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What changed in CMS ENERGY CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CMS ENERGY CORP's 2023 and 2024 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 2024 report.

+382 added−369 removedSource: 10-K (2025-02-11) vs 10-K (2024-02-08)

Top changes in CMS ENERGY CORP's 2024 10-K

382 paragraphs added · 369 removed · 295 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

78 edited+9 added−11 removed42 unchanged
Biggest changeCMS 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.
Biggest changeFor the year ended December 31, 2024, the companies attained scores of: ◦ 72 percent positive sentiment for engagement, up 11 percentage points from 2023 ◦ 65 percent positive sentiment for empowerment, up 17 percentage points from 2023 ◦ 73 percent positive sentiment for diversity, equity, and inclusion, up eight percentage points from 2023 CMS Energy and Consumers aim to continuously improve these scores every year. • Building Skill Sets at Scale: With an overarching goal of ensuring co-workers 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.
FERC also regulates the tariff rules and procedures administered by MISO and other independent system operators/regional transmission organizations, including wholesale electric markets and interconnection of new generating facilities to the transmission system.
FERC also regulates the tariff rules and procedures administered by MISO and other independent system operators/regional transmission organizations, including rules governing wholesale electric markets and interconnection of new generating facilities to the transmission system.
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.
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 2024: Firm city-gate and firm gas transportation contracts are those that define a fixed amount, price, and delivery time frame.
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.
Consumers addresses this competition in various ways, including: • aggressively controlling operating, maintenance, power supply, 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 $2.1 billion in 2024, $2.4 billion in 2023, and $2.7 billion in 2022.
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.
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, 2024, electric deliveries under the ROA program were at the ten‑percent limit.
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.
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 and non‑union employees.
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.
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 Veterans Advisory Panel, supporting former and active military personnel and assisting in recruiting and retaining veterans through career development • Genergy, 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 co-workers 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 35 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 11, 2025: Name, Age, Position(s) Period Garrick J.
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.
CMS Energy’s consolidated operating revenue was $7.5 billion in 2024 and 2023, and $8.6 billion in 2022. 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.
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.
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 $65 million at December 31, 2024.
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.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments. CMS Energy has recorded a $48 million liability for its subsidiaries’ obligations associated with Bay Harbor and Consumers has recorded a $60 million liability for its obligations at a number of former MGP sites. For additional information, see Item 1A. Risk Factors and Item 8.
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.
Presented in the following illustration is Consumers’ 2024 gas utility operating revenue of $2.1 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.
Similarly, Consumers is using an environmental justice screening tool provided by the State of Michigan in the planning of improvements to the electric distribution system, including prioritizing investments in more vulnerable communities. 32 Table of Contents A core tenet of environmental justice is inviting the input of the stakeholders in the local communities where CMS Energy and Consumers operate and invest.
Similarly, Consumers is using an environmental justice screening tool provided by the State of Michigan in the planning of improvements to the electric and gas distribution system, including prioritizing investments in more vulnerable communities. A core tenet of environmental justice is inviting the input of the stakeholders in the local communities where CMS Energy and Consumers operate and invest.
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.
For additional information on Consumers’ properties, see Business Segments—Consumers Electric Utility—Electric Utility Properties and Consumers Gas Utility—Gas Utility Properties. 17 Table of Contents In 2024, Consumers served 1.9 million electric customers and 1.8 million gas customers in Michigan’s Lower Peninsula.
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’ firm gas transportation contracts expire on various dates through 2028 with planned contract volumes providing 36 percent of Consumers’ total forecasted gas supply requirements for 2025. 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. 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.
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’ 2024 electric utility operating revenue of $5.1 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.
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.
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 $5.1 billion in 2024, $4.7 billion in 2023, and $5.4 billion in 2022.
Encompassing both its electric and gas businesses, Consumers has set a net-zero greenhouse gas emissions target by 2050. This goal incorporates greenhouse gas emissions from Consumers’ natural gas delivery system, including suppliers and customers, and has an interim goal of reducing customer emissions by 20 percent by 2030.
Encompassing both its electric and gas businesses, Consumers has set a net-zero greenhouse gas emissions target by 2050. This goal incorporates greenhouse gas emissions from Consumers’ natural gas delivery system, including suppliers and customers, and has an interim goal of reducing customer emissions by 25 percent by 2035.
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 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 2024 and 2023: Consumers’ 2024 summer peak demand was 8,030 MW, which included ROA demand of 603 MW.
Together, these updated plans will outline a path to meeting the requirements of the 2023 Energy Law by focusing on increasing the generation of renewable energy, deploying energy storage, helping customers use less energy, and offering demand response programs to reduce demand during critical peak times. 31 Table of Contents 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.
Together, these updated plans will serve as Consumers’ blueprint to meeting the requirements of the 2023 Energy Law by focusing on increasing the generation of renewable energy, deploying energy storage, helping customers use less energy, and offering demand response programs to reduce demand during critical peak times. 31 Table of Contents 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 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.
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 the MPSC in 2022.
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.
Consumers’ estimate of capital and cost of removal expenditures to comply with regulations relating to ash disposal is $237 million from 2025 through 2029. 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’ 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.
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 CMS Energy and Consumers Regulation. Consumers’ consolidated operating revenue was $7.2 billion in 2024 and 2023, and $8.2 billion in 2022.
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.
The needs of this market are driven by current electric demand and available generation, as well as projections of future electric demand and available generation. 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.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview and Outlook—Consumers Electric Utility Outlook and Uncertainties. 21 Table of Contents Presented in the following table are details about Consumers’ 2024 electric generation and supply mix: Name and Location (Michigan) Number of Units and Year Entered Service 2024 Generation Capacity (MW) 1 2024 Electric Supply (GWh) Coal steam generation J.H.
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.
McIntosh (age 49) 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, CAO, and Director 6/2024 – Present Vice President, Controller, and CAO 9/2021 – 6/2024 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.
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.
During 2024, 47 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 2024 and 2023: Gas Utility Properties: Consumers’ gas transmission, storage, and distribution system consists of: • 2,342 miles of transmission lines • 15 gas storage fields with a total storage capacity of 309 Bcf and a working gas volume of 154 Bcf • 28,368 miles of distribution mains • eight compressor stations with a total of 153,393 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.
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.
Hayes (age 50) 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 – 6/2024 EnerBank Chairman of the Board and Director 10/2018 – 10/2021 Tonya L.
On an annual basis, CMS Energy and Consumers set various safety goals tied to the OSHA recordable incident rate and high-risk injuries. The companies’ OSHA recordable incident rate was 1.48 in 2023 and 1.17 in 2022. The target recordable incident rate for 2024 is 0.96, which, if achieved, would place Consumers within the first quartile of its EEI peer group.
On an annual basis, CMS Energy and Consumers set various safety goals tied to the OSHA recordable incident rate and high-risk injuries. The companies’ OSHA recordable incident rate was 1.71 in 2024 and 1.48 in 2023. The target recordable incident rate for 2025 is 1.00, which, if achieved, would place Consumers within the first quartile of its EEI peer group.
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 the 2023-2024 winter season, Consumers’ peak demand was 5,594 MW, which included ROA demand of 410 MW. As required by MISO reserve margin requirements, Consumers owns or controls, through long-term PPAs, short-term capacity purchases, and auction capacity purchases, all of the capacity required to supply its projected firm peak load and necessary reserve margin for summer 2025.
Energy Legislation In November 2023, Michigan enacted the 2023 Energy Law, which among other things: • raises the renewable energy standard from the present 15-percent requirement to 50 percent by 2030 and 60 percent by 2035; renewable energy generated anywhere within MISO may be applied to meeting this standard, with certain limitations • sets a clean energy standard of 80 percent by 2035 and 100 percent by 2040; low- or zero-carbon emitting resources, such as nuclear generation and natural gas generation coupled with carbon capture, are considered clean energy sources under this standard • authorizes the MPSC to grant extensions of the clean energy or renewable energy standards deadlines if compliance is not practically feasible, would be excessively costly to customers, or would cause reliability issues • increases the energy waste reduction requirement for electric utilities to achieve annual reductions in customers’ electricity use from the present one-percent reduction requirement to 1.5 percent beginning in 2026; beyond this requirement, the law sets a goal of a two-percent reduction and requires that such goal be incorporated into in an electric utility’s integrated resource plan modeling scenarios • increases the energy waste reduction requirement for gas utilities to achieve annual reductions in customers’ gas use from the present 0.75-percent reduction requirement to 0.875 percent beginning in 2026 • enhances existing incentives for energy efficiency programs and returns earned on competitively bid PPAs • creates a new energy storage standard that requires electric utilities to file plans by 2029 to obtain new energy storage that will contribute to a Michigan target of 2,500 MW based on their pro rata share • expands the statutory cap on distributed generation resources to ten percent • expands the MPSC’s scope of considerations in integrated resource plans to include affordability, greenhouse gas emissions, environmental justice considerations, the effects on human health, and other environmental concerns • provides the MPSC siting authority over large renewable energy projects Consumers is required to file updates to its amended renewable energy plan before or in 2025 and its Clean Energy Plan before or in 2027.
Energy Legislation In November 2023, Michigan enacted the 2023 Energy Law, which among other things: • raised the renewable energy standard from the present 15 ‑ percent requirement to 50 percent by 2030 and 60 percent by 2035; renewable energy generated anywhere within MISO can be applied to meeting this standard, with certain limitations • set a clean energy standard of 80 percent by 2035 and 100 percent by 2040; low- or zero-carbon emitting resources, such as nuclear generation and natural gas generation coupled with carbon capture, are considered clean energy sources under this standard • authorized the MPSC to grant extensions of the clean energy or renewable energy standards deadlines if compliance is not practically feasible, would be excessively costly to customers, or would cause reliability issues • increased the energy waste reduction requirement for electric utilities to achieve annual reductions in customers’ electricity use from the present one‑percent reduction requirement to 1.5 percent beginning in 2026; beyond this requirement, the law set a goal of a two‑percent reduction and required that such goal be incorporated in an electric utility’s integrated resource plan modeling scenarios • increased the energy waste reduction requirement for gas utilities to achieve annual reductions in customers’ gas use from the present 0.75‑percent reduction requirement to 0.875 percent beginning in 2026 • enhanced existing incentives for energy efficiency programs and returns earned on new clean or renewable PPAs • created a new energy storage standard that requires electric utilities to file plans by 2029 to obtain new energy storage that will contribute to a Michigan target of 2,500 MW based on their pro rata share • expanded the statutory cap on distributed generation resources to ten percent • expanded the MPSC’s scope of considerations in integrated resource plans to include affordability, greenhouse gas emissions, environmental justice considerations, the effects on human health, and other environmental concerns • provided the MPSC siting authority over large renewable energy projects Consumers filed updates to its renewable energy plan in November 2024 and plans to file updates to its Clean Energy Plan in 2026.
