CMS ENERGY CORP [CMS-PC] Filings

10-Q 1 cms-20240630.htm FORM 10-Q (CMS ENERGY AND CONSUMERS) cms-20240630

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission File No.

Registrant; State of Incorporation; Address; and Telephone Number

IRS Employer Identification No.

1-9513

CMS ENERGY CORPORATION

38-2726431

(A Michigan Corporation)

One Energy Plaza, Jackson, Michigan 49201

(517) 788-0550


1-5611	CONSUMERS ENERGY COMPANY	38-0442310
	(A Michigan Corporation) One Energy Plaza, Jackson, Michigan 49201 (517) 788-0550

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

CMS Energy Corporation Common Stock, $0.01 par value

CMS

New York Stock Exchange

CMS Energy Corporation 5.625% Junior Subordinated Notes due 2078

CMSA

New York Stock Exchange

CMS Energy Corporation 5.875% Junior Subordinated Notes due 2078

CMSC

New York Stock Exchange

CMS Energy Corporation 5.875% Junior Subordinated Notes due 2079

CMSD

New York Stock Exchange

CMS Energy Corporation Depositary Shares, each representing a 1/1,000th interest in a share of 4.200% Cumulative Redeemable Perpetual Preferred Stock, Series C

CMS PRC

New York Stock Exchange

Consumers Energy Company Cumulative Preferred Stock, $100 par value: $4.50 Series

CMS-PB

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

CMS Energy Corporation:

Yes

☒

☐

Consumers Energy Company:

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

CMS Energy Corporation:

Yes

☒

☐

Consumers Energy Company:

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

CMS Energy Corporation:

Consumers Energy Company:

Large accelerated filer

☒

Large accelerated filer

☐

Non‑accelerated filer

☐

Non‑accelerated filer

☒

Accelerated filer

☐

Accelerated filer

☐

Smaller reporting company

☐

Smaller reporting company

☐

Emerging growth company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

CMS Energy Corporation:

☐

Consumers Energy Company:

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act).

CMS Energy Corporation:

Yes

☐

☒

Consumers Energy Company:

Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock at July 9, 2024:

CMS Energy Corporation:

CMS Energy Corporation Common Stock, $0.01 par value

298,729,438

Consumers Energy Company:

Consumers Common Stock, $10 par value, privately held by CMS Energy Corporation

84,108,789

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CMS Energy Corporation

Consumers Energy Company

Quarterly Reports on Form 10‑Q to the Securities and Exchange Commission for the Period Ended June 30, 2024

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Glossary		2
Filing Format		9
Available Information		9
Forward-looking Statements and Information		9











Part I—Financial Information		13
Item 1.	Financial Statements	13



Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	86
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	86


Item 4.	Controls and Procedures	86


Part II—Other Information		87
Item 1.	Legal Proceedings	87
Item 1A.	Risk Factors	87
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	88
Item 4.	Mine Safety Disclosures	88
Item 5 .	Other Information	88
Item 6.	Exhibits	89










Signatures		90

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Glossary

Certain terms used in the text and financial statements are defined below.


2023 Form 10‑K
Each of CMS Energy’s and Consumers’ Annual Report on Form 10‑K for the year ended December 31, 2023

2023 Energy Law
Michigan’s Public Acts 229, 230, 231, 233, 234, and 235 of 2023

3G
Third generation technology

4G
Fourth generation technology

ABATE
Association of Businesses Advocating Tariff Equity






















ASP
Appliance Service Plan

Aviator Wind
Aviator Wind Holdings, LLC, a VIE in which Aviator Wind Equity Holdings holds a Class B membership interest

Aviator Wind Equity Holdings
Aviator Wind Equity Holdings, LLC, a VIE in which Grand River Wind, LLC, a wholly owned subsidiary of NorthStar Clean Energy, has a 51‑percent interest

Bay Harbor
A residential/commercial real estate area located near Petoskey, Michigan, in which CMS Energy sold its interest in 2002

Bcf
Billion cubic feet
















CCR
Coal combustion residual







CEO
Chief Executive Officer

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CERCLA
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended

