosh (age 48) CMS Energy Vice President, Controller, and CAO 9/2021 – Present Vice President and Controller 6/2021 – 9/2021 Vice President 9/2015 – 6/2021 Consumers Vice President, Controller, and CAO 9/2021 – Present Vice President and Controller 6/2021 – 9/2021 Vice President 9/2015 – 6/2021 NorthStar Clean Energy Vice President, Controller, and CAO 9/2021 – Present Vice President and Controller 6/2021 – 9/2021 Vice President 9/2015 – 6/2021 There are no family relationships among executive officers and directors of CMS Energy or Consumers.
Consumers’ rates and certain other aspects of its business are subject to the jurisdiction of the MPSC and FERC, as well as to NERC reliability standards, as described in Item 1. Business—CMS Energy and Consumers Regulation. Consumers’ consolidated operating revenue was $8.2 billion in 2022, $7.0 billion in 2021, and $6.2 billion in 2020.
Consumers’ rates and certain other aspects of its business are subject to the jurisdiction of the MPSC and FERC, as well as to NERC reliability standards, as described in Item 1. Business—CMS Energy and Consumers Regulation. Consumers’ consolidated operating revenue was $7.2 billion in 2023, $8.2 billion in 2022, and $7.0 billion in 2021.
Item 1. Business General CMS Energy CMS Energy was formed as a corporation in Michigan in 1987 and 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 NorthStar Clean Energy (formerly known as CMS Enterprises Company), primarily a domestic independent power producer and marketer.
Item 1. Business General CMS Energy CMS Energy was formed as a corporation in Michigan in 1987 and 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 NorthStar Clean Energy, primarily a domestic independent power producer and marketer.
Rochow (age 48) CMS Energy President, CEO, and Director 12/2020 – Present Executive Vice President 1/2020 – 12/2020 Senior Vice President 7/2016 – 1/2020 Consumers President, CEO, and Director 12/2020 – Present Executive Vice President 1/2020 – 12/2020 Senior Vice President 7/2016 – 1/2020 NorthStar Clean Energy Chairman of the Board, CEO, and Director 12/2020 – Present Rejji P.
Rochow (age 49) CMS Energy President, CEO, and Director 12/2020 – Present Executive Vice President 1/2020 – 12/2020 Senior Vice President 7/2016 – 1/2020 Consumers President, CEO, and Director 12/2020 – Present Executive Vice President 1/2020 – 12/2020 Senior Vice President 7/2016 – 1/2020 NorthStar Clean Energy Chairman of the Board, CEO, and Director 12/2020 – Present Rejji P.
Hayes (age 48) CMS Energy Executive Vice President and CFO 5/2017 – Present Consumers Executive Vice President and CFO 5/2017 – Present NorthStar Clean Energy Executive Vice President, CFO, and Director 5/2017 – Present EnerBank Chairman of the Board and Director 10/2018 – 10/2021 Tonya L.
Hayes (age 49) CMS Energy Executive Vice President and CFO 5/2017 – Present Consumers Executive Vice President and CFO 5/2017 – Present NorthStar Clean Energy Executive Vice President, CFO, and Director 5/2017 – Present EnerBank Chairman of the Board and Director 10/2018 – 10/2021 Tonya L.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address is www.sec.gov. 36 Table of Contents
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address is www.sec.gov. 39 Table of Contents
In 2022, Consumers’ electric deliveries were 37 billion kWh, which included ROA deliveries of three billion kWh, resulting in net bundled sales of 34 billion kWh. In 2021, Consumers’ electric deliveries were 36 billion kWh, which included ROA deliveries of three billion kWh, resulting in net bundled sales of 33 billion kWh. Consumers’ electric utility operations are seasonal.
In 2023, Consumers’ electric deliveries were 36 billion kWh, which included ROA deliveries of three billion kWh, resulting in net bundled sales of 33 billion kWh. In 2022, Consumers’ electric deliveries were 37 billion kWh, which included ROA deliveries of three billion kWh, resulting in net bundled sales of 34 billion kWh. Consumers’ electric utility operations are seasonal.
Consumers addresses this competition in various ways, including: • aggressively controlling operating, maintenance, and fuel costs and passing savings on to customers • providing renewable energy options and energy waste reduction programs • providing competitive rate-design options, particularly for large energy-intensive customers • offering tariff-based incentives that support economic development • monitoring activity in adjacent geographical areas 24 Table of Contents Consumers Gas Utility Gas Utility Operations: Consumers’ gas utility operations, which include the purchase, transmission, storage, distribution, and sale of natural gas, generated operating revenue of $2.7 billion in 2022, $2.1 billion in 2021, and $1.8 billion in 2020.
Consumers addresses this competition in various ways, including: • aggressively controlling operating, maintenance, and fuel costs and passing savings on to customers • providing renewable energy options and energy waste reduction programs • providing competitive rate-design options, particularly for large energy-intensive customers • offering tariff-based incentives that support economic development • monitoring activity in adjacent geographical areas 25 Table of Contents Consumers Gas Utility Gas Utility Operations: Consumers’ gas utility operations, which include the purchase, transmission, storage, distribution, and sale of natural gas, generated operating revenue of $2.4 billion in 2023, $2.7 billion in 2022, and $2.1 billion in 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview. Business Segments Consumers Electric Utility Electric Utility Operations: Consumers’ electric utility operations, which include the generation, purchase, distribution, and sale of electricity, generated operating revenue of $5.4 billion in 2022, $5.0 billion in 2021, and $4.4 billion in 2020.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview. Business Segments Consumers Electric Utility Electric Utility Operations: Consumers’ electric utility operations, which include the generation, purchase, distribution, and sale of electricity, generated operating revenue of $4.7 billion in 2023, $5.4 billion in 2022, and $5.0 billion in 2021.
As CMS Energy or Consumers renews its policies, it is possible that some of the present insurance coverage may not be renewed or obtainable on commercially reasonable terms due to restrictive insurance markets. Human Capital CMS Energy and Consumers employ a highly trained and skilled workforce comprised of union, non‑union, and seasonal employees.
As CMS Energy or Consumers renews its policies, it is possible that some of the present insurance coverage may not be renewed or obtainable on commercially reasonable terms due to restrictive insurance markets. 33 Table of Contents Human Capital CMS Energy and Consumers employ a highly trained and skilled workforce comprised of union and non‑union employees.
Presented in the following illustration is Consumers’ 2022 gas utility operating revenue of $2.7 billion by customer class: Consumers’ gas utility operations are not dependent on a single customer, or even a few customers, and the loss of any one or even a few of Consumers’ largest customers is not reasonably likely to have a material adverse effect on Consumers’ financial condition.
Presented in the following illustration is Consumers’ 2023 gas utility operating revenue of $2.4 billion by customer class: Consumers’ gas utility operations are not dependent on a single customer, or even a few customers, and the loss of any one or even a few of Consumers’ largest customers is not reasonably likely to have a material adverse effect on Consumers’ financial condition.
Rich (age 48) CMS Energy Senior Vice President and Chief Customer Officer 8/2019 – Present Senior Vice President and Chief Information Officer 7/2016 – 8/2019 Consumers Senior Vice President and Chief Customer Officer 8/2019 – Present Senior Vice President and Chief Information Officer 7/2016 – 8/2019 LeeRoy Wells, Jr.
Rich (age 49) CMS Energy Senior Vice President and Chief Customer Officer 8/2019 – Present Senior Vice President and Chief Information Officer 7/2016 – 8/2019 Consumers Senior Vice President and Chief Customer Officer 8/2019 – Present Senior Vice President and Chief Information Officer 7/2016 – 8/2019 LeeRoy Wells, Jr.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview. 20 Table of Contents Presented in the following table are details about Consumers’ 2022 electric generation and supply mix: Name and Location (Michigan) Number of Units and Year Entered Service 2022 Generation Capacity (MW) 1 2022 Electric Supply (GWh) Coal steam generation J.H.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview. 21 Table of Contents Presented in the following table are details about Consumers’ 2023 electric generation and supply mix: Name and Location (Michigan) Number of Units and Year Entered Service 2023 Generation Capacity (MW) 1 2023 Electric Supply (GWh) Coal steam generation J.H.
CMS Energy’s consolidated operating revenue was $8.6 billion in 2022, $7.3 billion in 2021, and $6.4 billion in 2020. For further information about operating revenue, income, and assets and liabilities attributable to all of CMS Energy’s business segments and operations, see Item 8. Financial Statements and Supplementary Data—CMS Energy Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
CMS Energy’s consolidated operating revenue was $7.5 billion in 2023, $8.6 billion in 2022, and $7.3 billion in 2021. For further information about operating revenue, income, and assets and liabilities attributable to all of CMS Energy’s business segments and operations, see Item 8. Financial Statements and Supplementary Data—CMS Energy Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
Consumers’ firm gas transportation contracts expire on various dates through 2024 with planned contract volumes providing 38 percent of Consumers’ total forecasted gas supply requirements for 2023. Consumers purchases the balance of its required gas supply under firm city-gate contracts and through authorized suppliers under the GCC program.
Consumers’ firm gas transportation contracts expire on various dates through 2028 with planned contract volumes providing 34 percent of Consumers’ total forecasted gas supply requirements for 2024. Consumers purchases the balance of its required gas supply under firm city-gate contracts and through authorized suppliers under the GCC program.
Consumers’ electric utility customer base consists of a mix of primarily residential, commercial, and diversified industrial customers in Michigan’s Lower Peninsula. 17 Table of Contents Presented in the following illustration is Consumers’ 2022 electric utility operating revenue of $5.4 billion by customer class: Consumers’ electric utility operations are not dependent on a single customer, or even a few customers, and the loss of any one or even a few of Consumers’ largest customers is not reasonably likely to have a material adverse effect on Consumers’ financial condition.
Consumers’ electric utility customer base consists of a mix of primarily residential, commercial, and diversified industrial customers in Michigan’s Lower Peninsula. 18 Table of Contents Presented in the following illustration is Consumers’ 2023 electric utility operating revenue of $4.7 billion by customer class: Consumers’ electric utility operations are not dependent on a single customer, or even a few customers, and the loss of any one or even a few of Consumers’ largest customers is not reasonably likely to have a material adverse effect on Consumers’ financial condition.
During 2022, Consumers acquired 47 percent of the electricity it provided to customers through long-term PPAs and the MISO energy market. Consumers offers its generation into the MISO energy market on a day-ahead and real-time basis and bids for power in the market to serve the demand of its customers.
During 2023, Consumers acquired 43 percent of the electricity it provided to customers through long-term PPAs and the MISO energy market. Consumers offers its generation into the MISO energy market on a day-ahead and real-time basis and bids for power in the market to serve the demand of its customers.
Johnson (age 44) CMS Energy Senior Vice President and General Counsel 5/2019 – Present Vice President and Deputy General Counsel 4/2016 – 5/2019 Consumers Senior Vice President and General Counsel 5/2019 – Present Vice President and Deputy General Counsel 4/2016 – 5/2019 NorthStar Clean Energy Senior Vice President, General Counsel, and Director 4/2019 – Present Vice President and General Counsel 10/2018 – 4/2019 EnerBank Senior Vice President and General Counsel 8/2018 – 6/2020 Venkat Dhenuvakonda Rao (age 52) CMS Energy Senior Vice President 9/2016 – Present Consumers Senior Vice President 9/2016 – Present NorthStar Clean Energy Director 11/2017 – Present Senior Vice President 9/2016 – Present Brian F.
Johnson (age 45) CMS Energy Senior Vice President and General Counsel 5/2019 – Present Vice President and Deputy General Counsel 4/2016 – 5/2019 Consumers Senior Vice President and General Counsel 5/2019 – Present Vice President and Deputy General Counsel 4/2016 – 5/2019 NorthStar Clean Energy Senior Vice President, General Counsel, and Director 4/2019 – Present Vice President and General Counsel 10/2018 – 4/2019 EnerBank Senior Vice President and General Counsel 8/2018 – 6/2020 Venkat Dhenuvakonda Rao (age 53) CMS Energy Senior Vice President 9/2016 – Present Consumers Senior Vice President 9/2016 – Present NorthStar Clean Energy Director 11/2017 – Present Senior Vice President 9/2016 – Present Brian F.
Energy Resource Management: CMS ERM purchases and sells energy commodities in support of CMS Energy’s generating facilities with a focus on optimizing CMS Energy’s independent power production portfolio. In 2022, CMS ERM marketed two bcf of natural gas and 6,494 GWh of electricity.
Energy Resource Management: CMS ERM purchases and sells energy commodities in support of CMS Energy’s generating facilities with a focus on optimizing CMS Energy’s independent power production portfolio. In 2023, CMS ERM marketed two bcf of natural gas and 6,828 GWh of electricity.
Electricity marketed by CMS ERM was generated by independent power production of NorthStar Clean Energy and by unrelated third parties. CMS ERM’s operating revenue was $387 million in 2022, $260 million in 2021, and $197 million in 2020. NorthStar Clean Energy Competition: NorthStar Clean Energy competes with other independent power producers.
Electricity marketed by CMS ERM was generated by independent power production of NorthStar Clean Energy and by unrelated third parties. CMS ERM’s operating revenue was $233 million in 2023, $387 million in 2022, and $260 million in 2021. NorthStar Clean Energy Competition: NorthStar Clean Energy competes with other independent power producers.
For the year ended December 31, 2022, the diversity, equity, and inclusion index score was 72 percent. CMS Energy and Consumers are committed to building an inclusive workplace that embraces the diverse makeup of the communities that they serve.
For the year ended December 31, 2023, the diversity, equity, and inclusion index score was 65 percent. CMS Energy and Consumers are committed to building an inclusive workplace that embraces the diverse makeup of the communities that they serve.
Hofmeister (age 46) CMS Energy Senior Vice President 7/2017 – Present Consumers Senior Vice President 7/2017 – Present NorthStar Clean Energy Senior Vice President 9/2017 – Present Shaun M.
Hofmeister (age 47) CMS Energy Senior Vice President 7/2017 – Present Consumers Senior Vice President 7/2017 – Present NorthStar Clean Energy Senior Vice President 9/2017 – Present Shaun M.
Campbell 3 unit, net of the 6.69‑percent ownership interest of the Michigan Public Power Agency and Wolverine Power Supply Cooperative, Inc, each a non-affiliated company. 4 Consumers plans to retire these generating units in 2023. 5 Represents Consumers’ 51‑percent share of the capacity of Ludington.
Campbell 3 unit, net of the 6.69‑percent ownership interest of the Michigan Public Power Agency and Wolverine Power Supply Cooperative, Inc, each a non ‑ affiliated company. 4 Consumers retired these generating units in June 2023. 5 Represents Consumers’ 51‑percent share of the capacity of Ludington.
Consumers’ estimate of capital and cost of removal expenditures to comply with regulations relating to ash disposal is $205 million from 2023 through 2027. Consumers’ future costs to comply with solid waste disposal regulations may vary depending on future legislation, litigation, executive orders, treaties, or rulemaking. For further information concerning estimated capital expenditures related to environmental matters, see Item 7.
Consumers’ estimate of capital and cost of removal expenditures to comply with regulations relating to ash disposal is $238 million from 2024 through 2028. Consumers’ future costs to comply with solid waste disposal regulations may vary depending on future legislation, litigation, executive orders, treaties, or rulemaking. For further information concerning estimated capital expenditures related to environmental matters, see Item 7.
For the 2021-2022 winter season, Consumers’ peak demand was 5,559 MW, which included ROA demand of 447 MW. As required by MISO reserve margin requirements, Consumers owns or controls, through long-term PPAs and short-term capacity purchases, all of the capacity required to supply its projected firm peak load and necessary reserve margin for summer 2023.
For the 2022-2023 winter season, Consumers’ peak demand was 5,358 MW, which included ROA demand of 430 MW. As required by MISO reserve margin requirements, Consumers owns or controls, through long-term PPAs and short-term capacity purchases, all of the capacity required to supply its projected firm peak load and necessary reserve margin for summer 2024.
For additional information on Consumers’ properties, see Item 1. Business—Business Segments—Consumers Electric Utility—Electric Utility Properties and Business Segments—Consumers Gas Utility—Gas Utility Properties. 16 Table of Contents In 2022, Consumers served 1.9 million electric customers and 1.8 million gas customers in Michigan’s Lower Peninsula.
For additional information on Consumers’ properties, see Item 1. Business—Business Segments—Consumers Electric Utility—Electric Utility Properties and Business Segments—Consumers Gas Utility—Gas Utility Properties. 17 Table of Contents In 2023, Consumers served 1.9 million electric customers and 1.8 million gas customers in Michigan’s Lower Peninsula.