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.
In 2024, Consumers’ electric deliveries were 37 billion kWh, which included ROA deliveries of four billion kWh, resulting in net bundled sales of 33 billion kWh. 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. Consumers’ electric utility operations are seasonal.
The UWUA represents Consumers’ operating, maintenance, construction, and customer contact center employees. The USW represents Zeeland plant employees. The UWUA and USW agreements expire in 2025. The safety of employees, customers, and the general public is a priority of CMS Energy and Consumers.
The UWUA represents Consumers’ operating, maintenance, construction, and customer contact center employees. The USW represents Zeeland plant employees. The UWUA and USW agreements expire in 2025. 33 Table of Contents The safety of co-workers, customers, and the general public is a priority of CMS Energy and Consumers.
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 list of directors and their biographies will be included in CMS Energy’s and Consumers’ definitive proxy statement for their 2025 Annual Meetings of Shareholders to be held May 2, 2025.
Presented in the following map are Consumers’ service territories: Electric service territory Gas service territory Combination electric and gas service territory • Electric generation and battery storage facilities CMS Energy and Consumers—The Triple Bottom Line For information regarding CMS Energy’s and Consumers’ purpose and impact on the “triple bottom line” of people, planet, and profit, see Item 7.
Presented in the following map are Consumers’ service territories: Electric service territory Gas service territory Combination electric and gas service territory CMS Energy and Consumers—The Triple Bottom Line For information regarding CMS Energy’s and Consumers’ purpose and impact on the “triple bottom line” of people, planet, and prosperity, see Item 7.
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
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.
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.
The following table presents the composition of CMS Energy’s and Consumers’ workforce: December 31, 2024 CMS Energy, including Consumers Consumers Percent female employees 26 % 26 % Percent racially or ethnically diverse employees 14 14 Percent employees with disabilities 5 5 Percent veteran employees 10 10 Co ‑ workers are also empowered to engage in business employee resource groups and events that encourage candid conversations around diversity, equity, and inclusion.
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.
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 2, 2025). 37 Table of Contents Available Information CMS Energy’s internet address is www.cmsenergy.com.
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.
Rochow (age 50) CMS Energy President, CEO, and Director 12/2020 – Present Executive Vice President 1/2020 – 12/2020 Consumers President, CEO, and Director 12/2020 – Present Executive Vice President 1/2020 – 12/2020 NorthStar Clean Energy Chairman of the Board, CEO, and Director 12/2020 – Present Rejji P.
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.
In 2024, deliveries of natural gas through Consumers’ pipeline and distribution network, including off-system transportation deliveries, totaled 362 Bcf, which included GCC deliveries of 27 Bcf. 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. Consumers’ gas utility operations are seasonal.
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.
In order to obtain the coal it needs, Consumers enters into physical coal supply contracts. At December 31, 2024, Consumers had future commitments to purchase coal during 2025 until the retirement of its last coal generating unit; payment obligations under these contracts totaled $24 million. Most of Consumers’ rail-supplied coal contracts have fixed prices, although some contain market-based pricing.
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.
Presented in the following table are the number of employees of CMS Energy and Consumers: December 31 2024 2023 2022 CMS Energy, including Consumers Full-time and part-time employees 8,324 8,356 9,073 Consumers Full-time and part-time employees 8,090 8,144 8,879 At December 31, 2024, unions represented 44 percent of CMS Energy’s employees and 46 percent of Consumers’ employees.
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.
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. 6 Represents purchases under long-term PPAs. 7 For information about Consumers’ long-term PPA related to the MCV Facility, see Item 8.
For further information on Consumers’ progress towards its net-zero methane emissions goal, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview. 27 Table of Contents Gas Utility Supply: In 2023, Consumers purchased 85 percent of the gas it delivered from U.S. suppliers.
For further information on Consumers’ progress towards its net-zero methane emissions goal, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview. 27 Table of Contents Gas Utility Supply: In 2024, Consumers purchased 85 percent of the gas it delivered to its full-service sales customers.
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.
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, 2024: Location Ownership Interest (%) Primary Fuel Type Gross Capacity (MW) 1 2024 Net Generation (GWh) Dearborn, Michigan 100 Natural gas 770 5,655 Jackson County, Arkansas 100 Solar 180 363 Gaylord, Michigan 100 Natural gas 134 20 Paulding County, Ohio 2 100 Wind 100 270 Comstock, Michigan 100 Natural gas 76 245 Delta Township, Michigan 2 100 Solar 24 40 Phillips, Wisconsin 3 100 Solar 3 4 Paulding County, Ohio 100 Solar and storage 3 — Coke County, Texas 51 Wind 525 1,786 Filer City, Michigan 50 Coal 73 230 New Bern, North Carolina 50 Wood waste 50 261 Flint, Michigan 50 Wood waste 40 96 Grayling, Michigan 50 Wood waste 38 164 Total 2,016 9,134 1 Represents the intended full-load sustained output of each plant.
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.
For wind and solar generation, the amount represents installed capacity during the summer months. 22 Table of Contents 2 Consumers plans to retire these generating units in 2025. 3 Represents Consumers’ share of the capacity of the J.H.
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.
During 2024, the pumped-storage facility consumed 1,721 GWh of electricity to pump water during off-peak hours for storage in order to generate 1,263 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 the net amount of generation offered to and purchased from the MISO energy market.
NorthStar Clean Energy’s operating revenue was $297 million in 2023, $445 million in 2022, and $308 million in 2021.
NorthStar Clean Energy’s operating revenue was $316 million in 2024, $297 million in 2023, and $445 million in 2022.
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.
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 • 4,646 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 • 81,924 miles of electric distribution overhead lines • 9,775 miles of underground distribution lines • 1,098 substations with an aggregate transformer capacity of 28 million kVA Consumers is interconnected to the interstate high-voltage electric transmission system owned by METC and operated by MISO.
At December 31, 2023, Consumers had 77 percent of its 2024 expected coal requirements under contract, as well as a 67 ‑ day supply of coal on hand.
At December 31, 2024, Consumers had 100 percent of its remaining 2025 expected coal requirements under contract, as well as a 20 ‑ day supply of coal on hand.
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.
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 32 Table of Contents Operations—Outlook, and Item 8.
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.
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.
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.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments—Contractual Commitments. 8 Represents the net amount of generation offered to and purchased 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 2024 2023 2022 Owned generation Gas 14,856 11,221 6,684 Coal 7,932 6,884 10,217 Renewable energy 2,521 1,993 2,217 Oil 96 2 4 Net pumped storage 1 (458) (349) (370) Total owned generation 24,947 19,751 18,752 Purchased power 2 Gas generation 9,662 7,244 7,182 Renewable energy generation 3,138 2,585 2,441 Coal generation 230 318 500 Nuclear generation 3 — — 2,692 Net interchange power 4 (2,715) 4,532 3,943 Total purchased and interchange power 10,315 14,679 16,758 Total supply 35,262 34,430 35,510 1 Represents Consumers’ share of net pumped-storage generation.
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.
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.
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.
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 Represents Consumers’ 51‑percent share of the capacity of Ludington. DTE Electric holds the remaining 49‑percent ownership interest. 5 Represents Consumers’ share of net pumped-storage generation.
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.
In 2024, CMS ERM marketed one Bcf of natural gas and 7,475 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 $247 million in 2024, $233 million in 2023, and $387 million in 2022.
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.
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. Consumers supplements its generation capability with purchases from the MISO energy market.
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.
CMS Energy and Consumers are committed to building an inclusive workplace that embraces the diverse makeup of the communities that they serve.
(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.
(age 46) CMS Energy Senior Vice President 12/2020 – Present Consumers Senior Vice President 12/2020 – Present Vice President 8/2017 – 12/2020 Scott B.
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.
Hofmeister (age 48) CMS Energy Senior Vice President 7/2017 – Present Consumers Senior Vice President 7/2017 – Present NorthStar Clean Energy Senior Vice President 9/2017 – 6/2024 36 Table of Contents Name, Age, Position(s) Period Shaun M.
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 co-workers’ experience and enable leaders to coach and develop co ‑ workers, source talent, and anticipate and adjust to changing skill sets in the business environment. 34 Table of Contents Diversity, Equity, and Inclusion As a part of their People Strategy, CMS Energy and Consumers employ a broad and holistic diversity, equity, and inclusion strategy focused on embracing differences.
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.
Johnson (age 46) CMS Energy Senior Vice President and General Counsel 5/2019 – Present Consumers Senior Vice President and General Counsel 5/2019 – Present NorthStar Clean Energy Senior Vice President, General Counsel, and Director 4/2019 – 6/2024 EnerBank Senior Vice President and General Counsel 8/2018 – 6/2020 LeeRoy Wells, Jr.
Karn 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.
Karn 3 & 4 – Essexville 2 Units, 1975-1977 1,200 96 Hydroelectric Ludington – Ludington 6 Units, 1973 1,112 4 (458) 5 Conventional hydro generation 35 Units, 1906-1949 75 366 1,187 (92) Gas combined cycle Covert Generating Station – Covert 3 Units, 2004 1,089 7,159 Jackson – Jackson 1 Unit, 2002 534 2,001 Zeeland – Zeeland 3 Units, 2002 520 3,963 2,143 13,123 Gas combustion turbines Zeeland (simple cycle) – Zeeland 2 Units, 2001 314 1,733 Wind generation Crescent Wind Farm – Hillsdale County 2021 150 369 Cross Winds ® Energy Park – Tuscola County 2014-2019 232 721 Gratiot Farms Wind Project – Gratiot County 2020 150 364 Heartland Farms Wind Project – Gratiot County 2023 200 432 Lake Winds ® Energy Park – Mason County 2012 101 262 833 2,148 Solar generation Solar Gardens – Allendale, Cadillac, and Kalamazoo 2016-2021 5 7 Battery storage capacity Batteries – Grand Rapids, Cadillac, Kalamazoo, and Standish 4 Units, 2021-2022 3 — Total owned generation 7,016 24,947 Purchased power 6 Coal generation – T.E.S.
Under Michigan’s integrated resource planning process, Consumers is required to file proposed updates to its Clean Energy Plan before or in 2027; these updates will outline a path to meeting the requirements of the 2023 Energy Law that was enacted in Michigan in November 2023.
Under Michigan’s integrated resource planning process, Consumers will file updates 20 Table of Contents to its Clean Energy Plan in 2026. Together with updates to its renewable energy plan that Consumers filed in November 2024, these updated plans will serve as Consumers’ blueprint to meeting the requirements of the 2023 Energy Law that was enacted in Michigan in November 2023.
Campbell coal-fueled generating units in 2025. In order to continue providing controllable sources of electricity to customers while expanding its investment in renewable energy, Consumers purchased the Covert Generating Station, a natural gas-fueled generating facility, in May 2023. For further information on Consumers’ progress towards its net-zero carbon emissions goal, see Item 7.
In order to continue providing controllable sources of electricity to customers while expanding its investment in renewable energy, Consumers purchased the Covert Generating Station, a natural gas-fueled generating facility with 1,200 MW of nameplate capacity, in May 2023.
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.
The operating revenue from independent power production was $69 million in 2024, $64 million in 2023, and $58 million in 2022. Energy Resource Management: CMS ERM purchases and sells energy commodities in support of NorthStar Clean Energy’s generating facilities with a focus on optimizing the independent power production portfolio.
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.
At December 31, 2024, 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. The payments for 2025 through 2047 are estimated to total $7.0 billion and, for each of the next five years, $0.7 billion annually.
Filer City 60 318 Gas generation – MCV Facility 9 1,240 6,029 Other gas generation 152 1,215 Wind generation 385 970 Solar generation 307 554 Other renewable generation 210 1,061 2,354 10,147 Net interchange power 10 — 4,532 Total purchased and interchange power 2,354 14,679 Total supply 9,260 34,430 Less distribution and transmission loss 1,699 Total net bundled sales 32,731 1 With the exception of wind and solar generation, the amount represents generation capacity during the summer months (planning year 2023 capacity as reported to MISO and limited by interconnection service limits).
Filer City 63 230 Gas generation – MCV Facility 7 1,240 8,440 Other gas generation 153 1,222 Wind generation 384 996 Solar generation 803 1,152 Other renewable generation 194 990 2,837 13,030 Net interchange power 8 — (2,715) Total purchased and interchange power 2,837 10,315 Total supply 9,853 35,262 Less distribution and transmission loss 2,065 Total net bundled sales 33,197 1 With the exception of wind and solar generation, the amount represents generation capacity during the summer months (planning year 2024 capacity as reported to MISO and limited by interconnection service limits).
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.
Berry (age 52) CMS Energy Senior Vice President 2/2022 – Present Consumers Senior Vice President 2/2022 – Present Vice President 11/2018 – 2/2022 Brandon J.
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.
Campbell 1 & 2 – West Olive 2 2 Units, 1962-1967 540 2,718 J.H. Campbell 3 – West Olive 2,3 1 Unit, 1980 791 5,214 1,331 7,932 Oil/Gas steam generation D.E.
Within the utility industry, there is strong competition for rare, high-demand talent, including those related to renewable energy generation, technology, and data analytics. In order to address this competition and to be able to meet their human capital needs, CMS Energy and Consumers provide compensation and benefits that are competitive with industry peers.
In order to address this competition and to be able to meet their human capital needs, CMS Energy and Consumers provide compensation and benefits that are competitive with industry peers. Furthermore, CMS Energy and Consumers have developed a comprehensive talent strategy, the People Strategy, to attract, develop, and retain highly skilled co-workers.
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.
During 2024, 42 percent of the electric energy Consumers provided to customers was generated by its natural gas‑fueled generating units, which burned 107 Bcf of natural gas and produced a combined total of 14,856 GWh of electricity.
During 2023, 33 percent of the energy Consumers provided to customers was generated by its natural gas‑fueled generating units, which burned 83 bcf of natural gas and produced a combined total of 11,221 GWh of electricity. 24 Table of Contents In order to obtain the gas it needs for electric generation fuel, Consumers’ electric utility purchases gas from the market near the time of consumption, at prices that allow it to compete in the electric wholesale market.
In order to obtain the gas it needs for electric generation fuel, Consumers’ electric utility purchases gas from the market near the time of consumption, at prices that allow it to compete in the electric wholesale market.
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.
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 7,883 GWh at December 31, 2024. 2 NorthStar Clean Energy has entered into an agreement to sell a noncontrolling interest in this plant in 2025. 3 NorthStar Clean Energy has entered into an agreement to sell this plant in 2025.
This is done through embedding standards for diversity, equity, and inclusion into all company processes and ensuring these standards are incorporated into all employee experiences. To measure their success, CMS Energy and Consumers utilize select questions in the annual engagement survey to create a diversity, equity, and inclusion index.
The strategy is aimed at integrating principles of equity and inclusion into every process and co ‑ worker experience. To measure their success, CMS Energy and Consumers utilize select questions in the annual engagement survey to create a diversity, equity, and inclusion index. For the year ended December 31, 2024, the diversity, equity, and inclusion index score was 73 percent.
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.
These amounts may vary depending 24 Table of Contents on plant availability and fuel costs. For further information about Consumers’ future capacity and energy purchase obligations, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources and Liquidity—Other Material Cash Requirements and Item 8.
Over the last ten years, Consumers’ OSHA recordable incident rate has decreased by 20 percent. High-risk injuries encompass all recordable and non-recordable incidents with the potential for serious injury or fatality. In 2023, the companies recorded ten high-risk injuries, achieving their goal of less than 20 high-risk injuries.
High-risk injuries encompass all recordable and non-recordable incidents with the potential for serious injury or fatality. In 2024, the companies recorded 11 high-risk injuries, achieving their goal of less than 13 high-risk injuries. Within the utility industry, there is strong competition for rare, high-demand talent, including those related to electric line work, renewable energy generation, technology, and data analytics.
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.
Under its Clean Energy Plan, Consumers will eliminate the use of coal in owned generation in 2025. Specifically, Consumers retired the D.E. Karn coal-fueled generating units in June 2023 and plans to retire the J.H. Campbell coal-fueled generating units in 2025.
Furthermore, CMS Energy and Consumers have developed a comprehensive talent strategy, the People Strategy, to attract, develop, and retain highly skilled employees. The strategy focuses on three areas, which are summarized below.
The strategy focuses on three areas, which are summarized below.
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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.
Added
Consumers has also contracted to purchase 400 MW of capacity from battery storage facilities, which will be located in Michigan’s Lower Peninsula and are expected to be operational by 2027.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeConsumers might not be able to obtain an adequate supply of natural gas or coal, which could limit its ability to operate its electric generation facilities or serve its natural gas customers. Consumers has natural gas and coal supply and transportation contracts in place for the natural gas and coal it requires for its electric generating capacity.
Biggest changeChanges in laws that limit CMS Energy’s and Consumers’ ability to hedge could also have a negative effect on CMS Energy and Consumers. CMS Energy and Consumers might not be able to obtain an adequate supply of natural gas or coal, which could limit their ability to operate electric generation facilities or serve Consumers’ natural gas customers.
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.
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 policy/regulation, regulators’ implementation of policy/regulation 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.
The agreements that CMS Energy and Consumers enter into for the sale of assets customarily include provisions whereby they are required to: • retain specified preexisting liabilities, such as for taxes, pensions, or environmental conditions • indemnify the buyers against specified risks, including the inaccuracy of representations and warranties that CMS Energy and Consumers make • make payments to the buyers depending on the outcome of post-closing adjustments, litigation, audits, or other reviews, including claims resulting from attempts by foreign or domestic governments to assess taxes on past operations or transactions Many of these contingent liabilities can remain open for extended periods of time after the sales are closed.
The agreements that CMS Energy and Consumers enter into for the sale of assets can include provisions whereby they are required to: • retain specified preexisting liabilities, such as for taxes, pensions, or environmental conditions • indemnify the buyers against specified risks, including the inaccuracy of representations and warranties that CMS Energy and Consumers make • make payments to the buyers depending on the outcome of post-closing adjustments, litigation, audits, or other reviews, including claims resulting from attempts by foreign or domestic governments to assess taxes on past operations or transactions Many of these contingent liabilities can remain open for extended periods of time after the sales are closed.
Unforeseen outages or maintenance of the electric and gas delivery systems, power plants, gas infrastructure including storage facilities and compression stations, wind energy or solar equipment, and energy products owned in whole or in part by CMS Energy or Consumers may be required for many reasons.
Unforeseen outages or maintenance of the electric and gas delivery systems, power plants, gas infrastructure including storage facilities and compression stations, wind energy or solar equipment, energy storage assets, and energy products owned in whole or in part by CMS Energy or Consumers may be required for many reasons.
CMS Energy and Consumers cannot predict the impact of new laws, rules, regulations, principles, or practices by federal or state agencies or wholesale electricity market operators, or challenges or changes to present laws, rules, regulations, principles, or practices and the interpretation of any adoption or change.
CMS Energy and Consumers cannot predict the impact of new laws, rules, regulations, tariffs, principles, or practices by federal or state agencies or wholesale electricity market operators, or challenges or changes to present laws, rules, regulations, tariffs, principles, or practices and the interpretation of any adoption or change.
The counterparties under the agreements could experience financial or operational problems that inhibit their ability to fulfill their obligations to Consumers. In addition, counterparties under these contracts might not be required to supply natural gas or coal to Consumers under certain circumstances, such as in the event of a natural disaster or severe weather.
The counterparties under the agreements could experience financial or operational problems that inhibit their ability to fulfill their obligations to CMS Energy or Consumers. In addition, counterparties under these contracts might not be required to supply natural gas or coal to CMS Energy or Consumers under certain circumstances, such as in the event of a natural disaster or severe weather.
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.
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 of electricity and natural gas through energy waste reduction programs.
Apart from the contractual and monetary remedies available to Consumers in the event of a counterparty’s failure to perform under any of these contracts, there can be no assurances that the counterparties to these contracts will fulfill their obligations to provide natural gas or coal to Consumers.
Apart from the contractual and monetary remedies available to CMS Energy and Consumers in the event of a counterparty’s failure to perform under any of these contracts, there can be no assurances that the counterparties to these contracts will fulfill their obligations to provide natural gas or coal to CMS Energy or Consumers.
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.
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.
Depending on the extent to which the buyers might ultimately seek to enforce their rights under these contractual provisions, and the resolution of any disputes concerning them, there could be a material adverse effect on CMS Energy’s or Consumers’ liquidity, financial condition, and results of operations. Consumers is exposed to risks related to general economic conditions in its service territories.
Depending on the extent to which the buyers might ultimately seek to enforce their rights under these contractual provisions, and the resolution of any disputes concerning them, there could be a material adverse effect on CMS Energy’s or Consumers’ liquidity, financial condition, and results of operations. 45 Table of Contents Consumers is exposed to risks related to general economic conditions in its service territories.
When unplanned outages occur, CMS Energy and Consumers will not only incur unexpected maintenance expenses, but may also have to make spot market purchases of electric and gas commodities that may exceed CMS Energy’s or Consumers’ expected cost of generation or gas supply, be forced to curtail services, or retire a given asset if the cost or timing of the maintenance is not reasonable and prudent.
When unplanned outages occur, CMS Energy and Consumers will not only 48 Table of Contents incur unexpected maintenance expenses, but may also have to make spot market purchases of electric and gas commodities that may exceed CMS Energy’s or Consumers’ expected cost of generation or gas supply, be forced to curtail services, or retire a given asset if the cost or timing of the maintenance is not reasonable and prudent.