The payments for 2023 through 2050 are estimated to total $8.5 billion and, for each of the next five years, range from $0.7 billion to $0.8 billion annually. These amounts may vary depending on plant availability and fuel costs. For further information about Consumers’ future capacity and energy purchase obligations, see Item 7.
The payments for 2024 through 2048 are estimated to total $7.2 billion and, for each of the next five years, range from $0.7 billion to $0.8 billion annually. These amounts may vary depending on plant availability and fuel costs. For further information about Consumers’ future capacity and energy purchase obligations, see Item 7.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments. 30 Table of Contents CMS Energy has recorded a $45 million liability for its subsidiaries’ obligations associated with Bay Harbor and Consumers has recorded a $62 million liability for its obligations at a number of former MGP sites. For additional information, see Item 1A.
CMS Energy has recorded a $45 million liability for its subsidiaries’ obligations associated with Bay Harbor and Consumers has recorded a $62 million liability for its obligations at a number of former MGP sites. For additional information, see Item 1A. Risk Factors and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments.
During 2022, 48 percent of the natural gas supplied to all customers during the winter months was supplied from storage. 25 Table of Contents Presented in the following illustration are Consumers’ monthly weather-normalized natural gas deliveries (deliveries adjusted to reflect normal weather conditions) to its customers, including GCC deliveries, during 2022 and 2021: Gas Utility Properties: Consumers’ gas transmission, storage, and distribution system consists of: • 2,380 miles of transmission lines • 15 gas storage fields with a total storage capacity of 309 bcf and a working gas volume of 151 bcf • 28,170 miles of distribution mains • eight compressor stations with a total of 157,893 installed and available horsepower Under its Methane Reduction Plan, Consumers has set a goal of net-zero methane emissions from its natural gas delivery system by 2030.
During 2023, 45 percent of the natural gas supplied to all customers during the winter months was supplied from storage. 26 Table of Contents Presented in the following illustration are Consumers’ monthly weather-normalized natural gas deliveries (deliveries adjusted to reflect normal weather conditions) to its customers, including GCC deliveries, during 2023 and 2022: Gas Utility Properties: Consumers’ gas transmission, storage, and distribution system consists of: • 2,371 miles of transmission lines • 15 gas storage fields with a total storage capacity of 309 bcf and a working gas volume of 154 bcf • 28,277 miles of distribution mains • eight compressor stations with a total of 157,893 installed and available horsepower Under its Methane Reduction Plan, Consumers has set a goal of net-zero methane emissions from its natural gas delivery system by 2030.
The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment. 18 Table of Contents Presented in the following illustration are Consumers’ monthly weather-normalized electric deliveries (deliveries adjusted to reflect normal weather conditions) to its customers, including ROA deliveries, during 2022 and 2021: Consumers’ 2022 summer peak demand was 8,061 MW, which included ROA demand of 532 MW.
The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment. 19 Table of Contents Presented in the following illustration are Consumers’ monthly weather-normalized electric deliveries (deliveries adjusted to reflect normal weather conditions) to its customers, including ROA deliveries, during 2023 and 2022: Consumers’ 2023 summer peak demand was 8,067 MW, which included ROA demand of 549 MW.
The list of directors and their biographies will be included in CMS Energy’s and Consumers’ definitive proxy statement for their 2023 Annual Meetings of Shareholders to be held May 5, 2023.
The list of directors and their biographies will be included in CMS Energy’s and Consumers’ definitive proxy statement for their 2024 Annual Meetings of Shareholders to be held May 3, 2024.
The term of office of each of the executive officers extends to the first meeting of each of the Boards of Directors of CMS Energy and Consumers after the next annual election of Directors of CMS Energy and Consumers (to be held on May 5, 2023). Available Information CMS Energy’s internet address is www.cmsenergy.com.
The term of office of each of the executive officers extends to the first meeting of the Board after the next annual election of Directors of CMS Energy and Consumers (to be held on May 3, 2024). Available Information CMS Energy’s internet address is www.cmsenergy.com.
(age 44) CMS Energy Senior Vice President 12/2020 – Present Consumers Senior Vice President 12/2020 – Present Vice President 8/2017 – 12/2020 35 Table of Contents Name, Age, Position(s) Period Scott B.
(age 45) CMS Energy Senior Vice President 12/2020 – Present Consumers Senior Vice President 12/2020 – Present Vice President 8/2017 – 12/2020 38 Table of Contents Name, Age, Position(s) Period Scott B.
Of Consumers’ 1.9 million electric customers, fewer than 300, or 0.02 percent, purchased electric generation service under the ROA program. For additional information, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook—Consumers Electric Utility Outlook and Uncertainties.
Fewer than 300 of Consumers’ electric customers purchased electric generation service under the ROA program. For additional information, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook—Consumers Electric Utility Outlook and Uncertainties.
In 2022, deliveries of natural gas through Consumers’ pipeline and distribution network, including off-system transportation deliveries, totaled 391 bcf, which included GCC deliveries of 34 bcf. In 2021, deliveries of natural gas through Consumers’ pipeline and distribution network, including off-system transportation deliveries, totaled 347 bcf, which included GCC deliveries of 33 bcf. Consumers’ gas utility operations are seasonal.
In 2023, deliveries of natural gas through Consumers’ pipeline and distribution network, including off-system transportation deliveries, totaled 375 bcf, which included GCC deliveries of 31 bcf. In 2022, deliveries of natural gas through Consumers’ pipeline and distribution network, including off-system transportation deliveries, totaled 391 bcf, which included GCC deliveries of 34 bcf. Consumers’ gas utility operations are seasonal.
The following table presents the composition of CMS Energy’s and Consumers’ workforce: December 31, 2022 CMS Energy, including Consumers Consumers Percent female employees 27 % 28 % Percent racially or ethnically diverse employees 12 12 Percent employees with disabilities 5 5 Percent veteran employees 11 11 Co-workers are also empowered to engage in employee resource groups and events that encourage candid conversations around diversity, equity, and inclusion.
The following table presents the composition of CMS Energy’s and Consumers’ workforce: December 31, 2023 CMS Energy, including Consumers Consumers Percent female employees 26 % 26 % Percent racially or ethnically diverse employees 13 13 Percent employees with disabilities 4 5 Percent veteran employees 11 11 35 Table of Contents Co ‑ workers are also empowered to engage in business employee resource groups and events that encourage candid conversations around diversity, equity, and inclusion.
For the Jackson and Zeeland plants, Consumers utilizes an agent that owns firm transportation rights to each plant to purchase gas from the market and transport the gas to the facilities. For units 3 & 4 of D.E. Karn, Consumers holds gas transportation contracts to transport to the plant gas that Consumers or an agent purchase from the market.
For the Covert Generating Station and Jackson and Zeeland plants, Consumers utilizes an agent that owns firm transportation rights to each plant to purchase gas from the market and transport the gas to the facilities. For units 3 & 4 of D.E.
Consumers expects to recover costs to comply with environmental regulations in customer rates but cannot guarantee this result. For additional information concerning environmental matters, see Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook, and Item 8.
Consumers expects to recover costs to comply with environmental regulations in customer rates but cannot guarantee this result. For additional information concerning environmental matters, see Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook, and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments.
In order to obtain the coal it needs, Consumers enters into physical coal supply contracts. 23 Table of Contents At December 31, 2022, Consumers had future commitments to purchase coal through 2024; payment obligations under these contracts totaled $104 million. Most of Consumers’ rail-supplied coal contracts have fixed prices, although some contain market-based pricing.
In order to obtain the coal it needs, Consumers enters into physical coal supply contracts. At December 31, 2023, Consumers had future commitments to purchase coal during 2024 and 2025; payment obligations under these contracts totaled $56 million. Most of Consumers’ rail-supplied coal contracts have fixed prices, although some contain market-based pricing.
There are eight employee resource groups available to all co-workers; these groups are, by date of origin: • the Women’s Advisory Panel, contributing to the achievement of the corporate strategy by supporting the retention, development, and success of women • the Minority Advisory Panel, promoting a culture of diversity and inclusion among all racial and ethnic minorities through education, leadership, development, and networking • the Women’s Engineering Network, connecting and empowering women in the science, technology, engineering, and mathematics fields, while building capabilities to support company objectives • the Veteran’s Advisory Panel, supporting former and active military personnel and assisting in recruiting and retaining veterans through career development • GEN-ERGY, a multigenerational group designed to bridge the gap of learning, networking, and mentoring across the generations of the workforce • the Pride Alliance of Consumers Energy, promoting an inclusive environment that is safe, supportive, and respectful for lesbian, gay, bi-sexual, and transgender persons and allies • capABLE, aimed at removing barriers and creating pathways to meaningful work for employees of all abilities • Interfaith, a space for co-workers of all backgrounds to gather and celebrate their unique beliefs, creating an environment of understanding and respect for all faiths, religions, and spiritual beliefs, including those with no faith affiliation 33 Table of Contents Information About CMS Energy’s and Consumers’ Executive Officers Presented in the following table are the company positions held during the last five years for each of CMS Energy’s and Consumers’ executive officers as of February 3, 2023: Name, Age, Position(s) Period Garrick J.
There are seven business employee resource groups available to all co ‑ workers; these groups are: • Women in Energy, working toward an inclusive place for all women in the fields they have chosen, from front line to management • the Minority Advisory Panel, promoting a culture of diversity and inclusion among all racial and ethnic minorities through education, leadership, development, and networking • the Veteran’s Advisory Panel, supporting former and active military personnel and assisting in recruiting and retaining veterans through career development • GEN-ERGY, a multigenerational group designed to bridge the gap of learning, networking, and mentoring across the generations of the workforce • the Pride Alliance of Consumers Energy, promoting an inclusive environment that is safe, supportive, and respectful for lesbian, gay, bi-sexual, and transgender persons and allies • capABLE, aimed at removing barriers and creating pathways to meaningful work for employees of all abilities • Interfaith, a space for co ‑ workers of all backgrounds to gather and celebrate their unique beliefs, creating an environment of understanding and respect for all faiths, religions, and spiritual beliefs, including those with no faith affiliation 36 Table of Contents Information About CMS Energy’s and Consumers’ Executive Officers Presented in the following table are the company positions held during the last five years for each of CMS Energy’s and Consumers’ executive officers as of February 8, 2024: Name, Age, Position(s) Period Garrick J.
NorthStar Clean Energy’s operating revenue was $445 million in 2022, $308 million in 2021, and $229 million in 2020.
NorthStar Clean Energy’s operating revenue was $297 million in 2023, $445 million in 2022, and $308 million in 2021.
Independent Power Production: Presented in the following table is information about the independent power plants in which CMS Energy had an ownership interest at December 31, 2022: Location Ownership Interest (%) Primary Fuel Type Gross Capacity (MW) 1 2022 Net Generation (GWh) Dearborn, Michigan 100 Natural gas 770 4,786 Gaylord, Michigan 100 Natural gas 134 14 Paulding County, Ohio 100 Wind 100 317 Comstock, Michigan 100 Natural gas 76 111 Delta Township, Michigan 100 Solar 24 40 Phillips, Wisconsin 100 Solar 3 5 Paulding County, Ohio 100 Solar and storage 3 2 Coke County, Texas 51 Wind 525 1,894 Filer City, Michigan 50 Coal 73 498 New Bern, North Carolina 50 Wood waste 50 291 Flint, Michigan 50 Wood waste 40 163 Grayling, Michigan 50 Wood waste 38 219 Total 1,836 8,340 1 Represents the intended full-load sustained output of each plant.
Independent Power Production: Presented in the following table is information about the independent power plants in which CMS Energy had an ownership interest at December 31, 2023: Location Ownership Interest (%) Primary Fuel Type Gross Capacity (MW) 1 2023 Net Generation (GWh) Dearborn, Michigan 100 Natural gas 770 5,178 Jackson County, Arkansas 2 100 Solar 180 62 Gaylord, Michigan 100 Natural gas 134 10 Paulding County, Ohio 100 Wind 100 279 Comstock, Michigan 100 Natural gas 76 189 Delta Township, Michigan 100 Solar 24 39 Phillips, Wisconsin 100 Solar 3 4 Paulding County, Ohio 100 Solar and storage 3 1 Coke County, Texas 51 Wind 525 1,824 Filer City, Michigan 50 Coal 73 318 New Bern, North Carolina 50 Wood waste 50 310 Flint, Michigan 50 Wood waste 40 113 Grayling, Michigan 50 Wood waste 38 134 Total 2,016 8,461 1 Represents the intended full-load sustained output of each plant.
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 likely be offset by purchasing and/or producing renewable natural gas. For additional information on Consumers’ Methane Reduction Plan, see Item 7.
Consumers plans to reduce methane emissions from its system by about 80 percent, from 2012 baseline levels, by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices. The remaining emissions will likely be offset by purchasing and/or producing renewable natural gas.
During 2022, the pumped-storage facility consumed 1,339 GWh of electricity to pump water during off-peak hours for storage in order to generate 969 GWh of electricity later during peak-demand hours. 2 Represents purchases under long-term PPAs. 3 Represents purchases from the MISO energy market.
During 2023, the pumped-storage facility consumed 1,269 GWh of electricity to pump water during off-peak hours for storage in order to generate 920 GWh of electricity later during peak-demand hours. 2 Represents purchases under long-term PPAs. 3 Represents purchases from a nuclear generating facility that closed in May 2022. 4 Represents purchases from the MISO energy market.
Consumers’ distribution system consists of: • 212 miles of high-voltage distribution overhead lines operating at 138 kV • four miles of high-voltage distribution underground lines operating at 138 kV • 4,430 miles of high-voltage distribution overhead lines operating at 46 kV and 69 kV • 19 miles of high-voltage distribution underground lines operating at 46 kV • 82,326 miles of electric distribution overhead lines • 9,501 miles of underground distribution lines • 1,093 substations with an aggregate transformer capacity of 27 million kVA • three battery facilities with storage capacity of 2 MWh Consumers is interconnected to the interstate high-voltage electric transmission system owned by METC and operated by MISO.
Consumers’ distribution system consists of: • 270 miles of high-voltage distribution overhead lines operating at 138 kV • four miles of high-voltage distribution underground lines operating at 138 kV • 4,645 miles of high-voltage distribution overhead lines operating at 46 kV and 69 kV • 18 miles of high-voltage distribution underground lines operating at 46 kV • 82,049 miles of electric distribution overhead lines • 9,708 miles of underground distribution lines • 1,099 substations with an aggregate transformer capacity of 28 million kVA • four battery facilities with storage capacity of ten MWh Consumers is interconnected to the interstate high-voltage electric transmission system owned by METC and operated by MISO.
New technologies and carbon offset measures including, but not limited to, carbon sequestration, methane emission capture, forest preservation, and reforestation may be used to close the gap to achieving net-zero carbon emissions. Specifically, the Clean Energy Plan provides for the retirement of the D.E. Karn coal-fueled generating units in 2023 and the J.H. Campbell coal-fueled generating units in 2025.
New technologies and carbon offset measures including, but not limited to, carbon sequestration, methane emission capture, forest preservation, and reforestation may be used to close the gap to achieving net-zero carbon emissions. In accordance with its Clean Energy Plan, Consumers retired the D.E. Karn coal-fueled generating units in June 2023 and plans to retire the J.H.
Berry (age 50) CMS Energy Senior Vice President 2/2022 – Present Consumers Senior Vice President 2/2022 – Present Vice President 11/2018 – 2/2022 Executive Director, Quality 7/2017 – 11/2018 Catherine A. Hendrian (age 54) CMS Energy Senior Vice President 4/2017 – Present Consumers Senior Vice President 4/2017 – Present 34 Table of Contents Name, Age, Position(s) Period Brandon J.
Berry (age 51) CMS Energy Senior Vice President 2/2022 – Present Consumers Senior Vice President 2/2022 – Present Vice President 11/2018 – 2/2022 Catherine A. Hendrian (age 55) CMS Energy Senior Vice President 4/2017 – Present Consumers Senior Vice President 4/2017 – Present 37 Table of Contents Name, Age, Position(s) Period Brandon J.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments—Contractual Commitments. 9 Represents purchases from a nuclear generating facility that closed in May 2022. 10 Represents purchases from the MISO energy market. 22 Table of Contents Presented in the following table are the sources of Consumers’ electric supply for the last three years: GWh Years Ended December 31 2022 2021 2020 Owned generation Coal 10,217 10,861 7,960 Gas 6,684 5,555 5,883 Renewable energy 2,217 1,974 1,505 Oil 4 7 6 Net pumped storage 1 (370) (321) (371) Total owned generation 18,752 18,076 14,983 Purchased power 2 Gas generation 7,182 5,862 7,346 Nuclear generation 2,692 6,901 6,898 Renewable energy generation 2,441 2,408 2,225 Coal generation 500 494 513 Net interchange power 3 3,943 645 2,655 Total purchased and interchange power 16,758 16,310 19,637 Total supply 35,510 34,386 34,620 1 Represents Consumers’ share of net pumped-storage generation.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments—Contractual Commitments. 10 Represents purchases from the MISO energy market. 23 Table of Contents Presented in the following table are the sources of Consumers’ electric supply for the last three years: GWh Years Ended December 31 2023 2022 2021 Owned generation Gas 11,221 6,684 5,555 Coal 6,884 10,217 10,861 Renewable energy 1,993 2,217 1,974 Oil 2 4 7 Net pumped storage 1 (349) (370) (321) Total owned generation 19,751 18,752 18,076 Purchased power 2 Gas generation 7,244 7,182 5,862 Renewable energy generation 2,585 2,441 2,408 Coal generation 318 500 494 Nuclear generation 3 — 2,692 6,901 Net interchange power 4 4,532 3,943 645 Total purchased and interchange power 14,679 16,758 16,310 Total supply 34,430 35,510 34,386 1 Represents Consumers’ share of net pumped-storage generation.