Consumers’ ability to pay dividends or acquire its own stock from CMS Energy is limited by restrictions contained in Consumers’ preferred stock provisions and potentially by other legal restrictions, such as certain terms in its articles of incorporation and FERC requirements. CMS Energy has indebtedness that could limit its financial flexibility and its ability to meet its debt service obligations.
Consumers’ ability to pay dividends or acquire its own stock from CMS Energy is limited by restrictions contained in Consumers’ preferred stock provisions and potentially by other legal restrictions, such as certain terms in its articles of incorporation and FERC requirements. 38 Table of Contents CMS Energy has indebtedness that could limit its financial flexibility and its ability to meet its debt service obligations.
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.
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. Industry/Regulatory Risks Changes to ROA could have a material adverse effect on CMS Energy’s and Consumers’ businesses.
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.
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 • effective and timely contractor performance • changes in commodity and other prices, applicable tariffs, and/or material and equipment availability • governmental actions • interconnection uncertainty, delays, and costs for electric generation projects • 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.
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.
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, refund or disgorgement orders, or disallowed costs, or be required to implement additional compliance, cleanup, or remediation programs, the cost of which could be material.
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.
A work interruption or other union actions could adversely affect Consumers. At December 31, 2024, unions represent 46 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.
No assurance can be made that these strategies will be successful in managing CMS Energy’s and Consumers’ risk or that they will not result in net liabilities to CMS Energy or Consumers as a result of future volatility.
No assurance can be made that these strategies will be successful in managing 47 Table of Contents CMS Energy’s and Consumers’ risk or that they will not result in net liabilities to CMS Energy or Consumers as a result of future volatility.
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 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. CMS Energy and Consumers have financing needs and could be unable to obtain bank financing or access the capital markets.
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 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 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.
Consumers believes these costs should be recoverable in rates but cannot guarantee that outcome. Business/Operations Risks There are risks associated with Consumers’ substantial capital investment program planned for the next five years.
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 commercially available technologies required to reduce or eliminate greenhouse gases on a cost-effective basis at scale, such advances are largely outside of CMS Energy’s and Consumers’ control.
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.
Consumers’ planned investments include the construction or acquisition of electric generation, electric and gas infrastructure, conversions and expansions, environmental controls, electric grid automation technologies, and other electric and gas investments to upgrade delivery systems, as well as decommissioning of older facilities.
Failing to train replacement employees adequately and to transfer internal knowledge and expertise could adversely affect CMS Energy’s and Consumers’ ability to manage and operate their businesses. Item 1B. Unresolved Staff Comments None.
Failing to train replacement employees adequately and to transfer internal knowledge and expertise could adversely affect CMS Energy’s and Consumers’ ability to manage and operate their businesses. 49 Table of Contents Item 1B. Unresolved Staff Comments None.
Although CMS Energy and Consumers have insurance coverage for many potential incidents (subject to deductibles, limitations, and self-insurance amounts that could be material), depending upon the nature or severity of any incident, failure, or accident, CMS Energy or Consumers could suffer financial loss, reputational damage, and negative repercussions from regulatory agencies or other public authorities.
Although CMS Energy and Consumers have insurance coverage for many potential incidents (subject to deductibles, limitations, and self-insurance amounts that could be material), depending upon the nature or severity of any incident, failure, or accident, CMS Energy or Consumers could suffer financial loss, reputational damage, and negative repercussions from regulatory agencies or other public authorities, even where there is no legal liability.
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.
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.
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.
Disruptions in the capital and credit markets, or the inability to obtain required regulatory authorization for issuances of securities including debt, including as may be required from FERC, could adversely affect CMS Energy’s and Consumers’ access to liquidity needed for their businesses.
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.
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.
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.
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. 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, as governed by evolving wholesale market rules subject to FERC 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.
CMS Energy and Consumers could suffer negative impacts to their reputations as a result of operational incidents, accidents, actual or perceived violations of corporate policies or 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.
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.
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, could prevent or limit the implementation of an electric or gas revenue mechanism, or could penalize Consumers for not meeting service and reliability standards.
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.
Assets, equipment, and personnel of CMS Energy and Consumers, including electric and gas delivery systems, power plants, gas infrastructure including storage facilities, wind energy or solar equipment, energy products, energy storage assets, vehicle fleets and equipment, other assets, or employees and contractors, could be involved in incidents, failures, or accidents that result in injury, loss of life, or property loss and damage to customers, employees, or the public.
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.
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 and sites containing coal ash and related materials, under 44 Table of Contents NREPA, RCRA, CERCLA and related state and federal regulations.
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.
If the MPSC determined that any of these contracts or related contracting policies were imprudent, recovery of these costs could be disallowed. 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.
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.
Advancements in technology related to items such as battery storage, carbon capture/storage, and electric vehicles may not become commercially available or economically feasible as projected. Customer programs such as energy efficiency and demand response may not realize the projected levels of customer participation. Consumers has also announced its Reliability Roadmap.
In addition, regulatory action on PFAS at the state and/or federal level could cause CMS Energy and Consumers to further test and remediate some sites if PFAS is present at certain levels. Present and reasonably anticipated state and federal environmental statutes and regulations will continue to have a material effect on CMS Energy and Consumers.
In addition, regulatory action on PFAS at the state and/or federal level could cause CMS Energy and Consumers to further test and remediate some sites if PFAS is present at certain levels.
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.
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. To the extent that unhedged positions exist, fluctuating commodity prices could have a negative effect on CMS Energy and Consumers.
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 natural gas or the ability to deliver natural gas to customers. Advancements in technology related to items such as renewable natural gas may not become commercially available or economically feasible as projected in Consumers’ plan.
Consumers’ ability to implement its plan may be affected by environmental regulations, global supply chain disruptions, import tariffs, and changes in the cost, availability, and supply of natural gas or the ability to deliver natural gas to customers.
Certain of CMS Energy’s and Consumers’ securities and those of their affiliates are rated by various credit rating agencies.
The amounts involved may or may not be material. 39 Table of Contents Certain of CMS Energy’s and Consumers’ securities and those of their affiliates are rated by various credit rating agencies.
The judgments include determining reserves for potential adverse outcomes regarding tax positions that have been taken and may be subject to challenge by the IRS and/or other taxing authorities. Unfavorable settlements of any of the issues related to these reserves or other tax matters at CMS Energy or Consumers could have a material adverse effect.
The tax obligations include income taxes, real estate taxes, sales and use taxes, employment-related taxes, and ongoing issues related to these tax matters. The judgments include determining reserves for potential adverse outcomes regarding tax positions that have been taken and may be subject to challenge by the IRS and/or other taxing authorities.
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.
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.
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.
Consumers routinely enters into contracts for natural gas to mitigate exposure to the risks of demand, market effects of weather, and changes in commodity prices associated with the gas distribution business. 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.
Changes to the tariffs or business practice manuals of certain wholesale market operators such as MISO, PJM, or ERCOT could also have a material adverse effect on CMS Energy and Consumers. Utility regulation, state or federal legislation, and compliance could have a material adverse effect on CMS Energy’s and Consumers’ businesses.
Changes to the tariffs or business practice manuals of certain wholesale market operators such as MISO, PJM, or ERCOT, or corresponding impacts 41 Table of Contents such as interconnection delays for new electric generation or storage projects, could also have a material adverse effect on CMS Energy and Consumers.
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.
Cyber attacks, which include the use of malware, ransomware, computer viruses, and other means for disruption or 46 Table of Contents unauthorized access against companies, including CMS Energy and Consumers, are increasing in frequency, scope, and potential impact.
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.
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. 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.
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.
CMS Energy and Consumers’ ability to implement their plans may be affected by environmental regulations, global supply chain disruptions, import tariffs, and changes in the cost, availability, and supply of generation and storage capacity.
The contracts associated with Consumers’ fuel for electric generation and purchased power are executed in conjunction with the PSCR mechanism, which is designed to allow Consumers to recover prudently incurred costs associated with its positions in these commodities. If the MPSC determined that any of these contracts or related contracting policies were imprudent, recovery of these costs could be disallowed.
A substantial portion of Consumers’ operating expenses for its electric generating plants and vehicle fleet consists of the costs of obtaining commodities. The contracts associated with Consumers’ fuel for electric generation and purchased power are executed in conjunction with the PSCR mechanism, which is designed to allow Consumers to recover prudently incurred costs associated with its positions in these commodities.
CMS Energy and Consumers have interests in fossil-fuel-fired power plants, other types of power plants, and natural gas systems that emit greenhouse gases.
Present and reasonably anticipated state and federal environmental statutes and regulations will continue to have a material effect on CMS Energy and Consumers. 43 Table of Contents CMS Energy and Consumers have interests in fossil-fuel-fired power plants, other types of power plants, and natural gas systems that emit greenhouse gases.
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.
This plan includes accelerated infrastructure replacements, innovative leak detection technology, and process changes to reduce or eliminate methane emissions. The MPSC, FERC, U.S. Department of Transportation, 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.
Consumers also has interstate transportation and supply agreements in place to facilitate delivery of natural gas to its customers.
CMS Energy and Consumers have contracts in place for the supply and transportation of the natural gas, coal, and other fuel sources they require for their electric generating capacity. Consumers also has interstate transportation and supply agreements in place to facilitate delivery of natural gas to its customers.
CMS Energy and certain of its subsidiaries, including Consumers, are subject to, or affected by, extensive utility regulation and state and federal legislation.
Utility regulation, state or federal legislation, and compliance could have a material adverse effect on CMS Energy’s and Consumers’ businesses. CMS Energy and certain of its subsidiaries, including Consumers, are subject to, or affected by, extensive utility regulation and state and federal legislation, including through application of policies and rules of numerous state and federal agencies and governmental entities.
CMS Energy and Consumers are required to make judgments regarding the potential tax effects of various financial transactions and results of operations in order to estimate their obligations to taxing authorities. The tax obligations include income taxes, real estate taxes, sales and use taxes, employment-related taxes, and ongoing issues related to these tax matters.
Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact CMS Energy and Consumers. CMS Energy and Consumers are required to make judgments regarding the potential tax effects of various financial transactions and results of operations in order to estimate their obligations to taxing authorities.
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.
A variety of technological tools and systems, including both company-owned information technology and technological services provided by outside parties, support critical functions. 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.
Additionally, national gas pipeline infrastructure has recently been under scrutiny following disruptions related to extreme weather and cyber incidents. In 2021, the Transportation Security Administration issued two mandatory security directives related to natural gas pipelines that apply to Consumers. Additional regulation in this area could adversely affect Consumers’ gas operations.
Additionally, natural gas pipeline infrastructure has recently been under scrutiny following disruptions related to extreme weather and cyber incidents. Additional regulation in this area could adversely affect Consumers’ gas operations. CMS Energy and Consumers have announced ambitious plans to reduce their impact on climate change and increase the reliability of their electric distribution system.