Presented in the following illustration are the supply arrangements for the gas Consumers delivered to GCC and GCR customers during 2022: Firm gas transportation or firm city-gate contracts are those that define a fixed amount, price, and delivery time frame.
The remaining 15 percent was purchased from authorized GCC suppliers and delivered by Consumers to customers in the GCC program. Presented in the following illustration are the supply arrangements for the gas Consumers delivered to GCC and GCR customers during 2023: Firm city-gate and firm gas transportation contracts are those that define a fixed amount, price, and delivery time frame.
If CMS Energy or Consumers failed to comply with applicable laws and regulations, they could become subject to fines, penalties, or disallowed costs, or be required to implement additional compliance, cleanup, or remediation programs, the cost of which could be material. For more information on the potential impacts of government regulation affecting CMS Energy and Consumers, see Item 1A.
If CMS Energy, Consumers, or their subsidiaries failed to comply with applicable laws and regulations, they could become subject to fines, penalties, or disallowed costs, or be required to implement additional compliance, cleanup, or remediation programs, the cost of which could be material.
CMS Energy and Consumers develop skill sets in co-workers through a variety of means, including union apprenticeship programs and yearly trainings for newly required skills.
CMS Energy and Consumers develop skill sets in co ‑ workers through a variety of means, including union apprenticeship programs and yearly trainings for newly required skills. In 2023, CMS Energy and Consumers launched two new leadership development programs for mid-level and front-line leaders.
Risk Factors and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments. Costs related to the construction, operation, corrective action, and closure of solid waste disposal facilities for coal ash are significant. Consumers’ coal ash disposal areas are regulated under Michigan’s solid waste rules and by the EPA’s rules regulating CCRs.
Costs related to the construction, operation, corrective action, and closure of solid waste disposal facilities for coal ash are significant. Consumers’ coal ash disposal areas are regulated under Michigan’s solid waste rules and by the EPA’s rules regulating CCRs.
The amount of capacity relating to CMS Energy’s ownership interest was 1,478 MW and net generation relating to CMS Energy’s ownership interest was 6,826 GWh at December 31, 2022. The operating revenue from independent power production was $58 million in 2022, $48 million in 2021, and $32 million in 2020.
The amount of capacity relating to CMS Energy’s ownership interest was 1,658 MW and net generation relating to CMS Energy’s ownership interest was 7,130 GWh at December 31, 2023. 2 This project began operations in October 2023. The operating revenue from independent power production was $64 million in 2023, $58 million in 2022, and $48 million in 2021.
DTE Electric holds the remaining 49‑percent ownership interest. 6 Represents Consumers’ share of net pumped-storage generation. The pumped-storage facility consumes electricity to pump water during off-peak hours for storage in order to generate electricity later during peak‑demand hours. 7 Represents purchases under long-term PPAs. 8 For information about Consumers’ long-term PPA related to the MCV Facility, see Item 8.
The pumped-storage facility consumes electricity to pump water during off-peak hours for storage in order to generate electricity later during peak‑demand hours. 7 Consumers completed the purchase of this facility in May 2023. 8 Represents purchases under long-term PPAs. 9 For information about Consumers’ long-term PPA related to the MCV Facility, see Item 8.
For the year ended December 31, 2022, the employee experience index was 54 percent; CMS Energy and Consumers have a goal to achieve a score of 80 percent by 2030. • Building Skill Sets at Scale: With an overarching goal of ensuring employees have the right skills to succeed, CMS Energy and Consumers measure progress in this area through achievement of workforce planning and hiring milestones and through a first-time skill attainment index to evaluate the effectiveness of training.
CMS Energy and Consumers aim to enhance these scores by two percentage points year over year. 34 Table of Contents • Building Skill Sets at Scale: With an overarching goal of ensuring employees have the right skills to succeed, CMS Energy and Consumers measure progress in this area through achievement of workforce planning and hiring milestones and through a first-time skill attainment index to evaluate the effectiveness of training.
Campbell 1 & 2 – West Olive 2 2 Units, 1962-1967 610 2,869 J.H. Campbell 3 – West Olive 2,3 1 Unit, 1980 785 4,449 D.E. Karn 1 & 2 – Essexville 4 2 Units, 1959-1961 489 2,899 1,884 10,217 Oil/Gas steam generation D.E.
Campbell 1 & 2 – West Olive 2 2 Units, 1962-1967 617 2,025 J.H. Campbell 3 – West Olive 2,3 1 Unit, 1980 784 4,260 D.E. Karn 1 & 2 – Essexville 4 2 Units, 1959-1961 — 599 1,401 6,884 Oil/Gas steam generation D.E.
Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook, and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters.
For more information on the potential impacts of government regulation affecting CMS Energy, Consumers, and their subsidiaries, see Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook, and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters.
In 2021, CMS Energy and Consumers launched a full-scale development program for leaders to enable robust succession planning and improve employee engagement and empowerment. 32 Table of Contents This talent strategy allows CMS Energy and Consumers to shape employees’ experience and enable leaders to coach and develop co-workers, source talent, and anticipate and adjust to changing skill sets in the business environment.
This talent strategy allows CMS Energy and Consumers to shape employees’ experience and enable leaders to coach and develop co ‑ workers, source talent, and anticipate and adjust to changing skill sets in the business environment.
This goal includes not only emissions from owned generation, but also emissions from the generation of power purchased through long-term PPAs and from the MISO energy market.
Consumers’ Clean Energy Plan provides the foundation for its goal to achieve net-zero carbon emissions from its electric business by 2040. This goal includes not only emissions from owned generation, but also emissions from the generation of power purchased through long-term PPAs and from the MISO energy market.
Consumers is also interconnected to neighboring utilities and to other transmission systems. 19 Table of Contents Electric Utility Generation and Supply Mix: Consumers’ Clean Energy Plan details its strategy to meet customers’ long-term energy needs and provides the foundation for its goal to achieve net-zero carbon emissions from its electric business by 2040.
Consumers is also interconnected to neighboring utilities and to other transmission systems. Electric Utility Generation and Supply Mix: Consumers’ Clean Energy Plan details its strategy to meet customers’ long-term energy needs. The Clean Energy Plan was most recently revised and approved by 20 Table of Contents the MPSC in June 2022.
New technologies and carbon offset measures including, but not limited to, carbon sequestration, methane emission capture, forest preservation, and reforestation may be used to close the gap to achieving net-zero carbon emissions. In June 2022, Consumers received approval of its 2021 IRP, which updated its Clean Energy Plan.
New technologies and carbon offset measures including, but not limited to, carbon sequestration, methane emission capture, forest preservation, and reforestation may be used to close the gap to achieving net-zero carbon emissions. Under its Clean Energy Plan, Consumers will eliminate the use of coal-fueled generation in 2025 and currently forecasts renewable energy capacity levels of over 60 percent in 2040.
At December 31, 2022, Consumers had 85 percent of its 2023 expected coal requirements under contract, as well as a 34-day supply of coal on hand. In conjunction with its coal supply contracts, Consumers leases a fleet of railcars and has transportation contracts with various companies to provide rail services for delivery of purchased coal to Consumers’ generating facilities.
In conjunction with its coal supply contracts, Consumers leases a fleet of railcars and has transportation contracts with various companies to provide rail services for delivery of purchased coal to Consumers’ generating facilities. Consumers’ coal transportation contracts are future commitments and expire on various dates through 2025; payment obligations under these contracts totaled $213 million at December 31, 2023.
FERC also regulates certain aspects of Consumers’ electric operations, including compliance with FERC accounting rules, wholesale and transmission rates, operation of licensed hydroelectric generating plants, transfers of certain facilities, corporate mergers, and issuances of securities.
FERC regulates certain aspects of Consumers’ electric business, including, but not limited to, compliance with FERC accounting rules, wholesale electric and transmission rates, operation of licensed hydroelectric generating plants, corporate mergers and the sale and purchase of certain assets, issuance of securities, and conduct among affiliates.
For wind and solar generation, the amount represents the effective load-carrying capability. 2 Consumers plans to retire these generating units in 2025. 3 Represents Consumers’ share of the capacity of the J.H.
For wind and solar generation, the amount represents installed capacity during the summer months, except for Heartland Farms Wind Project, which began operation in December 2023. 2 Consumers plans to retire these generating units in 2025. 22 Table of Contents 3 Represents Consumers’ share of the capacity of the J.H.
FERC regulates limited aspects of Consumers’ gas business, principally compliance with FERC capacity release rules, shipping rules, the prohibition against certain buy/sell transactions, and the price-reporting rule.
FERC, in connection with NERC and with regional reliability organizations, also regulates generation and transmission owners and operators, load-serving entities, and others with regard to reliability of the bulk power system. FERC also regulates limited aspects of Consumers’ gas business, principally compliance with FERC capacity release rules, shipping rules, the prohibition of certain buy/sell transactions, and the price-reporting rule.
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 likely be offset by purchasing and/or producing renewable natural gas. For further information on Consumers’ progress towards its net-zero methane emissions goal, see Item 7.
Under its Methane Reduction Plan, Consumers has 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, from 2012 baseline levels, by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices.
During 2022, 29 percent of the energy Consumers provided to customers was generated by its coal-fueled generating units, which burned six million tons of coal and produced a combined total of 10,217 GWh of electricity.
Karn, Consumers holds gas transportation contracts to transport to the plant gas that Consumers or an agent purchase from the market. During 2023, 20 percent of the energy Consumers provided to customers was generated by its coal-fueled generating units, which burned four million tons of coal and produced a combined total of 6,884 GWh of electricity.
FERC and NERC FERC has exercised limited jurisdiction over several independent power plants and exempt wholesale generators in which NorthStar Clean Energy has ownership interests, as well as over CMS ERM, CMS Gas Transmission, and DIG. FERC’s jurisdiction includes, among other things, acquisitions, operations, disposals of certain assets and facilities, services provided and rates charged, and conduct among affiliates.
In addition, similar to FERC’s regulation of Consumers’ electric and gas businesses, FERC has jurisdiction over several independent power plants, PURPA-qualifying facilities, and exempt wholesale generators in which NorthStar Clean Energy has ownership interests, as well as over NorthStar Clean Energy itself, CMS ERM, CMS Gas Transmission, and DIG.
CMS Energy and Consumers Environmental Strategy and Compliance CMS Energy and Consumers are committed to protecting the environment; this commitment extends beyond compliance with applicable laws and regulations. Consumers’ Clean Energy Plan details its strategy to meet customers’ long-term energy needs and provides the foundation for its goal to achieve net-zero carbon emissions from its electric business by 2040.
Consumers’ Clean Energy Plan details its strategy to meet customers’ long-term energy needs and provides the foundation for its goal to achieve net-zero carbon emissions from its electric business by 2040. This goal includes not only emissions from owned generation, but also emissions from the generation of power purchased through long-term PPAs and from the MISO energy market.
Consumers serves individuals and businesses operating in the alternative energy, automotive, chemical, food, and metal products industries, as well as a diversified group of other industries. NorthStar Clean Energy, 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.
Consumers’ customer base consists of a mix of primarily residential, commercial, and diversified industrial customers. NorthStar Clean Energy, 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.
Presented in the following table are the number of employees of CMS Energy and Consumers: December 31 2022 2021 2020 CMS Energy, including Consumers Full-time and part-time employees 8,560 8,509 8,234 Seasonal employees 1 513 613 603 Total employees 9,073 9,122 8,837 Consumers Full-time and part-time employees 8,366 8,314 7,627 Seasonal employees 1 513 613 603 Total employees 8,879 8,927 8,230 1 Consumers’ seasonal workforce peaked at 587 employees during 2022, 622 employees during 2021, and 603 employees during 2020.
Presented in the following table are the number of employees of CMS Energy and Consumers: December 31 2023 2022 2021 CMS Energy, including Consumers Full-time and part-time employees 8,356 9,073 9,122 Consumers Full-time and part-time employees 8,144 8,879 8,927 At December 31, 2023, unions represented 44 percent of CMS Energy’s employees and 45 percent of Consumers’ employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe MPSC, FERC, other regulatory authorities, or other third parties may prohibit, delay, or impair the 2021 IRP and some or all of the 2021 IRP-associated acquisitions of owned or purchased electric generation capacity. Consumers may be unable to acquire, site, and/or permit some or all of the generation capacity proposed in the 2021 IRP.
Biggest changeConsumers has announced a long-term strategy for delivering clean, reliable, resilient, and affordable energy, including a plan to end coal use in 2025. The MPSC, FERC, other regulatory authorities, or other third parties may prohibit, delay, or impair some or all of Consumers’ planned acquisitions of owned or purchased electric generation capacity.
The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment, while peak demand for natural gas typically occurs in the winter due to colder temperatures and the resulting use of natural gas as heating fuel.
The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment, while peak demand for natural gas occurs in the winter due to colder temperatures and the resulting use of natural gas as heating fuel.
These events could impact the reliability of electric generation and electric and gas delivery and also subject CMS Energy and Consumers to financial harm. Cyber crime, which includes the use of malware, computer viruses, and other means for disruption or unauthorized access against companies, including CMS Energy and Consumers, is increasing in frequency, scope, and potential impact.
These events could impact the reliability of electric generation and electric and gas delivery and also subject CMS Energy and Consumers to financial harm. Cyber crime, which includes the use of malware, ransomware, computer viruses, and other means for disruption or unauthorized access against companies, including CMS Energy and Consumers, is increasing in frequency, scope, and potential impact.
Similarly, customers could also reduce their consumption of natural gas through alternative technologies or fuels. CMS Energy’s and Consumers’ energy sales and operations are affected by seasonal factors and varying weather conditions from year to year. CMS Energy’s and Consumers’ utility operations are seasonal.
Similarly, customers could also reduce their consumption of natural gas through alternative technologies or fuels or through electrification. CMS Energy’s and Consumers’ energy sales and operations are affected by seasonal factors and varying weather conditions from year to year. CMS Energy’s and Consumers’ utility operations are seasonal.
Also, changes in demographics, including an increased number of retirements or changes in life expectancy assumptions, could significantly increase the funding requirements of the obligations related to the pension and postretirement benefit plans. 38 Table of Contents Industry/Regulatory Risks Changes to ROA could have a material adverse effect on CMS Energy’s and Consumers’ businesses.
Also, changes in demographics, including an increased number of retirements or changes in life expectancy assumptions, could significantly increase the funding requirements of the obligations related to the pension and postretirement benefit plans. 41 Table of Contents Industry/Regulatory Risks Changes to ROA could have a material adverse effect on CMS Energy’s and Consumers’ businesses.
CMS Energy cannot make assurances that its businesses will continue to generate sufficient cash flow from operations to service its indebtedness, which could require CMS Energy to sell assets or obtain additional financing. 37 Table of Contents CMS Energy and Consumers have financing needs and could be unable to obtain bank financing or access the capital markets.
CMS Energy cannot make assurances that its businesses will continue to generate sufficient cash flow from operations to service its indebtedness, which could require CMS Energy to sell assets or obtain additional financing. 40 Table of Contents CMS Energy and Consumers have financing needs and could be unable to obtain bank financing or access the capital markets.
CMS Energy may also, from time to time, repurchase (either in open market transactions or through privately negotiated transactions), redeem, or otherwise retire its outstanding debt. Such activities, if any, will depend on prevailing market conditions, contractual restrictions, and other factors. The amounts involved may or may not be material.
CMS Energy and Consumers may also, from time to time, repurchase (either in open market transactions or through privately negotiated transactions), redeem, or otherwise retire outstanding debt. Such activities, if any, will depend on prevailing market conditions, contractual restrictions, and other factors. The amounts involved may or may not be material.
If it were determined that CMS Energy or Consumers failed to comply with applicable laws and regulations, they could become subject to fines, penalties, or disallowed costs, or be required to implement additional compliance, cleanup, or remediation programs, the cost of which could be material.
If it were determined that CMS Energy or Consumers failed to comply with applicable laws and regulations or with applicable tariff provisions, they could become subject to fines, penalties, or disallowed costs, or be required to implement additional compliance, cleanup, or remediation programs, the cost of which could be material.
Federal, state, and local environmental laws and rules, as well as international accords and treaties, could require CMS Energy and Consumers to install additional equipment for emission controls, undertake heat-rate improvement projects, purchase carbon emissions allowances, curtail operations, invest in generating capacity with fewer carbon dioxide emissions, or take other significant steps to manage or lower the emission of greenhouse gases.
Federal, state, and local environmental laws and rules, as well as international accords and treaties, could require CMS Energy and Consumers to install 44 Table of Contents additional equipment for emission controls, undertake heat-rate improvement projects, purchase carbon emissions allowances, curtail operations, invest in generating capacity with fewer carbon dioxide emissions, or take other significant steps to manage or lower the emission of greenhouse gases.
The failure of these technologies, including backup systems, or the inability of CMS Energy and Consumers to have these technologies supported, updated, expanded, or integrated into other technologies, could hinder their business operations. 44 Table of Contents CMS Energy’s and Consumers’ businesses have liability risks.
The failure of these technologies, including backup systems, or the inability of CMS Energy and Consumers to have these technologies supported, updated, expanded, or integrated into other technologies, could hinder their business operations. 47 Table of Contents CMS Energy’s and Consumers’ businesses have liability risks.
Disruptions in the capital and credit markets, or the inability to obtain required FERC authorization for issuances of securities including debt, could adversely affect CMS Energy’s and Consumers’ access to liquidity needed for their businesses.
Disruptions in the capital and credit markets, or the inability to obtain required regulatory authorization for issuances of securities including debt, could adversely affect CMS Energy’s and Consumers’ access to liquidity needed for their businesses.
Natural disasters, severe weather, wars, terrorist acts, civil unrest, vandalism, theft, cyber incidents, pandemics, and other catastrophic events could result in severe damage to CMS Energy’s and Consumers’ assets beyond what could be recovered through insurance policies (which are subject to deductibles, limitations, and self-insurance amounts that could be material), could require CMS Energy and Consumers to incur significant upfront costs, and could severely disrupt operations, resulting in loss of service to customers.
Natural disasters, severe weather, extreme temperatures, fires, smoke, flooding, wars, terrorist acts, civil unrest, vandalism, theft, cyber incidents, pandemics, and other catastrophic events could result in severe damage to CMS Energy’s and Consumers’ assets beyond what could be recovered through insurance policies (which are subject to deductibles, limitations, and self-insurance amounts that could be material), could require CMS Energy and Consumers to incur significant upfront costs, and could severely disrupt operations, resulting in loss of service to customers.
The success of these capital investments depends on or could be affected by a variety of factors that include, but are not limited to: • effective pre-acquisition evaluation of asset values, future operating costs, potential environmental and other liabilities, and other factors beyond Consumers’ control • effective cost and schedule management of new capital projects • availability of qualified construction personnel, both internal and contracted • changes in commodity and other prices, applicable tariffs, and/or material and equipment availability • governmental approvals and permitting • operational performance • changes in environmental, legislative, and regulatory requirements • regulatory cost recovery • inflation of labor rates • increases in lead times and disruptions in supply chain distribution • barriers to accessing key materials for renewable projects (solar, battery, and other key equipment) created by geopolitical relations and U.S. relations with China It is possible that adverse events associated with these factors could have a material adverse effect on Consumers.
The success of these capital investments depends on or could be affected by a variety of factors that include, but are not limited to: • effective pre-acquisition evaluation of asset values, future operating costs, potential environmental and other liabilities, and other factors beyond Consumers’ control • effective cost and schedule management of new capital projects • availability of qualified construction personnel, both internal and contracted • changes in commodity and other prices, applicable tariffs, and/or material and equipment availability • governmental actions • operational performance • changes in environmental, legislative, and regulatory requirements • regulatory cost recovery • inflation of labor rates and material and equipment prices • supply chain disruptions and increased lead times • barriers to accessing key materials for renewable projects (solar, battery, and other key equipment) created by geopolitical relations It is possible that adverse events associated with these factors could have a material adverse effect on Consumers.
A work interruption or other union actions could adversely affect Consumers. At December 31, 2022, unions represent 42 percent of Consumers’ employees. Consumers’ union agreements expire in 2025. If these employees were to engage in a strike, work stoppage, or other slowdown, Consumers could experience a significant disruption in its operations and higher ongoing labor costs.
A work interruption or other union actions could adversely affect Consumers. At December 31, 2023, unions represent 45 percent of Consumers’ employees. Consumers’ union agreements expire in 2025. If these employees were to engage in a strike, work stoppage, or other slowdown, Consumers could experience a significant disruption in its operations and higher ongoing labor costs.
These orders could also result in adverse regulatory treatment of other matters. For example, MPSC orders could prevent or curtail Consumers from shutting off non‑paying customers or could prevent or limit the implementation of a gas revenue mechanism.
These orders could also result in adverse regulatory treatment of other matters. For example, MPSC orders could prevent or curtail Consumers from shutting off non‑paying customers or could prevent or limit the implementation of an electric or gas revenue mechanism.
Consumers’ planned investments include the construction or acquisition of electric generation, electric and gas infrastructure, conversions and expansions, environmental controls, electric grid modernization 42 Table of Contents technology, and other electric and gas investments to upgrade delivery systems, as well as decommissioning of older facilities.
Consumers’ planned investments include the construction or acquisition of electric generation, electric and gas infrastructure, conversions and expansions, environmental controls, electric grid modernization technology, and other electric and gas investments to upgrade delivery systems, as well as decommissioning of older facilities.
In addition, economic conditions in Consumers’ service territory affect its collections of accounts receivable and levels of lost or stolen gas. 43 Table of Contents Consumers is exposed to changes in customer usage that could impact financial results.
In addition, economic conditions in Consumers’ service territory affect its collections of accounts receivable and levels of lost or stolen gas. Consumers is exposed to changes in customer usage that could impact financial results.
Technology advances, government incentives and subsidies, and recent regulatory decisions could increase the cost effectiveness of customer-owned methods of producing electricity and managing energy use resulting in reduced load, cross subsidization, and increased costs. Customers could also reduce their consumption through demand-side energy conservation and energy waste reduction programs.
Technology advances, government incentives and subsidies, and regulatory decisions could increase the cost effectiveness of customer-owned methods of producing electricity and managing energy use resulting in reduced load, cross subsidization, and increased costs. Customers could also reduce their consumption through energy waste reduction programs.
CMS Energy and Consumers could suffer negative impacts to their reputations as a result of operational incidents, violations of corporate policies, regulatory violations, inappropriate use of social media, or other events. Reputational damage could have a material adverse effect and could result in negative customer perception and increased regulatory oversight.
CMS Energy and Consumers are exposed to significant reputational risks. CMS Energy and Consumers could suffer negative impacts to their reputations as a result of operational incidents, violations of corporate policies, regulatory violations, inappropriate use of social media, or other events. Reputational damage could have a material adverse effect and could result in negative customer perception and increased regulatory oversight.
Consumers’ electric and gas utility businesses are affected by the economic conditions impacting the customers they serve. If the Michigan economy becomes sluggish or declines, Consumers could experience reduced demand for electricity or natural gas that could result in decreased earnings and cash flow.
Consumers’ electric and gas utility businesses are affected by the economic conditions impacting the customers they serve. If the Michigan economy becomes sluggish or declines, Consumers could experience reduced demand for electricity or natural gas that could result in decreased earnings and cash 46 Table of Contents flow.
Consumers’ electric and gas delivery systems, power plants, gas infrastructure including storage facilities, wind energy or solar equipment, and energy products, and the independent power plants owned in whole or in part by CMS Energy could be involved in incidents, failures, or accidents that result in injury, loss of life, or property loss to customers, employees, or the public.
Consumers’ electric and gas delivery systems, power plants, gas infrastructure including storage facilities, wind energy or solar equipment, energy products, vehicle fleets and equipment, or other assets; the independent power plants or other assets and equipment owned in whole or in part by CMS Energy; or CMS Energy or Consumers employees could be involved in incidents, failures, or accidents that result in injury, loss of life, or property loss to customers, employees, or the public.
Failure of these subsidiaries to maintain this FERC authority could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.
Failure of these subsidiaries to maintain this FERC authority could have a material 42 Table of Contents adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.
CMS Energy and Consumers are exposed to counterparty risk. Adverse economic conditions or financial difficulties experienced by counterparties with whom CMS Energy and Consumers do business could impair the ability of these counterparties to pay for 46 Table of Contents CMS Energy’s and Consumers’ services and/or fulfill their contractual obligations, including performance and payment of damages.
Adverse economic conditions or financial difficulties experienced by counterparties with whom CMS Energy and Consumers do business could impair the ability of these counterparties to pay for CMS Energy’s and Consumers’ services and/or fulfill their contractual obligations, including performance and payment of damages.
The following risks related to climate change, emissions, and environmental regulations could also have a material adverse impact on CMS Energy and Consumers: • a change in regulators’ implementation of policy or litigation originated by third parties against CMS Energy or Consumers due to CMS Energy’s or Consumers’ greenhouse gas or other emissions or CCR disposal and storage • impairment of CMS Energy’s or Consumers’ reputation due to their greenhouse gas or other emissions and public perception of their response to potential environmental regulations, rules, and legislation • extreme weather conditions, such as severe storms or flooding, that may affect customer demand, company operations, or company infrastructure Consumers expects to collect fully from its customers, through the ratemaking process, expenditures incurred to comply with environmental regulations, but cannot guarantee this outcome.
The following risks related to climate change, emissions, and environmental regulations could also have a material adverse impact on CMS Energy and Consumers: • a change in regulators’ implementation of policy or litigation originated by third parties against CMS Energy or Consumers due to CMS Energy’s or Consumers’ greenhouse gas or other emissions or CCR disposal and storage • impairment of CMS Energy’s or Consumers’ reputation due to their greenhouse gas or other emissions and public perception of their response to potential environmental regulations, rules, and legislation • weather that may affect customer demand, company operations, or company infrastructure, including catastrophic weather-related damage and extreme temperatures; natural disasters such as severe storms, floods, and droughts; fires; or smoke • implementation of state or federal environmental justice requirements Consumers expects to collect fully from its customers, through the ratemaking process, expenditures incurred to comply with environmental regulations, but cannot guarantee this outcome.
Transmission rates paid by Consumers and other CMS Energy subsidiaries are also set by FERC, as are the tariff terms 39 Table of Contents governing the participation of Consumers and other CMS Energy subsidiaries in FERC-regulated wholesale electricity markets operated by regional transmission organizations and independent system operators such as MISO and PJM.
Electric transmission and natural gas pipeline rates paid by Consumers and other CMS Energy subsidiaries are also set by FERC, as are the tariff terms governing the participation of Consumers and other CMS Energy subsidiaries in FERC-regulated wholesale electricity markets operated by regional transmission organizations and independent system operators such as MISO and PJM.
Similarly, 41 Table of Contents Consumers could be restricted from constructing natural gas infrastructure due to potential environmental regulations, which could require more costly alternatives.
Similarly, Consumers could be restricted from constructing natural gas infrastructure due to potential environmental regulations, which could require more costly alternatives.
A delay or failure by CMS Energy or Consumers to obtain or maintain any necessary environmental permits or approvals to satisfy any applicable environmental regulatory requirements or install emission or pollution control equipment could: • prevent the construction of new facilities • prevent the continued operation of and sale of energy from existing facilities • prevent the suspension of operations at existing facilities • prevent the modification of existing facilities • result in significant additional costs CMS Energy and Consumers expect to incur additional substantial costs related to remediation of legacy environmental sites.
A delay or failure by CMS Energy or Consumers to obtain or maintain any necessary environmental permits or approvals to satisfy any applicable environmental regulatory requirements or install emission or pollution control equipment could: • prevent the construction of new facilities • prevent the continued operation of and sale of energy from existing facilities • modify the way in which a facility is operated • prevent the suspension of operations at existing facilities • prevent the modification of existing facilities • result in significant additional costs, including fines or penalties CMS Energy and Consumers expect to incur additional substantial costs related to environmental remediation of former sites.
CMS Energy and Consumers are subject to, or affected by, extensive utility regulation and state and federal legislation.
CMS Energy and certain of its subsidiaries, including Consumers, are subject to, or affected by, extensive utility regulation and state and federal legislation.
Consumers expects to incur additional substantial costs related to the remediation of its former MGP sites and other response activity costs at a number of other sites, including, but not limited to, sites of retired coal-fueled electric generating units, under NREPA and CERCLA. Consumers believes these costs should be recoverable in rates, but cannot guarantee that outcome.
Consumers expects to incur additional substantial costs related to the remediation of its former MGP sites and other response activity costs at a number of other former sites, including, but not limited to, sites of retired coal-fueled electric generating units, under NREPA, RCRA, and CERCLA.
As a result, to the extent the commodity markets are illiquid, 45 Table of Contents CMS Energy and Consumers might not be able to execute their risk management strategies, which could result in larger unhedged positions than preferred at a given time.
Furthermore, the ability to hedge exposure to commodity price volatility depends on liquid commodity markets. As a result, to the extent the commodity markets are illiquid, CMS Energy and Consumers might not be able to execute their risk management strategies, which could result in larger unhedged positions than preferred at a given time.
CMS Energy and Consumers are subject to costly and stringent environmental regulations that will likely require additional significant capital expenditures for CCR disposal and storage, cooling water intake equipment, effluent treatment, and PCB remediation.
CMS Energy and Consumers are subject to costly and stringent environmental regulations that may require additional significant capital expenditures for CCR disposal and storage, emission reductions, and PCB remediation.
CMS Energy and Consumers are subject to rate regulation, which could have a material adverse effect on financial results. CMS Energy and Consumers are subject to rate regulation. Consumers’ electric and gas retail rates are set by the MPSC and cannot be changed without regulatory authorization.
CMS Energy and Consumers are subject to rate regulation. Consumers’ electric and gas retail rates are set by the MPSC and cannot be changed without regulatory authorization. If rate regulators fail to provide adequate rate relief, it could have a material adverse effect on Consumers or Consumers’ plans for making significant capital investments.
Consumers’ ability to implement the 2021 IRP may be affected by global supply chain disruptions and changes in the cost, availability, and supply of generation capacity. While CMS Energy and Consumers continue to advocate for advances in technologies required to reduce or eliminate greenhouse gases on a cost-effective basis, such advances are largely outside of CMS Energy’s and Consumers’ control.
While CMS Energy and Consumers continue to advocate for advances in technologies required to reduce or eliminate greenhouse gases on a cost-effective basis, such advances are largely outside of CMS Energy’s and Consumers’ control.
Third parties’ operations of distributed energy resources could also potentially have a negative impact on the stability of the grid. An increase in customers’ use of distributed energy resources, and the rate structure for distributed energy resources customers’ use of Consumers’ system and Consumers’ purchases of their excess generation, could have a material adverse effect on CMS Energy and Consumers.
An increase in customers’ use of distributed energy resources, and the rate structure for distributed energy resources customers’ use of Consumers’ system and Consumers’ purchases of their excess generation, could have a material adverse effect on CMS Energy and Consumers. CMS Energy and Consumers are subject to rate regulation, which could have a material adverse effect on financial results.
Regulators could face competitive or political pressures to avoid or limit rate increases for a number of reasons, including economic downturn in the state or decreased customer base, among others. FERC authorizes certain subsidiaries of CMS Energy to sell wholesale electricity at market-based rates.
Regulators could face competitive or political pressures to avoid or limit rate increases for a number of reasons, including economic downturn in the state, reliability and economic justice concerns, or decreased customer base, among others.
These contracts are executed in conjunction with the GCR mechanism, which is designed to allow Consumers to recover prudently incurred costs associated with its natural gas positions. If the MPSC determined that any of these contracts or related contracting policies were imprudent, recovery of these costs could be disallowed.
These contracts are executed in conjunction with the GCR mechanism, which is designed to allow Consumers to recover prudently incurred costs associated with its natural gas positions.
Advancements in technology related to items such as battery storage and electric vehicles may not become commercially available or economically feasible as projected in the 2021 IRP.
Advancements in technology related to items such as battery storage and electric vehicles may not become commercially 43 Table of Contents available or economically feasible as projected. Customer programs such as energy efficiency and demand response may not realize the projected levels of customer participation.