In addition, CMS Energy and Consumers operate in a highly regulated industry that requires the continued operation of sophisticated information and control technology systems and network infrastructure. Despite implementation of security measures, technology systems, including disaster recovery and backup systems, are vulnerable to failure, cyber crime, unauthorized access, and being disabled.
In the regular course of business, CMS Energy and Consumers handle a range of sensitive confidential security and customer information. In addition, CMS Energy and Consumers operate in a highly regulated industry that requires the continued operation of sophisticated information and control technology systems and network infrastructure.
Consumers 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 MPSC, FERC, other regulatory authorities, or other third parties may prohibit, delay, or impair some or all of CMS Energy’s and Consumers’ planned acquisitions or development of owned or purchased electric generation and storage capacity.
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.
Consumers’ ability to implement its plan may be affected by global supply chain disruptions and/or workforce availability. 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.
CMS Energy and Consumers could suffer financial loss, reputational damage, litigation, or other negative repercussions if they are unable to achieve their ambitious plans. Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact CMS Energy and Consumers.
Advancements in technology related to items such as renewable natural gas may not become commercially available or economically feasible as projected in Consumers’ plan. CMS Energy and Consumers could suffer financial loss, reputational damage, litigation, or other negative repercussions if they are unable to achieve their ambitious plans.
Additionally, changes in federal, state, or local tax rates or other changes in tax laws could have adverse impacts. CMS Energy and its subsidiaries, including Consumers, must comply with the Dodd-Frank Act and its related regulations. The Dodd-Frank Act provides for regulation by the Commodity Futures Trading Commission of certain commodity-related contracts.
Unfavorable settlements of any of the issues related to these reserves or other tax matters at CMS Energy or Consumers could have a material adverse effect. Additionally, changes in federal, state, or local tax rates or other changes in tax laws could have adverse impacts.
CMS Energy and Consumers have announced ambitious plans to reduce their impact on climate change and increase the reliability of their electric distribution system. Achieving these plans depends on numerous factors, many of which are outside of their control.
Achieving these plans depends on numerous factors, many of which are outside of their control. Consumers has announced a long-term strategy for delivering clean, reliable, resilient, and affordable energy, including a plan to end the use of coal in owned generation in 2025, and other subsidiaries of CMS Energy have plans to develop and operate clean energy assets.
CMS Energy and Consumers are subject to information security risks, risks of unauthorized access to their systems, and technology failures. In the regular course of business, CMS Energy and Consumers handle a range of sensitive confidential security and customer information.
Alternatively, this rapid expansion of data centers and resulting increase in demand for electric power in MISO and in Consumers’ service territory may not develop as planned. CMS Energy and Consumers are subject to information security risks, risks of unauthorized access to their systems, and technology failures.
Removed
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.
Added
The creation of utilities by municipalities in Consumers’ service territory, or the impairment of Consumers’ franchise rights to serve customers in municipalities, could have a material adverse effect on CMS Energy’s and Consumers’ businesses. Michigan law allows Consumers’ electric and natural gas utility businesses to serve customers pursuant to franchises granted by municipalities.
Removed
A variety of technological tools and systems, including both company-owned information technology and technological services provided by outside parties, support critical functions.
Added
Michigan law also allows municipalities to create, own, and operate utilities.
Removed
A substantial portion of Consumers’ operating expenses for its electric generating plants and vehicle fleet consists of the costs of obtaining these commodities.
Added
If one or more municipalities in Consumers’ service territory created a new or supplemental utility, or impaired the franchise under which Consumers serves customers in the municipality, it could have a material adverse effect on CMS Energy and Consumers. 40 Table of Contents Distributed energy resources could have a material adverse effect on CMS Energy’s and Consumers’ businesses.
Removed
Natural gas prices in particular have been historically volatile. Consumers routinely enters into contracts for natural gas to mitigate exposure to the risks of demand, market effects of weather, and changes in commodity prices associated with the gas distribution business.
Added
Consumers’ planned electric generation capacity, including renewable generation or storage projects, may be adversely impacted by interconnection delays at MISO or in the footprints of other regional transmission organizations, and/or by interconnection costs.
Removed
To the extent that unhedged positions exist, fluctuating commodity prices could have a negative effect on CMS Energy and Consumers. Changes in laws that limit CMS Energy’s and Consumers’ ability to hedge could also have a negative effect on CMS Energy and Consumers.
Added
CMS Energy and Consumers and its contractors may be unable to acquire, site, construct timely, and/or permit generation and storage capacity, including some or all of the generation and storage capacity proposed in Consumers’ plan.
Added
The Reliability Roadmap includes larger investments in grid hardening, distribution capacity, and automation to deliver better than median reliability to customers given increasingly severe weather and customer adoption of new technologies. The MPSC or other third parties may prohibit, delay, or impair the Reliability Roadmap and some or all 42 Table of Contents of the associated capital investments.
Added
The change in administration and the expiring tax cuts in the TCJA could result in changes to the renewable energy tax credits enacted in the Inflation Reduction Act of 2022. These changes could impact CMS Energy’s and Consumers’ clean energy efforts. CMS Energy and its subsidiaries, including Consumers, must comply with the Dodd-Frank Act and its related regulations.
Added
The Dodd-Frank Act provides for regulation by the Commodity Futures Trading Commission of certain commodity-related contracts.
Added
Demand for electricity associated with data center expansion could have a material effect on CMS Energy and Consumers. Consumers’ utility operations are affected by new customers and load growth.
Added
Rapid expansion of data centers associated with increasing demand for cloud services, artificial intelligence, and other applications could lead to an unprecedented increase in demand for electric power in MISO and in Consumers’ service territory.
Added
Data center electric demand could require a rapid and significant increase in generation capacity and grid infrastructure in the MISO footprint as well as in Consumers’ service territory, which could have a material effect on CMS Energy and Consumers.
Added
Despite implementation of security measures, technology systems, including disaster recovery and backup systems, are vulnerable to failure, cyber attacks, unauthorized access, and being disabled. These events could impact the reliability of electric generation and electric and gas delivery and also subject CMS Energy and Consumers to financial harm.
Added
CMS Energy’s and Consumers’ businesses have liability risks.
Added
If the MPSC determined that any of these contracts or related contracting policies were imprudent, recovery of these costs could be disallowed. Natural gas prices in particular have been historically volatile.
Added
In addition, any delay or default in payment or performance, including inadequate performance, of contractual obligations (such as contractual obligations by third parties to perform work, supply equipment, provide services, and meet related specifications or requirements), could have a material adverse effect on CMS Energy and Consumers.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCMS Energy’s and Consumers’ cybersecurity program focuses on finding and remediating vulnerabilities in their systems. The companies use third-party firms for penetration testing, audits, and assessments, and conduct exercises to practice their response to simulated events. The companies also have a dedicated, proactive function focused fully on monitoring CMS Energy’s and Consumers’ systems and responding when issues occur.
Biggest changeCMS Energy’s and Consumers’ cybersecurity program focuses on finding and remediating vulnerabilities in their systems. The companies use third-party firms for penetration testing, audits, and assessments, and conduct technical exercises to practice their response to simulated events as well as tabletop exercises to test that response using their incident command system, including leadership decisions.
The companies retain a third-party cybersecurity firm to assist with potentially significant incidents and have invested in cybersecurity insurance to offset costs incurred from any such incidents.
The companies retain a third-party cybersecurity firm to assist with potentially significant cybersecurity incidents and have invested in cybersecurity insurance to offset costs incurred from any such cybersecurity incidents.
The Audit Committee also reviews internal audit reports regarding cybersecurity processes, and receives updates that focus on CMS Energy’s and Consumers’ cybersecurity program, mitigation of cybersecurity risks, and assessments by third-party experts. Of note, two members of the Board have extensive industry experience in cybersecurity and are on CMS Energy’s and Consumers’ Audit Committee. 51 Table of Contents
The Audit Committee also reviews internal audit reports regarding cybersecurity processes, and receives updates that focus on CMS Energy’s and Consumers’ cybersecurity program, mitigation of cybersecurity risks, and assessments by third-party experts. Of note, two members of the Board have extensive industry experience in cybersecurity and are on CMS Energy’s and Consumers’ Audit Committee.
The companies’ electric, natural gas, and corporate systems each follow standards, controls, and requirements designed to maintain compliance with applicable regulations and standards, such as MPSC, NERC critical infrastructure protection, and 50 Table of Contents payment card industry regulations. Technology projects and third-party service providers are reviewed for adherence to cybersecurity requirements.
The companies’ electric, natural gas, and corporate systems each follow standards, controls, and requirements designed to maintain compliance with applicable regulations and standards, such as MPSC, NERC critical infrastructure protection, and payment card industry regulations. Technology projects and third-party service providers are reviewed for adherence to cybersecurity requirements.
The Executive Director of Security is responsible for informing the CEO and other members of senior management, as necessary, about cybersecurity incidents, covering prevention, detection, mitigation, and remediation efforts as they are detected by the Executive Director’s team. Cyber incidents are managed using the companies’ standard process for critical events.
The Vice President of Information Technology and Security and CIO is responsible for informing the CEO and other members of senior management, as necessary, about cybersecurity incidents, covering prevention, detection, mitigation, and remediation efforts as they are detected by the cybersecurity team. Cybersecurity incidents are managed using the companies’ standard process for critical events.
The enterprise risk management program is reviewed with the Board at least annually. Cybersecurity Program: CMS Energy’s and Consumers’ security function, led by the Executive Director of Security, is an integrated organization accountable for cyber and physical security and is subject to various state, federal, and industry cybersecurity, physical security, and privacy regulations.
The enterprise risk management program is reviewed with the Board at least annually. Cybersecurity Program: CMS Energy’s and Consumers’ security function, led by the Vice President of Information Technology and Security and CIO, is accountable for cyber and physical security and is subject to various state, federal, and industry cybersecurity, physical security, and privacy regulations.
In the event of such incidents, the Executive Director of Security communicates and collaborates with the officers of the companies and subject matter experts to address business continuity, contingency, and recovery plans. Senior management will notify the Board, including the Audit Committee, of any significant cybersecurity incidents.
In the event of such cybersecurity incidents, the Vice President of 50 Table of Contents Information Technology and Security and CIO communicates and collaborates with the officers of the companies and subject matter experts to address business continuity, contingency, and recovery plans. Senior management will notify the Board, including the Audit Committee, of any significant cybersecurity incidents.
CMS Energy and Consumers have experienced no material cybersecurity incidents; however, future cybersecurity incidents could materially affect their business strategy, results of operations, or financial condition. For additional details regarding these and other uncertainties, see Item 1A. Risk Factors. Management’s Role: The Executive Director of Security has 25 years of information technology and security experience.