Volatility and disruptions in capital and credit markets could have a negative impact on CMS Energy’s and Consumers’ lenders, vendors, contractors, suppliers, customers, and other counterparties, causing them to fail to meet their obligations. CMS Energy and Consumers are exposed to significant reputational risks.
Any delay or default in payment or performance, including inadequate performance, of contractual obligations could have a material adverse effect on CMS Energy and Consumers. 49 Table of Contents Volatility and disruptions in capital and credit markets could have a negative impact on CMS Energy’s and Consumers’ lenders, vendors, contractors, suppliers, customers, and other counterparties, causing them to fail to meet their obligations.
This plan includes accelerated infrastructure replacements, innovative leak detection technology, and process changes to reduce or eliminate methane emissions. The MPSC, FERC, other regulatory authorities, or other third parties may prohibit, delay, or impair the Natural Gas Delivery Plan and some or all of the associated capital investments.
The MPSC, FERC, other regulatory authorities, or other third parties may prohibit, delay, or impair the Natural Gas Delivery Plan and some or all of the associated capital investments.
CMS Energy and Consumers depend on these counterparties to remit payments and perform contracted services in a timely and adequate fashion. Any delay or default in payment or performance, including inadequate performance, of contractual obligations could have a material adverse effect on CMS Energy and Consumers.
CMS Energy and Consumers depend on these counterparties to remit payments and perform contracted services in a timely and adequate fashion.
Unplanned generator outages could reduce the capacity credit CMS Energy or Consumers receives from MISO and could cause CMS Energy or Consumers to incur additional capacity costs in future years. General Risk Factors The COVID-19 pandemic could materially and adversely affect each of CMS Energy’s and Consumers’ business, results of operations, financial condition, capital investment program, liquidity, and cash flows.
Unplanned generator outages could reduce the capacity credit CMS Energy or Consumers receives from MISO and could cause CMS Energy or Consumers to incur additional capacity costs in future years. General Risk Factors CMS Energy and Consumers are exposed to counterparty risk.
Consumers’ rates are regulated by the MPSC, while alternative electric suppliers charge market-based rates, putting competitive pressure on Consumers’ electric supply. If the ROA limit were increased or if electric generation service in Michigan were deregulated, it could have a material adverse effect on CMS Energy and Consumers.
If the ROA limit were increased, this new ROA-like community solar system were allowed, or electric generation service in Michigan were deregulated, it could have a material adverse effect on CMS Energy and Consumers. Distributed energy resources could have a material adverse effect on CMS Energy’s and Consumers’ businesses.
Distributed energy resources could have a material adverse effect on CMS Energy’s and Consumers’ businesses. Michigan law allows customers to use distributed energy resources for their electric energy needs. These distributed energy resources are connected to Consumers’ electric grid.
Michigan law allows customers to use distributed energy resources for their electric energy needs. These distributed energy resources are connected to Consumers’ electric grid. The 2023 Energy Law increases the cap on distributed generation to ten percent of utilities’ peak loads.
Business/Operations Risks There are risks associated with Consumers’ substantial capital investment program planned for the next ten years.
Consumers believes these costs should be recoverable in rates, but cannot guarantee that outcome. 45 Table of Contents Business/Operations Risks There are risks associated with Consumers’ substantial capital investment program planned for the next five years.
CMS Energy and Consumers do not always hedge any or all of the exposure of their operations from commodity price volatility. Furthermore, the ability to hedge exposure to commodity price volatility depends on liquid commodity markets.
If the MPSC determined that any of these contracts or related contracting policies were imprudent, recovery of these costs could be disallowed. 48 Table of Contents CMS Energy and Consumers do not always hedge any or all of the exposure of their operations from commodity price volatility.
Recent FERC policy will also soon allow many customer-owned behind-the-meter and grid-connected distributed energy resources to participate in and receive revenue from wholesale electricity markets. Increased customer use of distributed energy resources could result in a reduction of Consumers’ electric sales.
It also specifies an inflow and outflow rate method that must be implemented by the MPSC and provides federal funding for low-income distributed generation. Recent FERC policy allows many customer-owned behind-the-meter and grid-connected distributed energy resources to participate in and receive revenue from wholesale electricity markets.
Removed
The state distributed generation program is currently capped by the 2016 Energy Law at one percent of utilities’ peak loads, but in the settlement of its 2022 electric rate case, Consumers agreed to increase the cap to four percent on its system. Consumers is required to purchase distributed generation customers’ excess generation at rates determined by the MPSC.
Added
Consumers’ rates are regulated by the MPSC, while alternative electric suppliers charge market-based rates, putting competitive pressure on Consumers’ electric supply. Groups are advocating for an ROA-like community solar system that allows third parties to sell directly to customers and offer them a regulated bill credit.
Removed
If rate regulators fail to provide adequate rate relief, it could have a material adverse effect on Consumers or Consumers’ plans for making significant capital investments.
Added
Increased customer use of distributed energy resources could result in a reduction of Consumers’ electric sales. Third parties’ operations of distributed energy resources could also potentially have a negative impact on the stability of the grid.
Removed
Consumers has announced a long-term strategy for delivering clean, reliable, resilient, and affordable energy, including a plan to end coal use in 2025 as set forth in the 2021 IRP.
Added
FERC authorizes certain subsidiaries of CMS Energy, including Consumers, to sell wholesale electricity at market-based rates and to provide certain other wholesale electric services at rates and terms subject to FERC approval.
Removed
Customer programs such as energy efficiency and demand response may not realize the projected levels of customer participation. 40 Table of Contents Consumers has also announced its Natural Gas Delivery Plan, a 10-year strategic investment plan to deliver safe, reliable, clean, and affordable natural gas to customers.
Added
Consumers may be unable to acquire, site, and/or permit some or all of the generation capacity proposed in its plan. Consumers’ ability to implement its plan may be affected by environmental regulations, global supply chain disruptions, and changes in the cost, availability, and supply of generation capacity.
Removed
The COVID‑19 pandemic has had widespread impacts on people, businesses, economies, and financial markets globally, in the U.S., and in markets where CMS Energy and Consumers conduct business. These impacts include a reduction in economic activity, disruption to supply chains and operations, increased labor costs, reduced availability of labor, and reduced productivity.
Added
Consumers has also announced its Natural Gas Delivery Plan, a rolling ten ‑ year investment plan to deliver safe, reliable, clean, and affordable natural gas to customers. This plan includes accelerated infrastructure replacements, innovative leak detection technology, and process changes to reduce or eliminate methane emissions.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeBusiness, all of which are incorporated by reference in this Item 2: • General—CMS Energy • General—Consumers • Business Segments—Consumers Electric Utility—Electric Utility Properties • Business Segments—Consumers Gas Utility—Gas Utility Properties • Business Segments—NorthStar Clean Energy—Non-Utility Operations and Investments—Independent Power Production 47 Table of Contents
Biggest changeBusiness, all of which are incorporated by reference in this Item 2: • General—CMS Energy • General—Consumers • Business Segments—Consumers Electric Utility—Electric Utility Properties • Business Segments—Consumers Electric Utility—Electric Utility Generation and Supply Mix • Business Segments—Consumers Gas Utility—Gas Utility Properties • Business Segments—NorthStar Clean Energy—Non-utility Operations and Investments—Independent Power Production

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+2 added−0 removed1 unchanged
Biggest changeConsumers Consumers’ common stock is privately held by its parent, CMS Energy, and does not trade in the public market. 49 Table of Contents Issuer Repurchases of Equity Securities Presented in the following table are CMS Energy’s repurchases of common stock for the three months ended December 31, 2022: Period Total Number of Shares Purchased 1 Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Publicly Announced Plans or Programs October 1, 2022 to October 31, 2022 416 $ 58.26 — — November 1, 2022 to November 30, 2022 — — — — December 1, 2022 to December 31, 2022 — — — — Total 416 $ 58.26 — — 1 All of the common shares were repurchased to satisfy the minimum statutory income tax withholding obligation for common shares that have vested under the Performance Incentive Stock Plan.
Biggest changeConsumers Consumers’ common stock is privately held by its parent, CMS Energy, and does not trade in the public market. 53 Table of Contents Issuer Repurchases of Equity Securities CMS Energy repurchases common stock to satisfy the minimum statutory income tax withholding obligation for common shares that have vested under the PISP.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities CMS Energy CMS Energy’s common stock is traded on the New York Stock Exchange under the symbol CMS. At January 13, 2023, the number of registered holders of CMS Energy’s common stock totaled 26,227, based on the number of record holders.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities CMS Energy CMS Energy’s common stock is traded on the New York Stock Exchange under the symbol CMS. At January 12, 2024, the number of registered holders of CMS Energy’s common stock totaled 25,328, based on the number of record holders.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization. 48 Table of Contents Comparison of Five-year Cumulative Total Return Five-Year Cumulative Total Return Company/Index 2017 2018 2019 2020 2021 2022 CMS Energy $ 100 $ 108 $ 141 $ 140 $ 154 $ 154 S&P 500 Index 100 96 126 149 191 157 S&P 400 Utilities Index 100 107 122 105 126 126 These cumulative total returns assume reinvestments of dividends.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization. 52 Table of Contents Comparison of Five ‑ year Cumulative Total Return Five-Year Cumulative Total Return Company/Index 2018 2019 2020 2021 2022 2023 CMS Energy $ 100 $ 130 $ 130 $ 142 $ 142 $ 135 S&P 500 Index 100 131 156 200 164 207 S&P 400 Utilities Index 100 114 99 118 118 102 These cumulative total returns assume reinvestments of dividends.
The value of shares repurchased is based on the market price on the vesting date. Unregistered Sales of Equity Securities None. Item 6. Reserved
The value of shares repurchased is based on the market price on the vesting date.
Added
Presented in the following table are CMS Energy’s repurchases of common stock for the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share October 1, 2023 to October 31, 2023 730 $ 52.87 November 1, 2023 to November 30, 2023 187 56.51 December 1, 2023 to December 31, 2023 2,042 58.37 Total 2,959 $ 56.90 As of December 31, 2023, CMS Energy has no other publicly announced plans or programs that permit the repurchase of equity securities.
Added
Unregistered Sales of Equity Securities None. Item 6. Reserved

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

144 edited+46 added−64 removed51 unchanged
Biggest changeAmounts in the following tables are presented pre-tax, with the exception of income tax changes. 59 Table of Contents Presented in the following table is a summary of changes to net income available to common stockholders for 2022 versus 2021: In Millions Year Ended December 31, 2021 $ 1,348 Reasons for the change Consumers electric utility and gas utility Electric sales $ (38) Gas sales 89 Electric rate increase 35 Gas rate increase 54 Lower non-operating retirement benefits expenses 40 Lower income tax expense 16 Voluntary revenue refunds, including one-time bill credit commitment 1 (37) Higher interest charges (24) Higher property taxes, reflecting higher capital spending (23) Higher depreciation and amortization (11) Higher other maintenance and operating expenses (7) Other (16) $ 78 NorthStar Clean Energy 11 Corporate interest and other (12) Discontinued operations (598) Year Ended December 31, 2022 $ 827 1 See Note 2, Regulatory Matters. 60 Table of Contents Consumers Electric Utility Results of Operations Presented in the following table are the detailed changes to the electric utility’s net income available to common stockholders for 2022 versus 2021: In Millions Year Ended December 31, 2021 $ 565 Reasons for the change Electric deliveries 1 and rate increases Rate increase, including return on higher renewable capital spending $ 35 Higher energy waste reduction program revenues 27 Voluntary revenue refunds, including one-time bill credit commitment 2 (29) Lower revenue due primarily to weather and sales mix (15) Lower other revenues (23) $ (5) Maintenance and other operating expenses Lower service restoration costs 55 Absence of 2021 fleet write-down and other asset impairments 2 34 Higher energy waste reduction program costs (27) Higher vegetation management costs (15) Higher distribution, transmission, and generation expenses (13) Higher uncollectible accounts expense (6) Higher demand response costs (7) Voluntary separation plan expenses (7) Voluntary assistance to vulnerable customers 2 (5) Higher other maintenance and operating expenses (19) (10) Depreciation and amortization Lower depreciation rates, offset partially by higher capital spending 15 General taxes Higher property taxes, reflecting higher capital spending, and other (13) Other income, net of expenses Lower non-operating retirement benefits expenses 26 Lower other income, net of expenses (7) 19 Interest charges (12) Income taxes 8 Year Ended December 31, 2022 $ 567 1 Deliveries to end-use customers were 37.3 billion kWh in 2022 and 36.2 billion kWh in 2021. 2 See Note 2, Regulatory Matters. 61 Table of Contents Consumers Gas Utility Results of Operations Presented in the following table are the detailed changes to the gas utility’s net income available to common stockholders for 2022 versus 2021: In Millions Year Ended December 31, 2021 $ 302 Reasons for the change Gas deliveries 1 and rate increases Favorable weather and sales mix $ 92 Rate increase 54 Higher energy waste reduction program revenues 17 Voluntary revenue refund 2 (8) Lower other revenues (3) $ 152 Maintenance and other operating expenses Absence of 2021 fleet write-down and other asset impairments 2 11 Higher energy waste reduction program costs (17) Higher uncollectible accounts expense (12) Ray Compressor Station impairment 3 (10) Voluntary assistance to vulnerable customers 2 (5) Voluntary separation plan expenses (4) Higher distribution, transmission, and compression expenses, and other (3) (40) Depreciation and amortization Increased plant in service, reflecting higher capital spending (26) General taxes Higher property taxes, reflecting higher capital spending (14) Other income, net of expenses Lower non-operating retirement benefits expenses 14 Lower other income, net of expenses (6) 8 Interest charges (12) Income taxes Lower income tax expense due primarily to accelerated amortization of excess deferred income taxes and tax benefits associated with cost of removal 4 25 Higher gas utility pre-tax earnings (17) 8 Year Ended December 31, 2022 $ 378 1 Deliveries to end-use customers were 315 bcf in 2022 and 282 bcf in 2021. 2 See Note 2, Regulatory Matters. 3 See Note 3, Contingencies and Commitments. 4 See Note 12, Income Taxes. 62 Table of Contents NorthStar Clean Energy Results of Operations Presented in the following table are the detailed changes to NorthStar Clean Energy’s net income available to common stockholders for 2022 versus 2021: In Millions Year Ended December 31, 2021 $ 23 Reason for the change Higher earnings from renewable wind projects $ 10 Higher earnings at DIG, offset partially by lower earnings from equity method investees 6 Higher income taxes, due primarily to higher earnings (5) Year Ended December 31, 2022 $ 34 Corporate Interest and Other Results of Operations Presented in the following table are the detailed changes to corporate interest and other results for 2022 versus 2021: In Millions Year Ended December 31, 2021 $ (144) Reasons for the change Absence of 2021 reduction in state tax liabilities $ (7) Higher preferred stock dividends (5) Lower income tax benefit (2) Other 2 Year Ended December 31, 2022 $ (156) Results of Discontinued Operations In October 2021, EnerBank was acquired by Regions Bank.
Biggest changePresented in the following table is a summary of changes to net income available to common stockholders for 2023 versus 2022: In Millions Year Ended December 31, 2022 $ 827 Reasons for the change Consumers electric utility and gas utility Electric sales $ (103) Gas sales (130) Electric rate increase 165 Gas rate increase 151 Lower other maintenance and operating expenses 108 Absence of 2022 voluntary revenue refunds, including one-time bill credit commitment 1 37 Higher other income, net of expenses 21 Higher interest charges (112) Higher service restoration costs (75) Higher depreciation and amortization (48) Higher property taxes, reflecting higher capital spending, and other (37) 2023 voluntary separation program expenses (33) Higher income tax expense (24) $ (80) NorthStar Clean Energy 33 Corporate interest and other 97 Year Ended December 31, 2023 $ 877 1 See Note 2, Regulatory Matters. 65 Table of Contents Consumers Electric Utility Results of Operations Presented in the following table are the detailed changes to the electric utility’s net income available to common stockholders for 2023 versus 2022: In Millions Year Ended December 31, 2022 $ 567 Reasons for the change Electric deliveries 1 and rate increases Rate increase, including return on higher renewable capital spending $ 165 Absence of 2022 voluntary revenue refunds, including one-time bill credit commitment 2 29 Lower revenue due primarily to unfavorable weather and sales mix (101) Lower other revenues (3) $ 90 Maintenance and other operating expenses Lower corporate and general operating expenses 37 Lower distribution and generation expenses 35 Higher service restoration costs due primarily to increased storm activity (75) 2023 voluntary separation program expenses (20) Lower mutual insurance distribution (9) Higher vegetation management costs (7) Higher other maintenance and operating expenses (7) (46) Depreciation and amortization Increased plant in service, reflecting higher capital spending (40) General taxes Higher property taxes, reflecting higher capital spending, and other (20) Other income, net of expenses Higher interest income 18 Higher non-operating retirement benefits expenses (9) Higher other income, net of expenses 15 24 Interest charges (67) Income taxes Lower electric utility pre-tax earnings 16 Deferred tax liability reversal 3 10 Lower income tax expense due to excess deferred income taxes 8 Lower other income taxes 8 42 Year Ended December 31, 2023 $ 550 1 Deliveries to end-use customers were 36.3 billion kWh in 2023 and 37.3 billion kWh in 2022. 2 See Note 2, Regulatory Matters. 3 See Note 12, Income Taxes. 66 Table of Contents Consumers Gas Utility Results of Operations Presented in the following table are the detailed changes to the gas utility’s net income available to common stockholders for 2023 versus 2022: In Millions Year Ended December 31, 2022 $ 378 Reasons for the change Gas deliveries 1 and rate increases Rate increase $ 151 Absence of 2022 voluntary revenue refund 2 8 Lower revenue due primarily to unfavorable weather (134) Higher other revenues 9 $ 34 Maintenance and other operating expenses Lower distribution, transmission, and compression expenses 26 Lower corporate and general operating expenses 14 Absence of 2022 Ray Compressor Station impairment 10 2023 voluntary separation program expenses (13) Lower other maintenance and operating expenses 5 42 Depreciation and amortization Increased plant in service, reflecting higher capital spending (8) General taxes Higher property taxes, reflecting higher capital spending, and other (17) Other income, net of expenses Higher non-operating retirement benefits expenses (15) Higher other income, net of expenses 12 (3) Interest charges (45) Income taxes Absence of 2022 accelerated tax amortizations 3 (71) Deferred tax liability reversal 3 4 Lower other income taxes 1 (66) Year Ended December 31, 2023 $ 315 1 Deliveries to end-use customers were 282 bcf in 2023 and 315 bcf in 2022. 2 See Note 2, Regulatory Matters. 3 See Note 12, Income Taxes. 67 Table of Contents NorthStar Clean Energy Results of Operations Presented in the following table are the detailed changes to NorthStar Clean Energy’s net income available to common stockholders for 2023 versus 2022: In Millions Year Ended December 31, 2022 $ 34 Reason for the change Higher earnings from renewable projects due primarily to Newport Solar achieving commercial operations 1 $ 46 Higher renewable energy tax credits 7 Other income tax expense (10) Lower operating earnings, primarily at DIG (10) Year Ended December 31, 2023 $ 67 1 See Note 18, Variable Interest Entities.
Consumers is unable to predict these events or their financial impact; however, Consumers evaluates the potential physical impacts of climate change on its operations, including increased frequency or intensity of storm activity; increased precipitation; increased temperature; and changes in lake and river levels. Consumers released a report addressing the physical risks of climate change on its infrastructure in February 2022.
Consumers is unable to predict these events or their financial impact; however, Consumers evaluates the potential physical impacts of climate change on its operations, including increased frequency or intensity of storm activity; increased precipitation; increased temperature; and changes in lake and river levels. Consumers released a report addressing the physical risks of climate change on its infrastructure in 2022.
Consumers may be required to: • replace equipment • install additional emission control equipment • purchase emission allowances or credits (including potential greenhouse gas offset credits) • curtail operations • arrange for alternative sources of supply • purchase facilities that generate fewer emissions • mothball or retire facilities that generate certain emissions • pursue energy efficiency or demand response measures more swiftly • take other steps to manage or lower the emission of greenhouse gases Although associated capital or operating costs relating to greenhouse gas regulation or legislation could be material and cost recovery cannot be assured, Consumers expects to recover these costs in rates consistent with the recovery of other reasonable costs of complying with environmental laws and regulations.
Consumers may be required to: • replace equipment • install additional emission control equipment • purchase emission allowances or credits (including potential greenhouse gas offset credits) • curtail operations • arrange for alternative sources of supply • purchase or build facilities that generate fewer emissions • mothball, sell, or retire facilities that generate certain emissions • pursue energy efficiency or demand response measures more swiftly • take other steps to manage or lower the emission of greenhouse gases Although associated capital or operating costs relating to greenhouse gas regulation or legislation could be material and cost recovery cannot be assured, Consumers expects to recover these costs in rates consistent with the recovery of other reasonable costs of complying with environmental laws and regulations.
Under Consumers’ renewable energy plan, the MPSC has approved the acquisition of up to 525 MW of new wind generation projects and authorized Consumers to earn a 10.7 ‑ percent return on equity on any projects approved by the MPSC.
The MPSC has approved the acquisition of up to 525 MW of new wind generation projects and authorized Consumers to earn a 10.7 ‑ percent return on equity on any projects approved by the MPSC under Consumers’ amended renewable energy plan.
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, less-costly dispatchable generation sources, and energy waste reduction and demand response programs • targeted infrastructure investment to reduce maintenance costs and improve reliability and safety • supply chain optimization • economic development to increase sales and reduce overall rates • information and control system efficiencies • employee and retiree health care cost sharing • workforce productivity enhancements While CMS Energy and Consumers have experienced some supply chain disruptions and inflationary pressures, they have taken steps to mitigate the impact on their ability to provide safe and reliable service to customers.
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, less-costly dispatchable generation sources, and energy waste reduction and demand response programs • targeted infrastructure investment to reduce maintenance costs and improve reliability and safety • supply chain optimization • economic development to increase sales and reduce overall rates • information and control system efficiencies • employee and retiree health care cost sharing • tax planning • cost-effective financing • workforce productivity enhancements While CMS Energy and Consumers have experienced some supply chain disruptions and inflationary pressures, they have taken steps to mitigate the impact on their ability to provide safe and reliable service to customers.
Statutes like the federal Endangered Species Act, the Migratory Bird Treaty Act, and the Bald and Golden Eagle Protection Act may impact operations at Consumers’ facilities. In 2021, the U.S. Fish and Wildlife Service announced its intent to regulate incidental take under the Migratory Bird Treaty Act.
Statutes like the federal Endangered Species Act, the Migratory Bird Treaty Act, and the Bald and Golden Eagle Protection Act of 1940 may impact operations at Consumers’ facilities. In 2021, the U.S. Fish and Wildlife Service announced its intent to regulate incidental take under the Migratory Bird Treaty Act.
NorthStar Clean Energy Outlook and Uncertainties CMS Energy’s primary focus with respect to its NorthStar Clean Energy businesses is to maximize the value of generating assets, its share of which represents 1,478 MW of capacity, and to pursue opportunities for the development of renewable generation projects.
NorthStar Clean Energy Outlook and Uncertainties CMS Energy’s primary focus with respect to its NorthStar Clean Energy businesses is to maximize the value of generating assets, its share of which represents 1,658 MW of capacity, and to pursue opportunities for the development of renewable generation projects.
Consumers is taking steps to mitigate these risks as appropriate. While Consumers cannot predict the outcome of changes in U.S. policy or of other legislative, executive, or regulatory initiatives involving the potential regulation or reporting of greenhouse gases, it intends to move forward with its Clean Energy Plan, its present net-zero goals, and its emphasis on reliable and resilient supply.
Consumers is taking steps to mitigate these risks as appropriate. 80 Table of Contents While Consumers cannot predict the outcome of changes in U.S. policy or of other legislative, executive, or regulatory initiatives involving the potential regulation or reporting of greenhouse gases, it intends to move forward with its Clean Energy Plan, its present net-zero goals, and its emphasis on reliable and resilient supply.
Actual delivery levels will depend on: • weather fluctuations • use by power producers • availability and development of renewable energy sources • gas price changes • Michigan’s economic conditions, including population trends and housing activity • the price or demand of competing energy sources or fuels • energy efficiency and conservation impacts Gas Rate Matters: Rate matters are critical to Consumers’ gas utility business.
Actual delivery levels will depend on: • weather fluctuations • use by power producers • availability and development of renewable energy sources 82 Table of Contents • gas price changes • Michigan’s economic conditions, including population trends and housing activity • the price or demand of competing energy sources or fuels • energy efficiency and conservation impacts Gas Rate Matters: Rate matters are critical to Consumers’ gas utility business.
GCR Plan: Consumers submitted its 2023-2024 GCR plan to the MPSC in December 2022 and, in accordance with its proposed plan, expects to self-implement the 2023-2024 GCR charge beginning in April 2023. Gas Pipeline and Storage Integrity and Safety: The U.S.
GCR Plan: Consumers submitted its 2024 ‑ 2025 GCR plan to the MPSC in December 2023 and, in accordance with its proposed plan, expects to self-implement the 2024 ‑ 2025 GCR charge beginning in April 2024. Gas Pipeline and Storage Integrity and Safety: The U.S.
An additional source of liquidity is Consumers’ commercial paper program, which allows Consumers to issue, in one or more placements, up to $500 million in aggregate principal amount of commercial paper notes with 67 Table of Contents maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities.
An additional source of liquidity is Consumers’ commercial paper program, which allows Consumers to issue, in one or more placements, up to $500 million in aggregate principal amount of commercial paper notes with maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities.
In 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 75 Table of Contents carbon neutral by 2050. The executive order aims for a 28 ‑ percent reduction below 2005 levels of greenhouse gas emissions by 2025.
In 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.
For additional details regarding these and other legal matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments. Employee Separation Program: In April 2022, CMS Energy and Consumers announced a voluntary separation program for salaried non-union employees.
For additional details regarding these and other legal matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments. Employee Separation Program: In April 2023, CMS Energy and Consumers announced a voluntary separation program for non ‑ union employees.
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 likely be offset by purchasing and/or producing renewable natural gas.
Consumers plans to reduce methane emissions from its system by about 80 percent, from 2012 baseline levels, by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices. The remaining emissions will likely be offset by purchasing and/or producing renewable natural gas.
Consumers has already initiated work in these key areas, continuing to expand its energy waste reduction targets, launching a program allowing gas customers to purchase carbon offset credits on a voluntary basis, and announcing plans to begin development of a renewable natural gas facility that will capture methane from manure generated at a Michigan-based farm and convert it into renewable natural gas.
Consumers has already initiated work in these key areas, continuing to expand its energy waste reduction targets, launching a program allowing gas customers to purchase carbon offset credits on a voluntary basis, and announcing plans to begin development of renewable natural gas facilities that will capture methane from manure generated at Michigan-based farms and convert it into renewable natural gas.
Changes in business strategies or market conditions, as well as a requirement to apply different interpretations of the derivative accounting literature, could result in changes in accounting for a single contract or groups of contracts, 83 Table of Contents which could have a material impact on CMS Energy’s and Consumers’ financial statements.
Changes in business strategies or market conditions, as well as a requirement to apply different interpretations of the derivative accounting literature, could result in changes in accounting for a single contract or groups of contracts, which could have a material impact on CMS Energy’s and Consumers’ financial statements.
Under this net-zero goal, Consumers plans to eliminate the impact of carbon 69 Table of Contents emissions created by the electricity it generates or purchases for customers.
Under this net-zero goal, Consumers plans to eliminate the impact of carbon 74 Table of Contents emissions created by the electricity it generates or purchases for customers.
At this time, Consumers does not expect any adverse changes to its environmental strategy as a result of these events, as its plans exceed the nationally committed reduction. The commitment made by the U.S. is not binding without new Congressional legislation.
At this time, Consumers does not expect any adverse changes to its environmental strategy as a result of this event, as its plans exceed the nationally committed reduction. The commitment made by the U.S. is not binding without new Congressional legislation.
Consumers is required to submit RECs, which represent proof that the associated electricity was generated from a renewable energy resource, in an amount equal to at least 15 percent of Consumers’ electric sales volume each year.
Consumers is required to submit RECs, which represent proof that the associated electricity was generated from a renewable energy resource, in an amount equal to at least the required percentage of Consumers’ electric sales volume each year.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments—Guarantees. For additional details on letters of credit and CMS Energy’s forward sales contracts, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments—Guarantees. For additional details on letters of credit and CMS Energy’s forward sales contracts, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization—Issuance of Common Stock.
To date, Consumers has reduced methane emissions by more than 20 percent from a 2012 baseline. In March 2022, Consumers also announced a net-zero greenhouse gas emissions target for its entire natural gas system by 2050. This includes suppliers and customers, and has an interim goal of reducing customer emissions by 20 percent by 2030.
To date, Consumers has reduced methane emissions by more than 25 percent. In March 2022, Consumers also announced a net-zero greenhouse gas emissions target for its entire natural gas system by 2050. This includes suppliers and customers, and has an interim goal of reducing customer emissions by 20 percent by 2030.
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.
This outlook reflects the effects of energy waste reduction programs offset by modest growth in electric and gas demand. 60 Table of Contents 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.
Such regulation, if adopted, may involve requirements to reduce 79 Table of Contents methane emissions from Consumers’ gas utility operations and carbon dioxide emissions from customer use of natural gas. No such measures apply to Consumers at this time.
Such regulation, if adopted, may involve requirements to reduce methane emissions from Consumers’ gas utility operations and carbon dioxide emissions from customer use of natural gas. No such measures apply to Consumers at this time.
For additional details on CMS Energy’s and Consumers’ derivatives and how the fair values of derivatives are determined, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Fair Value Measurements.
For additional details on CMS Energy’s and Consumers’ derivatives and how the fair values of derivatives are 87 Table of Contents determined, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Fair Value Measurements.
This evaluation could result in: • a change in Consumers’ fuel mix • changes in the types of generating units Consumers may purchase or build in the future • changes in how certain units are operated • the retirement, mothballing, or repowering with an alternative fuel of some of Consumers’ generating units • changes in Consumers’ environmental compliance costs • the purchase or sale of allowances Greenhouse Gases: There have been numerous legislative and regulatory initiatives at the state, regional, national, and international levels that involve the potential regulation and reporting of greenhouse gases.
This evaluation could result in: • a change in Consumers’ fuel mix • changes in the types of generating units Consumers may purchase or build in the future • changes in how certain units are operated, including the installation of additional emission control equipment • the retirement, mothballing, or repowering with an alternative fuel of some of Consumers’ generating units • changes in Consumers’ environmental compliance costs • the purchase or sale of allowances Greenhouse Gases: There have been numerous legislative and regulatory initiatives at the state, regional, national, and international levels that involve the potential regulation and reporting of greenhouse gases.
Under this mechanism, if an alternative electric supplier does not demonstrate that it has procured its capacity requirements for the four-year forward period, its customers will pay a set charge to the utility for capacity that is not provided by the alternative electric supplier.
Under this mechanism, if an alternative 77 Table of Contents electric supplier does not demonstrate that it has procured its capacity requirements for the four ‑ year forward period, its customers will pay a set charge to the utility for capacity that is not provided by the alternative electric supplier.
Consumers began tracking mercury emissions in 2007; since that time, it has reduced such emissions by nearly 90 percent.
Consumers began tracking mercury emissions in 2007; since that time, it has reduced such emissions by nearly 93 percent.
CMS Energy’s and Consumers’ present level of cash and expected cash flows from operating activities, together with access to sources of liquidity, are anticipated to be sufficient to fund contractual obligations and other material cash requirements for 2023 and beyond. Capital Expenditures: Over the next five years, Consumers expects to make substantial capital investments.
CMS Energy’s and Consumers’ present level of cash and expected cash flows from operating activities, together with access to sources of liquidity, are anticipated to be sufficient to fund contractual obligations and other material cash requirements for 2024 and beyond. Capital Expenditures: Over the next five years, CMS Energy and Consumers expect to make substantial capital investments.
CMS Energy’s Environmental, Social, Governance and Sustainability Report, which is available to the public, describes CMS Energy’s and Consumers’ progress toward world class performance measured in the areas of people, planet, and profit.
CMS Energy’s Sustainability Report, which is available to the public, describes CMS Energy’s and Consumers’ progress toward world class performance measured in the areas of people, planet, and profit.
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. 55 Table of Contents Over the next five years, Consumers expects weather-normalized electric and gas deliveries to remain relatively stable compared to 2022.
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 relatively stable compared to 2023.
While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At December 31, 2022, there were $20 million of commercial paper notes outstanding under this program.
While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At December 31, 2023, there were $93 million commercial paper notes outstanding under this program.
During 2017, the MPSC issued orders finding that it has statutory authority to determine and implement a local clearing requirement, which requires all electric suppliers to demonstrate that a portion of the capacity procured to serve customers during peak demand times is located in the MISO footprint in Michigan’s Lower Peninsula.
During 2017, the MPSC issued orders finding that it has statutory authority to determine and implement a local clearing requirement, which requires all electric suppliers to demonstrate that a portion of the capacity used to serve customers is located in the MISO footprint in Michigan’s Lower Peninsula.