CMS Energy and Consumers have experienced no material cybersecurity incidents; however, future cybersecurity incidents could materially affect their business strategy, results of operations, or financial condition. For additional details regarding these and other uncertainties, see Item 1A. Risk Factors.
This includes regular information sharing with industry partners, peer utilities, and state and federal partners. The companies’ incident response plan outlines the individuals responsible, the methods employed, and the timeline for notifying state and federal governmental agencies.
The companies also have a dedicated, proactive function focused fully on monitoring CMS Energy’s and Consumers’ systems and responding when cybersecurity attacks occur. This includes regular information sharing with industry partners, peer utilities, and state and federal partners. The companies’ incident response plan outlines the individuals responsible, the methods employed, and the timeline for notifying state and federal governmental agencies.
Removed
To enhance governance, the Executive Director of Security reports to the Senior Vice President and Chief Customer Officer, who has extensive experience overseeing cybersecurity and has had executive oversight of the security function for nine years at CMS Energy and Consumers.
Added
Management’s Role: The Vice President of Information Technology and Security and CIO has over 25 years of information technology and security experience and, to enhance governance, reports to the Senior Vice President and General Counsel.
Removed
Prior to joining CMS Energy, this officer served as Vice President of Business Technology at Pacific Gas & Electric Company, a non-affiliated company.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeCMS Energy, Consumers, and certain of their affiliates are also parties to routine lawsuits and administrative proceedings incidental to their businesses involving, for example, claims for personal injury and property damage, contractual matters, various taxes, and rates and licensing. Item 4. Mine Safety Disclosures Not applicable. Part II
Biggest changeCMS Energy, Consumers, and certain of their affiliates are also parties to routine lawsuits and administrative proceedings incidental to their businesses involving, for example, claims for personal injury and property damage, contractual matters, various taxes, and rates and licensing. Item 4. Mine Safety Disclosures Not applicable. 51 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−1 removed2 unchanged
Biggest changeFinancial 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.
Biggest changeComparison of Five ‑ year Cumulative Total Return Five-Year Cumulative Total Return Company/Index 2019 2020 2021 2022 2023 2024 CMS Energy $ 100 $ 100 $ 109 $ 110 $ 104 $ 123 S&P 500 Index 100 118 152 125 158 197 S&P 400 Utilities Index 100 86 103 103 89 117 These cumulative total returns assume reinvestments of dividends. 52 Table of Contents Consumers Consumers’ common stock is privately held by its parent, CMS Energy, and does not trade in the public market.
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.
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 17, 2025, the number of registered holders of CMS Energy’s common stock totaled 24,092, based on the number of record holders.
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.
Presented in the following table are CMS Energy’s repurchases of common stock for the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid Per Share October 1, 2024 to October 31, 2024 202 $ 70.96 November 1, 2024 to November 30, 2024 348 68.42 December 1, 2024 to December 31, 2024 — — Total 550 $ 69.35 As of December 31, 2024, CMS Energy has no other publicly announced plans or programs that permit the repurchase of equity securities.
Consumers 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.
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. The value of shares repurchased is based on the market price on the vesting date.
Removed
The value of shares repurchased is based on the market price on the vesting date.
Added
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization.

Item 7. Management's Discussion & Analysis

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

140 edited+61 added−55 removed46 unchanged
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.
Biggest changeFinancial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters. 63 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 2024 versus 2023: In Millions Year Ended December 31, 2023 $ 550 Reasons for the change Electric deliveries 1 and rate increases Rate increase, including securitization surcharge and return on higher renewable capital spending $ 235 Higher revenue due primarily to favorable weather 45 Higher energy waste reduction program revenues 10 $ 290 Maintenance and other operating expenses Lower service restoration costs 32 Absence of 2023 voluntary separation program expenses 20 Higher distribution, transmission, and generation expenses (15) Higher energy waste reduction program costs (10) Higher other maintenance and operating expenses (18) 9 Depreciation and amortization Increased plant in service, reflecting higher capital spending (68) General taxes Higher property taxes, reflecting higher capital spending (21) Other income, net of expenses (5) Interest charges (39) Income taxes Higher electric utility pre-tax earnings (41) Higher renewable energy tax credits 2 11 Higher other income taxes (5) (35) Year Ended December 31, 2024 $ 681 1 Deliveries to end-use customers were 36.8 billion kWh in 2024 and 36.3 billion kWh in 2023. 2 See Item 8.
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.
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.
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.
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, sequester, 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.
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.
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, including changes to renewable energy tax credits • 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.
Gas Environmental Outlook: Consumers expects to incur response activity costs at a number of sites, including 23 former MGP sites. For additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments—Consumers Gas Utility Contingencies—Gas Environmental Matters. Consumers’ gas operations are subject to various federal, state, and local environmental laws and regulations.
Gas Environmental Outlook: Consumers expects to incur response activity costs at a number of sites, including 23 former MGP sites. For additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments—Consumers Gas Utility Contingencies. Consumers’ gas operations are subject to various federal, state, and local environmental laws and regulations.
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 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 2025 and beyond. Capital Expenditures: Over the next five years, CMS Energy and Consumers expect to make substantial capital investments.
At December 31, 2023, electric deliveries under the ROA program were at the ten‑percent limit. Fewer than 300 of Consumers’ electric customers purchased electric generation service under the ROA program. In 2016, Michigan law established a path to ensure that forward capacity is secured for all electric customers in Michigan, including customers served by alternative electric suppliers under ROA.
At December 31, 2024, electric deliveries under the ROA program were at the ten‑percent limit. Fewer than 300 of Consumers’ electric customers purchased electric generation service under the ROA program. In 2016, Michigan law established a path to ensure that forward capacity is secured for all electric customers in Michigan, including customers served by alternative electric suppliers under ROA.
Presented in the following table are estimates of credits and cash contributions through 2026 for the DB Pension Plans and OPEB Pl an. Actual future costs, credits, and contributions will depend on future investment performance, discount rates, and various factors related to the participants of the DB Pension Plans and OPEB Plan.
Presented in the following table are estimates of credits and cash contributions through 2027 for the DB Pension Plans and OPEB Pl an. Actual future costs, credits, and contributions will depend on future investment performance, discount rates, and various factors related to the participants of the DB Pension Plans and OPEB Plan.
People: The people element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to their employees, their customers, the residents of local communities in which they do business, and other stakeholders. The safety of employees, customers, and the general public is a priority of CMS Energy and Consumers.
People: The people element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to their employees, their customers, the residents of local communities in which they do business, and other stakeholders. The safety of co-workers, customers, and the general public is a priority of CMS Energy and Consumers.
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.
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.
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.
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.
Looking Forward CMS Energy and Consumers will continue to consider the impact on the triple bottom line of people, planet, and profit in their daily operations as well as in their long-term strategic decisions.
Looking Forward CMS Energy and Consumers will continue to consider the impact on the triple bottom line of people, planet, and prosperity in their daily operations as well as in their long-term strategic decisions.
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.
GCR Plan: Consumers submitted its 2025 ‑ 2026 GCR plan to the MPSC in December 2024 and, in accordance with its proposed plan, expects to self-implement the 2025 ‑ 2026 GCR charge beginning in April 2025. Gas Pipeline and Storage Integrity and Safety: The U.S.
Profit: The profit element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to meeting their financial objectives and providing economic development opportunities and benefits in the communities in which they do business.
Prosperity: The prosperity element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to meeting their financial objectives and providing economic development opportunities and benefits in the communities in which they do business.
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 is unable to predict these events; 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 will continue to monitor NAAQS rulemakings and evaluate potential impacts to its compressor stations and other applicable natural gas storage and delivery assets. Greenhouse Gases: There is increasing interest at the federal, state, and local levels in potential regulation of greenhouse gases or their sources.
Consumers will continue to monitor NAAQS rulemakings and evaluate potential impacts to its compressor stations and other applicable natural gas storage and delivery assets. 82 Table of Contents Greenhouse Gases: There is increasing interest at the federal, state, and local levels in potential regulation of greenhouse gases or their sources.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters. Contingencies: CMS Energy and Consumers make judgments regarding the future outcome of various matters that give rise to contingent liabilities. For such matters, they record liabilities when they are considered probable and reasonably estimable, based on all available information.
For additional information, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters. Contingencies: CMS Energy and Consumers make judgments regarding the future outcome of various matters that give rise to contingent liabilities. For such matters, they record liabilities when they are considered probable and reasonably estimable, based on all available information.
Department of Transportation’s Pipeline and Hazardous Materials Safety Administration has published various rules that expand federal safety standards for gas transmission pipelines and underground storage facilities. Initial expanded requirements for transmission pipelines took effect in 2020, with additional requirements released in 2023. There are also proposed rules expanding requirements for gas distribution systems pending.
Department of Transportation’s Pipeline and Hazardous Materials Safety Administration has published various rules that expand federal safety standards for gas transmission pipelines and underground storage facilities. Initial expanded requirements for transmission pipelines took effect in 2020, with additional requirements released in 2023. There are also proposed rules expanding requirements for gas distribution systems and leak detection and repair.
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.
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.
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.
Under its Clean Energy Plan, Consumers bids new capacity and energy competitively and expects to own and operate all new wind capacity and approximately 50 percent of new solar capacity, with the remainder being built and owned by third parties.
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.
Material Cash Requirements: Based on the present investment plan, during 2025, CMS Energy, including Consumers, projects capital expenditures of $4.3 billion and Consumers projects capital expenditures of $3.7 billion. CMS Energy’s 2025 contractual commitments comprise $2.4 billion of purchase obligations and $1.9 billion of principal and interest payments on long-term debt.
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.
Consumers’ 2025 contractual commitments comprise $2.1 billion of purchase obligations and $1.0 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.
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.
Electric distribution and other projects comprise $8.5 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 $5.2 billion on clean generation, which includes investments in wind, solar, and hydroelectric generation resources.
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.
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.
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 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. To date, Consumers has reduced methane emissions by nearly 30 percent.
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.
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. 55 Table of Contents Planet: The planet element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to protect the environment.
Actual delivery levels will depend on: • energy conservation measures and results of energy waste reduction programs • weather fluctuations • Michigan’s economic conditions, including utilization, expansion, or contraction of manufacturing facilities, population trends, electric vehicle adoption, and housing activity Electric ROA: 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.
Actual delivery levels will depend on: • energy conservation measures and results of energy waste reduction programs • weather fluctuations • Michigan’s economic conditions, including utilization, expansion, or contraction of large commercial and industrial facilities, economic development, population trends, electric vehicle adoption, and housing activity Electric ROA: 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 75 Table of Contents Consumers’ sales, with certain exceptions.
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.
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 2024, CMS Energy’s net income available to common stockholders was $993 million, and diluted EPS were $3.33.