Karn coal-fueled generating units, totaling 515 MW of nameplate capacity, in 2023 • the retirement of the J.H. Campbell coal-fueled generating units, totaling 1,407 MW of nameplate capacity, in 2025 • the retirement of the D.E.
Karn coal-fueled generating units, totaling 515 MW of nameplate capacity; these units closed in June 2023 • the retirement of the J.H. Campbell coal-fueled generating units, totaling 1,407 MW of nameplate capacity, in 2025 • the retirement of the D.E.
Consumers may revise its forecast of capital expenditures periodically due to a number of factors, including environmental regulations, MPSC approval or disapproval, business opportunities, market volatility, economic trends, and the ability to access capital.
The companies may revise their forecast of capital expenditures periodically due to a number of factors, including environmental regulations, MPSC approval or disapproval, business opportunities, market volatility, economic trends, and the ability to access capital.
The gas infrastructure projects comprise $6.3 billion to sustain deliverability, enhance pipeline integrity and safety, and reduce methane emissions. Electric distribution and other projects comprise $6.1 billion to strengthen circuits and substations, replace poles, and interconnect clean energy resources. Consumers also expects to spend $3.1 billion on clean generation, which includes investments in wind, solar, and hydro electric generation resources.
Electric distribution and other projects comprise $7.3 billion primarily to strengthen circuits and substations, replace poles, and interconnect clean energy resources. The gas infrastructure projects comprise $6.3 billion to sustain deliverability, enhance pipeline integrity and safety, and reduce methane emissions. Consumers also expects to spend $3.4 billion on clean generation, which includes investments in wind, solar, and hydroelectric generation resources.
Trends, uncertainties, and other matters related to NorthStar Clean Energy that could have a material impact on CMS Energy’s consolidated income, cash flows, or financial position include: • investment in and financial benefits received from renewable energy and energy storage projects • changes in energy and capacity prices • severe weather events and climate change associated with increasing levels of greenhouse gases • changes in commodity prices on certain derivative contracts that do not qualify for hedge accounting and must be marked to market through earnings • changes in various environmental laws, regulations, principles, or practices, or in their interpretation • indemnity obligations assumed in connection with ownership interests in facilities that involve tax equity financing • representations, warranties, and indemnities provided by CMS Energy in connection with sales of assets • delays or difficulties in obtaining environmental permits for facilities located in areas associated with environmental justice concerns 81 Table of Contents In March 2022, the U.S.
Trends, uncertainties, and other matters related to NorthStar Clean Energy that could have a material impact on CMS Energy’s consolidated income, cash flows, or financial position include: • investment in and financial benefits received from renewable energy and energy storage projects • changes in energy and capacity prices • severe weather events and climate change associated with increasing levels of greenhouse gases • changes in commodity prices on certain derivative contracts that do not qualify for hedge accounting and must be marked to market through earnings • changes in various environmental laws, regulations, principles, or practices, or in their interpretation • indemnity obligations assumed in connection with ownership interests in facilities that involve tax equity financing • representations, warranties, and indemnities provided by CMS Energy in connection with sales of assets • delays or difficulties in obtaining environmental permits for facilities located in areas associated with environmental justice concerns For additional details regarding NorthStar Clean Energy’s uncertainties, see Item 8.
Presented in the following table are Consumers’ estimated capital expenditures, including lease commitments, for 2023 through 2027: In Billions 2023 2024 2025 2026 2027 Total Consumers Electric utility operations $ 2.5 $ 1.6 $ 1.9 $ 1.6 $ 1.6 $ 9.2 Gas utility operations 1.2 1.3 1.3 1.3 1.2 6.3 Total Consumers $ 3.7 $ 2.9 $ 3.2 $ 2.9 $ 2.8 $ 15.5 68 Table of Contents Other Material Cash Requirements : Presented in the following table are CMS Energy’s and Consumers’ material cash obligations from known contractual and other legal obligations: In Billions Payments Due December 31, 2022 Less Than One Year Total CMS Energy, including Consumers Long-term debt $ 1.1 $ 14.4 Interest payments on long-term debt 0.6 13.2 Purchase obligations 3.2 12.5 AROs — 2.7 Total obligations $ 4.9 $ 42.8 Consumers Long-term debt $ 1.0 $ 10.3 Interest payments on long-term debt 0.4 7.8 Purchase obligations 3.0 11.9 AROs — 2.6 Total obligations $ 4.4 $ 32.6 Purchase obligations arise from long-term contracts for the purchase of commodities and related services, plant purchase commitments, and construction and service agreements.
Presented in the following table are CMS Energy’s and Consumers’ estimated capital expenditures, including lease commitments, for 2024 through 2028: In Billions 2024 2025 2026 2027 2028 Total CMS Energy, including Consumers Consumers $ 3.3 $ 3.9 $ 3.3 $ 3.4 $ 3.1 $ 17.0 NorthStar Clean Energy, including subsidiaries 0.2 0.6 0.3 0.4 0.2 1.7 Total CMS Energy $ 3.5 $ 4.5 $ 3.6 $ 3.8 $ 3.3 $ 18.7 Consumers Electric utility operations $ 2.1 $ 2.6 $ 2.0 $ 2.1 $ 1.9 $ 10.7 Gas utility operations 1.2 1.3 1.3 1.3 1.2 6.3 Total Consumers $ 3.3 $ 3.9 $ 3.3 $ 3.4 $ 3.1 $ 17.0 73 Table of Contents Other Material Cash Requirements : Presented in the following table are CMS Energy’s and Consumers’ material cash obligations from known contractual and other legal obligations: In Billions Payments Due December 31, 2023 Less Than One Year Total CMS Energy, including Consumers Long-term debt $ 1.0 $ 15.6 Interest payments on long-term debt 0.7 13.9 Purchase obligations 2.4 10.7 AROs 0.1 2.7 Total obligations $ 4.2 $ 42.9 Consumers Long-term debt $ 0.7 $ 11.3 Interest payments on long-term debt 0.5 8.6 Purchase obligations 2.3 10.0 AROs 0.1 2.6 Total obligations $ 3.6 $ 32.5 Purchase obligations arise from long-term contracts for the purchase of commodities and related services, and construction and service agreements.
Consumers continually assesses whether future recovery of its regulatory assets is probable by considering communications and experience with its regulators and changes in the regulatory environment. If Consumers determined that recovery of a regulatory asset were not probable, Consumers would be required to write off the asset and immediately recognize the expense in earnings.
Consumers continually assesses whether future recovery of its regulatory assets is probable by considering communications and experience with its regulators and changes in the regulatory environment. If Consumers determined that recovery of a regulatory asset were not probable, Consumers would be required to write off the asset and immediately recognize the expense in earnings. For additional information, see Item 8.
Under the Paris Agreement, an international agreement addressing greenhouse gas emissions, the U.S. has committed to reduce greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. Under its 2021 IRP, Consumers plans to reduce carbon emissions from its electric business by 60 percent from 2005 levels in 2025.
Under the Paris Agreement, an international agreement addressing greenhouse gas emissions, the U.S. has committed to reduce greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. Under its Clean Energy Plan, Consumers plans to reduce carbon emissions from its electric business by 60 percent from 2005 levels in 2025.
Consumers’ Natural Gas Delivery Plan, a 10-year strategic investment plan to deliver safe, reliable, clean, and affordable natural gas to customers, outlines ways in which Consumers can make early progress toward these goals in a cost-effective manner, including energy waste reduction or energy efficiency, carbon offsets, and renewable natural gas supply.
Consumers’ Natural Gas Delivery Plan, a rolling ten ‑ year investment plan to deliver safe, reliable, clean, and affordable natural gas to customers, outlines ways in which Consumers can make early progress toward these goals in a cost-effective manner, including energy waste reduction, carbon offsets, and renewable natural gas supply.
New Accounting Standards There are no new accounting standards issued but not yet effective that are expected to have a material impact on CMS Energy’s or Consumers’ consolidated financial statements. 85 Table of Contents
New Accounting Standards There are no new accounting standards issued but not yet effective that are expected to have a material impact on CMS Energy’s or Consumers’ consolidated financial statements.
The MPSC also approved a surcharge for the recovery of $6 million of depreciation, property tax, and interest expense related to distribution investments made in 2021 that exceeded what was authorized in rates in accordance with the December 2020 electric rate order.
The MPSC also approved a surcharge for the recovery of $6 million of depreciation, property tax, and interest expense related to distribution investments made in 2021 that exceeded what was authorized in rates in accordance with the December 2020 electric rate order. The new rates became effective January 20, 2023.
Army Corps of Engineers have proposed changes to the scope of federal jurisdiction over bodies of water and to the frequency of dual jurisdiction in states with authority to regulate the same waters; Michigan is one such state.
In recent years, the EPA and the U.S. Army Corps of Engineers have proposed changes to the scope of federal jurisdiction over bodies of water and to the frequency of dual jurisdiction in states with authority to regulate the same waters; Michigan is one such state.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments. 2022 Gas Rate Case: In December 2022, Consumers filed an application with the MPSC seeking an annual rate increase of $212 million, based on a 10.25-percent authorized return on equity for the projected twelve-month period ending September 30, 2024.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments. 2023 Gas Rate Case: In December 2023, Consumers filed an application with the MPSC seeking an annual rate increase of $136 million based on a 10.25‑percent authorized return on equity for the projected 12‑month period ending September 30, 2025.
The 2021 IRP will allow Consumers to exceed its breakthrough goal of at least 50 ‑ percent combined renewable energy and energy waste reduction by 2030. Presented in the following illustration is Consumers’ 2021 capacity portfolio and its future capacity portfolio under its 2021 IRP.
The Clean Energy Plan will allow Consumers to exceed its breakthrough goal of at least 50 ‑ percent combined renewable energy and energy waste reduction by 2030. 58 Table of Contents Presented in the following illustration is Consumers’ 2021 capacity portfolio and its future capacity portfolio under its Clean Energy Plan.
Important regulatory events and developments not already discussed are summarized below. 2021 Gas Rate Case: In December 2021, Consumers filed an application with the MPSC seeking an annual rate increase of $278 million, based on a 10.5-percent authorized return on equity for the projected twelve-month period ending September 30, 2023.
Important regulatory events and developments not already discussed are summarized below. 2023 Gas Rate Case: In December 2023, Consumers filed an application with the MPSC seeking an annual rate increase of $136 million based on a 10.25‑percent authorized return on equity for the projected 12‑month period ending September 30, 2025.
Specifically, the MPSC has approved the following: • purchase and construction of a 150 ‑ MW wind generation project in Gratiot County, Michigan; the project became operational and Consumers took full ownership in 2020 • purchase of a 166 ‑ MW wind generation project in Hillsdale, Michigan; the project became operational and Consumers took full ownership in February 2021 • purchase of a wind generation project under development, with capacity of up to 201 MW, in Gratiot County, Michigan; Consumers expects to take full ownership and begin commercial operation of the project in 2023 The MPSC also approved the execution of a 20-year PPA under which Consumers will purchase 100 MW of renewable capacity, energy, and RECs from a 149 ‑ MW solar generating facility to be constructed in Calhoun County, Michigan; the facility is targeted to be operational in 2024.
Specifically, the MPSC has approved the following: • purchase and construction of a 150 ‑ MW wind generation project in Gratiot County, Michigan; the project became operational and Consumers took full ownership in 2020 • purchase of a 166 ‑ MW wind generation project in Hillsdale, Michigan; the project became operational and Consumers took full ownership in 2021 76 Table of Contents • purchase of a 201-MW wind generation project in Gratiot County, Michigan; the project became operational and Consumers took full ownership of the project in December 2023 The MPSC also approved the execution of a 20-year PPA under which Consumers will purchase 100 MW of renewable capacity, energy, and RECs from a 149 ‑ MW solar generating facility to be constructed in Calhoun County, Michigan; the facility is targeted to be operational in 2024.
A change in species listed under the Endangered Species Act may impact Consumers’ costs to mitigate its impact on protected species and habitats at certain existing facilities as well as siting choices for new facilities. 77 Table of Contents Other Matters: Other electric environmental matters could have a material impact on Consumers’ outlook.
A change in species listed under the Endangered Species Act may impact Consumers’ costs to mitigate its impact on protected species and habitats at certain existing facilities as well as siting choices for new facilities. Other Matters: Other electric environmental matters could have a material impact on Consumers’ outlook. For additional details on other electric environmental matters, see Item 8.
CMS Energy and Consumers were each in compliance with these covenants as of December 31, 2022, as presented in the following table: Limit Actual CMS Energy, parent only Debt to Capital 1 0.70 to 1.0 0.58 to 1.0 Consumers Debt to Capital 2 0.65 to 1.0 0.50 to 1.0 1 Applies to CMS Energy’s revolving credit agreement and letter of credit reimbursement agreement, and a term loan agreement of a subsidiary of NorthStar Clean Energy. 2 Applies to Consumers’ revolving credit agreements and term loan agreement.
CMS Energy and Consumers were each in compliance with these covenants as of December 31, 2023, as presented in the following table: Limit Actual CMS Energy, parent only Debt to Capital 1 0.70 to 1.0 0.58 to 1.0 Consumers Debt to Capital 2 0.65 to 1.0 0.49 to 1.0 1 Applies to CMS Energy’s revolving credit agreement and letter of credit reimbursement agreement. 2 Applies to Consumers’ revolving credit agreements.
CCRs: In 2015, the EPA published a rule regulating CCRs under RCRA. This rule adopts minimum standards for beneficially using and disposing of non‑hazardous CCRs and establishes technical requirements for CCR landfills and surface impoundments. The rule also sets out conditions under which some CCR units would be forced to cease receiving CCR wastewater and initiate closure.
CCRs: In 2015, the EPA published a rule regulating CCRs under RCRA. This rule adopts minimum standards for the disposal of non‑hazardous CCRs in CCR landfills and surface impoundments and criteria for the beneficial use of CCRs. The rule also sets out conditions under which some CCR units would be forced to cease receiving CCR wastewater and initiate closure.
CSAPR requires Michigan and many other states to improve air quality by reducing power plant emissions that, according to EPA modeling, contribute to ground-level ozone in other downwind states. Since its 2015 effective date, CSAPR has been revised several times.
CSAPR requires Michigan and many other states to improve air quality by reducing power plant emissions that, according to EPA modeling, contribute to ground-level ozone in other downwind states. Since its 2015 effective date, CSAPR has been revised several times. In June 2023, the EPA published the “Good Neighbor Plan,” a revision to CSAPR.
This proposed rule seeks to reduce interstate air pollution transport issues that EPA modeling suggests contribute to downwind states attaining or maintaining compliance with the NAAQS for ozone. While prior CSAPR regulations have primarily focused on electric generating units, the proposed rule includes other emission sources, including engines at natural gas compressor stations.
This regulation will reduce interstate air pollution transport issues that EPA modeling suggests contribute to downwind states attaining or maintaining compliance with the NAAQS for ozone. While prior CSAPR regulations focused only on electric generating units, this latest rule includes other emission sources, including some engines used at compressor stations.
Consumers’ other material cash requirements for 2023 comprise $3.0 billion of purchase obligations and $1.4 billion of principal and interest payments on long-term debt. Components of CMS Energy’s and Consumers’ cash management plan include controlling operating expenses and capital expenditures and evaluating market conditions for financing and refinancing opportunities.
Consumers’ 2024 contractual commitments comprise $2.3 billion of purchase obligations and $1.2 billion of principal and interest payments on long-term debt. Components of CMS Energy’s and Consumers’ cash management plan include controlling operating expenses and capital expenditures and evaluating market conditions for financing and refinancing opportunities.
Net-zero methane emissions from natural gas delivery system by 2030: Under its Methane Reduction Plan, 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 likely be offset by purchasing and/or producing renewable natural gas.
Net-zero methane emissions from natural gas delivery system by 2030: Under its Methane Reduction Plan, Consumers plans to reduce methane emissions from its system by about 80 percent, from 2012 baseline levels, by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices.
Karn oil and gas-fueled generating units, totaling 1,219 MW of nameplate capacity, in 2031, the units’ original retirement date The MPSC has authorized Consumers to issue securitization bonds to finance the recovery of and return on the D.E. Karn coal-fueled generating units.
Karn oil and gas-fueled generating units, totaling 1,219 MW of nameplate capacity, in 2031 The MPSC authorized Consumers to issue securitization bonds to finance the recovery of and return on the D.E. Karn coal-fueled generating units; Consumers issued these bonds in December 2023.
This rate-base growth, together with cost-control measures, should allow Consumers to maintain affordable customer prices. 56 Table of Contents Presented in the following illustration are planned capital expenditures of $15.5 billion that Consumers expects to make from 2023 through 2027: Of this amount, Consumers plans to spend $12.4 billion over the next five years to primarily 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.
This rate-base growth, together with cost-control measures, should allow Consumers to maintain affordable customer prices. 61 Table of Contents Presented in the following illustration are Consumers’ planned capital expenditures through 2028 of $17.0 billion: Of this amount, Consumers plans to spend $13.6 billion over the next five years primarily to maintain and upgrade its electric distribution systems and gas infrastructure in order to enhance safety and reliability, improve customer satisfaction, reduce energy waste on those systems, and facilitate its clean energy transformation.
Additionally, Consumers will continue to earn a return equal to its weighted-average cost of capital on payments made under new competitively bid PPAs approved by the MPSC. 70 Table of Contents As a result of requests for proposals, Consumers has entered into PPAs to purchase renewable capacity, energy, and RECs from solar generating facilities and build transfer agreements to purchase solar generating facilities.
Additionally, Consumers earns a return equal to its pre-tax weighted-average cost of capital on permanent capital structure on payments made under new competitively bid PPAs with non‑affiliated entities approved by the MPSC. 75 Table of Contents As a result of requests for proposals, Consumers has entered into PPAs to purchase renewable capacity, energy, and RECs from solar generating facilities and build transfer agreements to purchase solar generating facilities.
Additionally, to advance its environmental stewardship in Michigan and to minimize the impact of future regulations, Consumers announced the following targets in 2022: • to enhance, restore, or protect 6,500 acres of land by 2026; in 2022, Consumers enhanced, restored, or protected over 700 acres of land • to increase the rate of waste diverted from landfills (through waste reduction, recycling, and reuse) to 90 percent from a baseline of 88 percent; in 2022, Consumers’ rate of waste diverted from landfills was 92 percent CMS Energy and Consumers are monitoring numerous legislative, policy, and regulatory initiatives, including those to regulate and report greenhouse gases, and related litigation.
Additionally, to advance its environmental stewardship in Michigan and to minimize the impact of future regulations, Consumers set the following targets in 2022: • to enhance, restore, or protect 6,500 acres of land by 2026; through 2023, Consumers enhanced, restored, or protected more than 2,700 acres of land • to reduce water usage by 1.5 billion gallons by 2026; through 2023, Consumers reduced water usage by more than 1.4 billion gallons • to increase the rate of waste diverted from landfills (through waste reduction, recycling, and reuse) to 90 percent through 2023 from a baseline of 88 percent in 2021; during 2023, Consumers’ rate of waste diverted from landfills was 91 percent CMS Energy and Consumers are monitoring numerous legislative, policy, and regulatory initiatives, including those to regulate and report greenhouse gases, and related litigation.
The MPSC approved that settlement agreement in June 2022. Under its 2021 IRP, Consumers will eliminate the use of coal-fueled generation in 2025 and expects to meet 90 percent of its customers’ needs with clean energy sources by 2040. Specifically, the 2021 IRP provides for: • the retirement of the D.E.
Under this plan, Consumers will eliminate the use of coal-fueled generation in 2025 and expects to meet 90 percent of its customers’ needs with clean energy sources by 2040. Specifically, the Clean Energy Plan provides for: • the retirement of the D.E.
Under the 2021 IRP, Consumers will receive regulatory asset treatment to recover the remaining book value of the J.H. Campbell coal-fueled generating units, as well as a 9.0‑percent return on equity, commencing in 2025.
Additionally, the MPSC has authorized regulatory asset treatment for Consumers to recover the remaining book value of the J.H. Campbell coal-fueled generating units, as well as a 9.0‑percent return on equity, commencing in 2025.
Additionally, a final 2022 rulemaking changed the definition of “Waters of the United States.” Consumers does not expect adverse changes to its environmental strategy as a result of the current interpretations. Many of Consumers’ facilities maintain NPDES permits, which are vital to the facilities’ operations. Consumers applies for renewal of these permits every five years.
Supreme Court issued a decision reducing the scope of “Waters of the United States.” Consumers does not expect adverse changes to its environmental strategy as a result of the current interpretations and court decision. Many of Consumers’ facilities maintain NPDES permits, which are vital to the facilities’ operations. Consumers applies for renewal of these permits every five years.
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. In 2022, CMS Energy’s net income available to common stockholders was $827 million, and diluted EPS were $2.85.
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 attract and retain talent, and to reinvest in the communities they serve. In 2023, CMS Energy’s net income available to common stockholders was $877 million, and diluted EPS were $3.01.
None of Consumers’ fossil-fuel-fired generating units are located in these areas. Additionally, in January 2023, the EPA proposed lowering the NAAQS for particulate matter. Consumers will continue to monitor NAAQS rulemakings and evaluate potential impacts to its generating assets.
As of May 2023, three counties in western Michigan have been designated as not meeting the ozone standard. None of Consumers’ fossil-fuel-fired generating units are located in these areas. Additionally, in January 2023, the EPA proposed lowering the NAAQS for particulate matter. Consumers will continue to monitor NAAQS rulemakings and evaluate potential impacts to its generating assets.
Failure of EGLE to renew any NPDES permit, a successful appeal against a permit, a change in the interpretation or scope of NPDES permitting, or onerous terms contained in a permit could have a significant detrimental effect on the operations of a facility.
NorthStar Clean Energy applies for renewal of these permits every five years. Failure of EGLE to renew any NPDES permit, a successful appeal against a permit, a change in the interpretation or scope of NPDES permitting, or onerous terms contained in a permit could have a significant detrimental effect on the operations of a facility.
Consumers continues to monitor and comment on these initiatives, as appropriate. In June 2022, the EPA announced its plan to propose a new rule to address greenhouse gas emissions from existing fossil-fuel-fired electric generating units. Under its 2021 IRP, Consumers will eliminate the use of coal-fueled generation in 2025.
Consumers continues to monitor and comment on these initiatives, as appropriate. In May 2023, the EPA released its proposed rule to address greenhouse gas emissions from existing fossil-fuel-fired electric generating units. Under its Clean Energy Plan, Consumers will eliminate the use of coal-fueled generation in 2025.
The 2021 IRP outlines Consumers’ 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 planned • purchase an existing natural gas-fueled generating unit, providing an additional 1,176 MW of nameplate capacity and allowing Consumers to continue providing controllable sources of electricity to customers • solicit approximately 700 MW of capacity through PPAs from sources able to deliver to Michigan’s Lower Peninsula beginning in 2025 • expand its investment in renewable energy, adding nearly 8,000 MW of solar generation by 2040 Under the 2021 IRP, Consumers will continue to earn a return equal to its weighted-average cost of capital on payments made under new competitively bid PPAs approved by the MPSC.
The Clean Energy Plan outlines Consumers’ 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 planned • purchase the Covert Generating Station, a natural gas-fueled generating facility with 1,200 MW of nameplate capacity, allowing Consumers to continue to provide controllable sources of electricity to customers; this purchase was completed in May 2023 • solicit up to 700 MW of capacity through PPAs from sources able to deliver to Michigan’s Lower Peninsula beginning in 2025 • expand its investment in renewable energy, adding nearly 8,000 MW of solar generation by 2040 Under the Clean Energy Plan, Consumers earns a return equal to its pre-tax weighted-average cost of capital on permanent capital structure on payments made under new competitively bid PPAs with non‑affiliated entities approved by the MPSC.
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 over seven percent.
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.
Additionally, through its Clean Energy Plan, Consumers continues to make progress on expanding its customer programs, namely its demand response, energy efficiency, and conservation voltage reduction programs, as well as increasing its renewable energy and pumped storage generation. The Clean Energy Plan was originally outlined in Consumers’ 2018 IRP, which was approved by the MPSC in 2019.
Additionally, through its Clean Energy Plan, Consumers continues to make progress on expanding its customer programs, namely its demand response, energy efficiency, and conservation voltage reduction programs, as well as increasing its renewable energy generation. The Clean Energy Plan was most recently revised and approved by the MPSC in June 2022.
Material Cash Requirements: Based on the present investment plan, during 2023, Consumers projects capital expenditures of $3.7 billion. Additionally, CMS Energy’s other material cash requirements for 2023 include $3.2 billion of purchase obligations and $1.7 billion of principal and interest payments on long-term debt.
Material Cash Requirements: Based on the present investment plan, during 2024, CMS Energy, including Consumers, projects capital expenditures of $3.5 billion and Consumers projects capital expenditures of $3.3 billion. CMS Energy’s 2024 contractual commitments comprise $2.4 billion of purchase obligations and $1.7 billion of principal and interest payments on long-term debt.
Under its 2021 IRP, Consumers will continue to bid new capacity competitively and will own and operate approximately 50 percent of new capacity, with the remainder being built and owned by third parties.
Under its Clean Energy Plan, Consumers bids new capacity competitively and expects to own and operate approximately 50 percent of new capacity, with the remainder being built and owned by third parties.
The rules seek to reduce alleged harmful impacts on aquatic organisms, such as fish. In 2018, Consumers submitted to EGLE for approval all required studies and recommended plans to comply with Section 316(b), but has not yet received final approval. The EPA also regulates the discharge of wastewater through its effluent limitation guidelines for steam electric generating plants.
The rules seek to reduce alleged harmful impacts on aquatic organisms, such as fish. In 2018, Consumers submitted to EGLE for approval all required studies and recommended plans to comply with Section 316(b) for its coal-fueled units, but has not yet received final approval.
In 2020, the EPA revised previous guidelines related to the discharge of certain wastewater, but allowed for extension of the compliance deadline from the end of 2023 to the end of 2025, upon approval by EGLE through the NPDES permitting process. Consumers received such an extension to 2025 for its J.H.
The EPA also regulates the discharge of wastewater through its effluent limitation guidelines for steam electric generating plants. In 2020, the EPA revised previous guidelines related to the discharge of certain wastewater, but allowed for extension of the compliance deadline from the end of 2023 to the end of 2025, upon approval by EGLE through the NPDES permitting process.
If a contract is a derivative and does not qualify for the normal purchases and sales exception, it is recorded on the consolidated balance sheets at its fair value.
If a contract is a derivative and does not qualify for the normal purchases and sales exception, it is recorded on the consolidated balance sheets at its fair value. For the FTRs at Consumers, changes in fair value are deferred as regulatory assets or liabilities.
The CE Way is an important means of realizing CMS Energy’s and Consumers’ purpose of achieving world class performance while delivering hometown service. 58 Table of Contents Results of Operations CMS Energy Consolidated Results of Operations In Millions, Except Per Share Amounts Years Ended December 31 2022 2021 Change Net Income Available to Common Stockholders $ 827 $ 1,348 $ (521) Basic Earnings Per Average Common Share $ 2.85 $ 4.66 $ (1.81) Diluted Earnings Per Average Common Share $ 2.85 $ 4.66 $ (1.81) In Millions Years Ended December 31 2022 2021 Change Electric utility $ 567 $ 565 $ 2 Gas utility 378 302 76 NorthStar Clean Energy 34 23 11 Corporate interest and other (156) (144) (12) Discontinued operations 4 602 (598) Net Income Available to Common Stockholders $ 827 $ 1,348 $ (521) For a summary of net income available to common stockholders for 2021 versus 2020, as well as detailed changes by reportable segment, see Item 7.
The CE Way is an important means of realizing CMS Energy’s and Consumers’ purpose of achieving world class performance while delivering hometown service. 63 Table of Contents Results of Operations CMS Energy Consolidated Results of Operations In Millions, Except Per Share Amounts Years Ended December 31 2023 2022 Change Net Income Available to Common Stockholders $ 877 $ 827 $ 50 Basic Earnings Per Average Common Share $ 3.01 $ 2.85 $ 0.16 Diluted Earnings Per Average Common Share $ 3.01 $ 2.85 $ 0.16 In Millions Years Ended December 31 2023 2022 Change Electric utility $ 550 $ 567 $ (17) Gas utility 315 378 (63) NorthStar Clean Energy 67 34 33 Corporate interest and other (55) (152) 97 Net Income Available to Common Stockholders $ 877 $ 827 $ 50 For a summary of net income available to common stockholders for 2022 versus 2021, as well as detailed changes by reportable segment, see Item 7.
CMS Energy may settle the contracts at any time through their maturity dates, and presently intends to physically settle the contracts by delivering shares of its common stock. As of December 31, 2022, these contracts have an aggregate sales price of $439 million, maturing through February 2024. For more information on these forward sale contracts, see Item 8.
CMS Energy may settle the contracts at any time through their maturity dates, and presently intends to physically settle the contracts by delivering shares of its common stock. As of December 31, 2023, these contracts had an aggregate sales price of $265 million, maturing through December 2024.
Consumers continues to monitor these initiatives and comment as appropriate. Consumers cannot predict the impact of any potential future legislation or regulation on its gas utility. Consumers is making voluntary efforts to reduce its gas utility’s methane emissions. Under its Methane Reduction Plan, Consumers has set a goal of net-zero methane emissions from its natural gas delivery system by 2030.
Consumers continues to monitor these initiatives and comment as appropriate. Consumers cannot predict the impact of any potential future legislation or regulation on its gas utility. Consumers is making voluntary efforts to reduce its gas utility’s methane emissions.
Under its renewable energy plan, Consumers has met the 15 ‑ percent 71 Table of Contents requirement and expects to continue meeting the requirement going forward with a combination of newly generated RECs and previously generated RECs carried over from prior years.
Under its renewable energy plan, Consumers has met and expects to continue to meet its renewable energy requirement each year with a combination of newly generated RECs and previously generated RECs carried over from prior years.
For more information on Consumers’ recent financing activities, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization.
For additional details on Consumers’ dividend restrictions, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization—Dividend Restrictions.
The calculation of the liabilities and associated expenses requires the expertise of actuaries, and requires many assumptions, including: • life expectancies • discount rates • expected long-term rate of return on plan assets • rate of compensation increases • expected health care costs A change in these assumptions could change significantly CMS Energy’s and Consumers’ recorded liabilities and associated expenses. 84 Table of Contents Presented in the following table are estimates of credits and cash contributions through 2025 for the DB Pension Plans and OPEB Pl an.
The calculation of the liabilities and associated expenses requires the expertise of actuaries, and requires many assumptions, including: • life expectancies • discount rates • expected long-term rate of return on plan assets • rate of compensation increases • expected health care costs A change in these assumptions could change significantly CMS Energy’s and Consumers’ recorded liabilities and associated expenses.
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 NorthStar 50 Table of Contents Clean Energy, its non‑utility operations and investments. Consumers operates principally in two business segments: electric utility and gas utility.
CMS Energy operates principally in three business segments: electric utility; gas utility; and NorthStar Clean Energy, its non‑utility operations and investments. Consumers operates principally in two business 54 Table of Contents segments: electric utility and gas utility.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changePresented in the following table is a sensitivity analysis of interest-rate risk on CMS Energy’s and Consumers’ debt instruments (assuming an adverse change in market interest rates of ten percent): In Millions December 31 2022 2021 Fixed-rate financing—potential loss in fair value CMS Energy, including Consumers $ 711 $ 639 Consumers 482 402 The fair value losses in the above table could be realized only if CMS Energy and Consumers transferred all of their fixed-rate financing to other creditors.
Biggest changeCMS Energy and Consumers use a combination of these instruments, and may also enter into interest-rate swap agreements, in order to manage this risk and to achieve a reasonable cost of capital. 89 Table of Contents Presented in the following table is a sensitivity analysis of interest-rate risk on CMS Energy’s and Consumers’ debt instruments (assuming an adverse change in market interest rates of ten percent): In Millions December 31 2023 2022 Fixed-rate financing—potential loss in fair value CMS Energy, including Consumers $ 751 $ 711 Consumers 534 482 The fair value losses in the above table could be realized only if CMS Energy and Consumers transferred all of their fixed-rate financing to other creditors.
The annual earnings exposure related to variable-rate financing was immaterial for both CMS Energy and Consumers at December 31, 2022 and 2021, assuming an adverse change in market interest rates of ten percent. For additional details on financial instruments see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 6, Financial Instruments. 86 Table of Contents
The annual earnings exposure related to variable-rate financing was immaterial for both CMS Energy and Consumers at December 31, 2023 and 2022, assuming an adverse change in market interest rates of ten percent. For additional details on financial instruments see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 6, Financial Instruments 90 Table of Contents
Long-Term Debt: CMS Energy and Consumers are exposed to interest-rate risk resulting from issuing fixed-rate and variable-rate debt instruments. CMS Energy and Consumers use a combination of these instruments, and may also enter into interest-rate swap agreements, in order to manage this risk and to achieve a reasonable cost of capital.
Long-term Debt: CMS Energy and Consumers are exposed to interest-rate risk resulting from issuing fixed-rate and variable-rate debt instruments.

Other CMS 10-K year-over-year comparisons