First, Consumers requested a $207 million annual rate increase, based on an authorized return on equity of 10.25 percent for the projected 12 ‑ month period ending February 28, 2025. The filing requested authority to recover costs related to new infrastructure investment primarily in distribution system reliability and cleaner energy resources.
First, Consumers requested a $303 million annual rate increase, based on a 10.25‑percent authorized return on equity for the projected 12 ‑ month period ending February 28, 2026. The filing requested authority to recover costs related to new infrastructure investment primarily in distribution system reliability and cleaner energy resources.
First, Consumers requested a $207 million annual rate increase, based on an authorized return on equity of 10.25 percent for the projected 12 ‑ month period ending February 28, 2025. The filing requested authority to recover costs related to new infrastructure investment primarily in distribution system reliability and cleaner energy resources.
First, Consumers requested a $303 million annual rate increase, based on a 10.25‑percent authorized return on equity for the projected 12 ‑ month period ending February 28, 2026. The filing requested authority to recover costs related to new infrastructure investment primarily in distribution system reliability and cleaner energy resources.
This regulation tightens allowance budgets for electric generating units in Michigan between 2023 and 2029 and changes the mechanism for allocating such allowances on a year-over-year basis beginning in 2026.
This regulation tightens allowance budgets for electric generating units in Michigan between 2023 and 2029 and changes the mechanism for allocating such allowances on a year-over-year basis beginning in 2026. In June 2024, the U.S.
CMS Energy and Consumers measure their progress toward the purpose by considering their impact on the “triple bottom line” of people, planet, and profit, which is underpinned by performance; this consideration takes into account not only the economic value that CMS Energy and Consumers create for customers and investors, but also their responsibility to social and environmental goals.
CMS Energy and Consumers measure their progress toward the purpose by considering their impact on the “triple bottom line” of people, planet, and prosperity; this consideration takes into account not only the economic value that CMS Energy and Consumers create for customers and investors, but also their responsibility to social and environmental goals.
In 2023, CMS Energy entered into an equity offering program under which it may sell shares of its common stock having an aggregate sales price of up to $1 billion in privately negotiated transactions, in “at the market” offerings, or through forward sales transactions. There have been no sales of securities under this program.
In 2023, CMS Energy entered into an equity offering program under which it may sell shares of its common stock having an aggregate sales price of up to $1 billion in privately negotiated transactions, in “at the market” offerings, or through forward sales transactions.
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.
This rate-base growth, together with cost-control measures, should allow Consumers to maintain affordable customer prices. 59 Table of Contents Presented in the following illustration are Consumers’ planned capital expenditures through 2029 of $20.0 billion: Of this amount, Consumers plans to spend $14.8 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.
For additional accounting policies, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 1, Significant Accounting Policies. In the preparation of CMS Energy’s and Consumers’ consolidated financial statements, estimates and assumptions are used that may affect reported amounts and disclosures.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 1, Significant Accounting Policies. In the preparation of CMS Energy’s and Consumers’ consolidated financial statements, estimates and assumptions are used that may affect reported amounts and disclosures.
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.
Presented in the 71 Table of Contents following table are CMS Energy’s and Consumers’ estimated capital expenditures, including lease commitments, for 2025 through 2029: In Billions 2025 2026 2027 2028 2029 Total CMS Energy, including Consumers Consumers $ 3.7 $ 4.1 $ 4.4 $ 3.9 $ 3.9 $ 20.0 NorthStar Clean Energy, including subsidiaries 0.6 0.3 0.7 0.6 0.6 2.8 Total CMS Energy $ 4.3 $ 4.4 $ 5.1 $ 4.5 $ 4.5 $ 22.8 Consumers Electric utility operations $ 2.5 $ 2.8 $ 3.1 $ 2.7 $ 2.6 $ 13.7 Gas utility operations 1.2 1.3 1.3 1.2 1.3 6.3 Total Consumers $ 3.7 $ 4.1 $ 4.4 $ 3.9 $ 3.9 $ 20.0 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, 2024 Less Than One Year Total CMS Energy, including Consumers Long-term debt $ 1.2 $ 16.5 Interest payments on long-term debt 0.7 13.2 Purchase obligations 2.4 11.4 AROs — 2.6 Total obligations $ 4.3 $ 43.7 Consumers Long-term debt $ 0.5 $ 12.2 Interest payments on long-term debt 0.5 8.2 Purchase obligations 2.1 10.4 AROs — 2.5 Total obligations $ 3.1 $ 33.3 Purchase obligations arise from long-term contracts for the purchase of commodities and related services, and construction and service agreements.
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.
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 72 Table of Contents Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization.
In support of this purpose, CMS Energy and Consumers employ the “CE Way,” a lean operating model designed to improve safety, quality, cost, delivery, and employee morale.
In support of this purpose, CMS Energy and Consumers couple digital transformation with the “CE Way,” a lean operating model designed to improve safety, quality, cost, delivery, and employee morale.
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.
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 segments: electric utility and gas utility.
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.
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 but has not yet published a proposed rule.
Consumers’ investment program, which is subject to approval through general rate case proceedings, is expected to result in annual rate-base growth of more than seven percent.
Consumers’ investment program, which is subject to approval through general rate case and other MPSC proceedings, is expected to result in annual rate-base growth of more than eight percent.
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.
Consumers continually assesses whether future recovery of its regulatory assets is probable by 85 Table of Contents 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 is committed to working with the third ‑ party auditor and the MPSC to continue improving electric reliability and safety in Michigan. 2023 Electric Rate Case: In May 2023, Consumers filed an application with the MPSC seeking a rate increase of $216 million, made up of two components.
Consumers is committed to working with the MPSC to continue improving electric reliability and safety in Michigan. 2024 Electric Rate Case: In May 2024, Consumers filed an application with the MPSC seeking a rate increase of $325 million, made up of two components.
The remaining emissions will likely be offset by purchasing and/or producing renewable natural gas. To date, Consumers has reduced methane emissions by more than 25 percent.
The remaining emissions will likely be offset by purchasing and/or producing renewable natural gas. To date, Consumers has reduced methane emissions by nearly 30 percent.
Consumers estimates that it will incur capital expenditures of $240 million from 2024 through 2028 to continue to comply with RCRA, the Clean Air Act, and numerous other environmental regulations. Consumers expects to recover these costs in customer rates, but cannot guarantee this result. Multiple environmental laws and regulations are subject to litigation.
Consumers estimates that it will incur capital expenditures of $240 million from 2025 through 2029 to continue to comply with RCRA, the Clean Air Act, and numerous other environmental regulations. Consumers expects to recover these costs in customer rates, but cannot guarantee this result.
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.
A change in species listed under the Endangered Species Act, or under Michigan’s equivalent law, 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations, in the Form 10‑K for the fiscal year ended December 31, 2022, filed February 9, 202 3 . 64 Table of Contents Amounts in the following tables are presented pre-tax, with the exception of income tax changes.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations, in the Form 10‑K for the fiscal year ended December 31, 2023, filed February 8, 2024 . 62 Table of Contents Amounts in the following tables are presented pre-tax, with the exception of income tax changes.
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.
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 electric supply.
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.
In 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 25 percent by 2035.
Consumers began tracking mercury emissions in 2007; since that time, it has reduced such emissions by nearly 93 percent.
Consumers began tracking mercury emissions in 2007; since that time, it has reduced such emissions by more than 92 percent.
Additionally, as a result of actions already taken through 2023, initial measurement data indicates Consumers has: • reduced carbon dioxide emissions by nearly 40 percent since 2005 • reduced methane emissions by more than 25 percent since 2012 • reduced the volume of water used to generate electricity by more than 50 percent since 2012 56 Table of Contents • reduced landfill waste disposal by more than 1.8 million tons since 1992 • enhanced, restored, or protected more than 8,800 acres of land since 2017 Since 2005, Consumers has reduced its sulfur dioxide and particulate matter emissions by more than 95 percent and its NOx emissions by nearly 88 percent.
Additionally, as a result of actions already taken through 2024, initial measurement data indicates Consumers has: • reduced carbon dioxide emissions from owned generation by more than 30 percent since 2005 • reduced methane emissions by nearly 30 percent since 2012 • reduced the volume of water used to generate electricity by more than 50 percent since 2012 • reduced landfill waste disposal by more than two million tons since 1992 • enhanced, restored, or protected more than 11,700 acres of land since 2017 Since 2005, Consumers has reduced its sulfur dioxide and particulate matter emissions by nearly 95 percent and its NOx emissions by more than 86 percent.
During the year ended December 31, 2023, Consumers paid $695 million in dividends on its common stock to CMS Energy. 71 Table of Contents Consumers uses cash flows generated from operations and external financing transactions, as well as stockholder contributions from CMS Energy, to fund capital expenditures, retire debt, pay dividends, and fund its other obligations.
During the year ended December 31, 2024, Consumers paid $795 million in dividends on its common stock to CMS Energy. Consumers uses cash flows generated from operations, external financing transactions, and the monetization of tax credits, along with stockholder contributions from CMS Energy, to fund capital expenditures, retire debt, pay dividends, and fund its other obligations.
Second, Consumers requested approval of a surcharge for the recovery of $9 million of distribution investments made in 2022 that exceeded the rates authorized in accordance with the December 2021 electric rate order.
Second, Consumers requested approval of a $22 million surcharge for the recovery of distribution investments made in 2023 that exceeded the rates authorized in accordance with previous electric rate orders.
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.
Additionally, to advance its environmental stewardship in Michigan and to minimize the impact of future regulations, Consumers set the following goals for the five-year period 2023 through 2027: • to enhance, restore, or protect 6,500 acres of land through 2027; Consumers has enhanced, restored, or protected more than 5,000 acres of land towards this goal • to reduce water usage by 1.7 billion gallons through 2027; Consumers has reduced water usage by more than 1.3 billion gallons towards this goal • to annually divert a minimum of 90 percent of waste from landfills (through waste reduction, recycling, and reuse); during 2024, 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.
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.
The EPA regulates cooling water intake systems of existing electric generating plants under Section 316(b) of the Clean Water Act. The rules seek to reduce alleged harmful impacts on aquatic organisms, such as fish. In 2018, Consumers submitted to EGLE studies and recommended plans to comply with Section 316(b) for its coal-fueled units but has not yet received final approval.
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.
Karn coal-fueled generating units, totaling 515 MW of nameplate capacity, in June 2023 and plans to retire the J.H. Campbell coal-fueled generating units, totaling 1,407 MW of nameplate capacity, in 2025. 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.
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. CMS Energy and Consumers manage their businesses by the nature of services each provides.
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. 53 Table of Contents CMS Energy and Consumers manage their businesses by the nature of services each provides.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments. MPSC Distribution System Audit: In October 2022, the MPSC ordered the state’s two largest electric utilities, including Consumers, to report on their compliance with regulations and past MPSC orders governing the utilities’ response to outages and downed lines.
MPSC Distribution System Audit: In 2022, the MPSC ordered the state’s two largest electric utilities, including Consumers, to report on their compliance with regulations and past MPSC orders governing the utilities’ response to outages and downed lines.
For additional details on postretirement benefits, including the fair value measurements for the assets of the DB Pension Plans and OPEB Plan, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 10, Retirement Benefits.
For additional details on postretirement benefits, including the fair value measurements for the assets of the DB Pension Plans and OPEB Plan, see Item 8.
CMS Energy’s and Consumers’ businesses are affected primarily by: • regulation and regulatory matters • state and federal legislation • economic conditions • weather • energy commodity prices • interest rates • their securities’ credit ratings The Triple Bottom Line CMS Energy’s and Consumers’ purpose is to achieve world class performance while delivering hometown service.
CMS Energy’s and Consumers’ businesses are affected primarily by: • regulation and regulatory matters • state and federal legislation • economic conditions • weather • energy commodity prices • interest rates • their securities’ credit ratings The Triple Bottom Line CMS Energy’s and Consumers’ purpose is to provide safe, reliable, affordable, clean, and equitable energy in service of their customers.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 19, Exit Activities and Discontinued Operations. Electric Environmental Outlook: Consumers’ electric operations are subject to various federal, state, and local environmental laws and regulations.
For additional details on this program, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 19, Exit Activities and Asset Sales. Electric Environmental Outlook: Consumers’ electric operations are subject to various federal, state, and local environmental laws and regulations.
Consumers has already surpassed the 28 ‑ percent reduction milestone for its owned electric generation and previously announced a goal of achieving net-zero carbon emissions from its electric business by 2040. The 2023 Energy Law codifies much of the Governor’s goals. For additional details on the 2023 Energy Law, see the Planet section of the Executive Overview.
Consumers has already surpassed the 28 ‑ percent reduction milestone for its owned electric generation. The 2023 Energy Law codifies much of the Governor’s goals. For additional details on the 2023 Energy Law, see the Planet section of the Executive Overview.
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.
Failure of EGLE to renew any NPDES permit, a successful appeal against a permit, a change in the interpretation or 84 Table of Contents scope of NPDES permitting, or onerous terms contained in a permit could have a significant detrimental effect on the operations of a facility.
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.
The CE Way is an important means of realizing CMS Energy’s and Consumers’ purpose of providing safe, reliable, affordable, clean, and equitable energy in service of their customers. 61 Table of Contents Results of Operations CMS Energy Consolidated Results of Operations In Millions, Except Per Share Amounts Years Ended December 31 2024 2023 Change Net Income Available to Common Stockholders $ 993 $ 877 $ 116 Basic Earnings Per Average Common Share $ 3.34 $ 3.01 $ 0.33 Diluted Earnings Per Average Common Share $ 3.33 $ 3.01 $ 0.32 In Millions Years Ended December 31 2024 2023 Change Electric utility $ 681 $ 550 $ 131 Gas utility 328 315 13 NorthStar Clean Energy 63 67 (4) Corporate interest and other (79) (55) (24) Net Income Available to Common Stockholders $ 993 $ 877 $ 116 For a summary of net income available to common stockholders for 2023 versus 2022, as well as detailed changes by reportable segment, see Item 7.
In September 2023, Consumers revised its requested increase to $169 million. 2022 Electric Rate Case: In January 2023, the MPSC approved a settlement agreement authorizing an annual rate increase of $155 million, based on a 9.9‑percent authorized return on equity.
In May 2024, Consumers revised its requested increase to $113 million. In July 2024, the MPSC approved a settlement agreement authorizing an annual rate increase of $35 million, based on a 9.9‑percent authorized return on equity.
Presented in the following illustration are Consumers’ reductions in these emissions: In November 2023, Michigan enacted the 2023 Energy Law, which among other things: • raises the renewable energy standard from the present 15-percent requirement to 50 percent by 2030 and 60 percent by 2035; renewable energy generated anywhere within MISO may be applied to meeting this standard, with certain limitations • sets a clean energy standard of 80 percent by 2035 and 100 percent by 2040; low- or zero-carbon emitting resources, such as nuclear generation and natural gas generation coupled with carbon capture, are considered clean energy sources under this standard • enhances existing incentives for energy efficiency programs and returns earned on competitively bid PPAs • expands the statutory cap on distributed generation resources to ten percent Consumers is required to file updates to its amended renewable energy plan before or in 2025 and its Clean Energy Plan before or in 2027.
Presented in the following illustration are Consumers’ reductions in these emissions: 56 Table of Contents In November 2023, Michigan enacted the 2023 Energy Law, which among other things: • raised the renewable energy standard from the present 15 ‑ percent requirement to 50 percent by 2030 and 60 percent by 2035; renewable energy generated anywhere within MISO can be applied to meeting this standard, with certain limitations • set a clean energy standard of 80 percent by 2035 and 100 percent by 2040; low- or zero-carbon emitting resources, such as nuclear generation and natural gas generation coupled with carbon capture, are considered clean energy sources under this standard • enhanced existing incentives for energy efficiency programs and returns earned on new clean or renewable PPAs • created a new energy storage standard that requires electric utilities to file plans by 2029 to obtain new energy storage that will contribute to a Michigan target of 2,500 MW based on their pro rata share • expanded the statutory cap on distributed generation resources to ten percent Consumers filed updates to its renewable energy plan in November 2024 and plans to file updates to its Clean Energy Plan in 2026.
Over the next five years, Consumers expects weather-normalized gas deliveries to remain stable relative to 2023. This outlook reflects the effects of energy waste reduction programs offset by modest growth in gas demand.
The peak demand for natural gas occurs in the winter due to colder temperatures and the resulting use of natural gas as heating fuel. Over the next five years, Consumers expects weather-normalized gas deliveries to remain stable relative to 2024. This outlook reflects modest growth in gas demand, offset by the effects of energy waste reduction programs.
Multiple environmental laws and regulations are subject to litigation. Consumers’ primary environmental compliance focus includes, but is not limited to, the following matters. Air Quality: Multiple air quality regulations apply, or may apply, to Consumers’ gas utility. In June 2023, the EPA published the “Good Neighbor Plan,” a revision to CSAPR that impacts Michigan.
Multiple environmental laws and regulations are subject to litigation. Consumers’ primary environmental compliance focus includes, but is not limited to, the following matters. Air Quality: Multiple air quality regulations apply, or may apply, to Consumers’ gas utility.
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.
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 deliveries to increase compared to 2024. This outlook reflects strong growth in electric demand, offset partially by the effects of energy waste reduction programs.
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.
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.
To comply with these rules, Consumers will incur increased capital and operating and maintenance costs to install and remediate pipelines and to expand inspections, maintenance, and monitoring of its existing pipelines and storage facilities. 83 Table of Contents Although associated capital or operating and maintenance costs relating to these regulations could be material and cost recovery cannot be assured, Consumers expects to recover such costs in rates consistent with the recovery of other reasonable costs of complying with laws and regulations.
Although associated capital or operating and maintenance costs relating to these regulations could be material and cost recovery cannot be assured, Consumers expects to recover such costs in rates consistent with the recovery of other reasonable costs of complying with laws and regulations.
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.
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.
Campbell program through 2025 is estimated to be $50 million; Consumers expects to recognize $10 million of retention benefit costs in 2024. The MPSC has approved deferred accounting treatment for these costs; these expenses are deferred as a regulatory asset. For additional details on this program, see Item 8.
Campbell through retirement, Consumers has implemented a retention incentive program. The aggregate cost of the J.H. Campbell program through 2025 is estimated to be less than $50 million; Consumers expects to recognize $5 million of retention benefit costs in 2025. The MPSC has approved deferred accounting treatment for these costs; these expenses are deferred as a regulatory asset.
In 2020, EGLE submitted a regulatory package for Michigan’s permit program to the EPA for its review, which is still pending. Consumers, with agreement from EGLE, completed the work necessary to initiate closure by excavating CCRs or placing a final cover over each of its relevant CCR units prior to the closure initiation deadline.
Consumers, with agreement from EGLE, completed the work necessary to initiate closure by excavating CCRs or placing a final cover over each of its relevant CCR units prior to the closure initiation deadline set forth in the 2015 CCR rule.
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.
The MPSC must issue a final order in this case before or in October 2025. 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 test year comprising the 12‑month period ending September 30, 2025.
The plan proposes the following spending for projects designed to reduce the number and duration of power outages to customers through investment in infrastructure upgrades, forestry management, and grid modernization: • capital expenditures of $7 billion over the next five years; this amount is $3 billion higher than proposed in the previous plan • maintenance and operating spending of $1.7 billion over the next five years, reflecting an increase of $300 million over the previous plan Consumers will request rate recovery of these proposed expenditures in future electric rate cases.
The plan proposes the following spending for projects designed to reduce the number and duration of power outages to customers through investment in infrastructure upgrades, vegetation management, and grid modernization: • capital expenditures of $7 billion through 2028; this amount is $3 billion higher than proposed in the previous plan • maintenance and operating spending of $1.7 billion through 2028, reflecting an increase of $300 million over the previous plan In the electric rate case it filed in May 2024, Consumers outlined its proposal to begin implementing the Reliability Roadmap and requested rate recovery of the investments needed to support the plan’s key objectives.
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.
For additional information on unbilled revenues, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 14, Revenue. 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.
Lowering the PBO discount rates by 25 basis points would decrease estimated pension cost for 2024 by $1 million for both CMS Energy and Consumers.
Lowering the expected long-term rate of return on the assets of the DB Pension Plans by 25 basis points would increase estimated pension cost for 2025 by $8 million for both CMS Energy and Consumers. Lowering the PBO discount rates by 25 basis points would decrease estimated pension cost for 2025 by $1 million for both CMS Energy and Consumers.
Planet: The planet element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to protect the environment. This commitment extends beyond compliance with various state and federal environmental, health, and safety laws and regulations. Management considers climate change and other environmental risks in strategy development, business planning, and enterprise risk management processes.
This commitment extends beyond compliance with various state and federal environmental, health, and safety laws and regulations. Management considers climate change and other environmental risks in strategy development, business planning, and enterprise risk management processes. CMS Energy and Consumers continue to focus on opportunities to protect the environment and reduce their carbon footprint from owned generation.
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.
This regulation or others, if adopted, may involve requirements to reduce methane emissions from Consumers’ gas utility operations and carbon dioxide emissions from customer use of natural gas. Consumers will continue to monitor this proposed rule for potential impacts.

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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 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.
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 2024 2023 Fixed-rate financing—potential loss in fair value CMS Energy, including Consumers $ 717 $ 751 Consumers 543 534 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, 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
The annual earnings exposure related to variable-rate financing was immaterial for both CMS Energy and Consumers at December 31, 2024 and 2023, 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. 88 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.
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.

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