CFO
Chief Financial Officer




Clean Air Act
Federal Clean Air Act of 1963, as amended

Clean Energy Plan
Consumers’ long-term strategy for delivering clean, reliable, resilient, and affordable energy to its customers; this plan was originally outlined and approved in Consumers’ 2018 integrated resource plan and subsequently updated and approved through its 2021 integrated resource plan

Clean Water Act
Federal Water Pollution Control Act of 1972, as amended




CMS Energy
CMS Energy Corporation and its consolidated subsidiaries, unless otherwise noted; the parent of Consumers and NorthStar Clean Energy
















CMS Land
CMS Land Company, a wholly owned subsidiary of CMS Capital, L.L.C., a wholly owned subsidiary of CMS Energy




Consumers
Consumers Energy Company and its consolidated subsidiaries, unless otherwise noted; a wholly owned subsidiary of CMS Energy

Consumers 2014 Securitization Funding
Consumers 2014 Securitization Funding LLC, a wholly owned consolidated bankruptcy-remote subsidiary of Consumers and special-purpose entity organized for the sole purpose of purchasing and owning securitization property, issuing securitization bonds, and pledging its interest in securitization property to a trustee to collateralize the securitization bonds

Consumers 2023 Securitization Funding
Consumers 2023 Securitization Funding LLC, a wholly owned consolidated bankruptcy-remote subsidiary of Consumers and special-purpose entity organized for the sole purpose of purchasing and owning securitization property, issuing securitization bonds, and pledging its interest in securitization property to a trustee to collateralize the securitization bonds

Covert Generating Station
A 1,200-MW natural gas-fueled generation station that was acquired by Consumers in May 2023 from New Covert Generating Company, LLC, a non-affiliated company

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Craven
Craven County Wood Energy Limited Partnership, a VIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of NorthStar Clean Energy, has a 50‑percent interest

CSAPR
Cross-State Air Pollution Rule of 2011, as amended







DB Pension Plans
Defined benefit pension plans of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries

DB SERP
Defined Benefit Supplemental Executive Retirement Plan










DIG
Dearborn Industrial Generation, L.L.C., a wholly owned subsidiary of Dearborn Industrial Energy, L.L.C., a wholly owned subsidiary of NorthStar Clean Energy




Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

DTE Electric
DTE Electric Company, a non‑affiliated company




EGLE
Michigan Department of Environment, Great Lakes, and Energy

Endangered Species Act
Endangered Species Act of 1973, as amended




energy waste reduction
The reduction of energy consumption through energy efficiency and demand-side energy conservation, as established under Michigan law




EPA
U.S. Environmental Protection Agency

EPS
Earnings per share




Exchange Act
Securities Exchange Act of 1934

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Federal Power Act
Federal Power Act of 1920




FERC
Federal Energy Regulatory Commission







FTR
Financial transmission right

GAAP
U.S. Generally Accepted Accounting Principles







Genesee
Genesee Power Station Limited Partnership, a VIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of NorthStar Clean Energy, has a 50‑percent interest

Good Neighbor Plan
A plan issued by the EPA which secures significant reductions in ozone-forming emissions of NOx from power plants and industrial facilities




Grayling
Grayling Generating Station Limited Partnership, a VIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of NorthStar Clean Energy, has a 50‑percent interest
















IRS
Internal Revenue Service










kWh
Kilowatt-hour, a unit of energy equal to one thousand watt-hours




Ludington
Ludington pumped-storage plant, jointly owned by Consumers and DTE Electric

MATS
Mercury and Air Toxics Standards, which limit mercury, acid gases, and other toxic pollution from coal‑fueled and oil‑fueled power plants













MD&A
Management’s Discussion and Analysis of Financial Condition and Results of Operations




MGP
Manufactured gas plant

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Migratory Bird Treaty Act
Migratory Bird Treaty Act of 1918, as amended




MISO
Midcontinent Independent System Operator, Inc.

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

MPSC
Michigan Public Service Commission




MW
Megawatt, a unit of power equal to one million watts




NAAQS
National Ambient Air Quality Standards

Natural Gas Act
Natural Gas Act of 1938







Newport Solar Holdings
Newport Solar Holdings III, LLC, a VIE in which Newport Solar Equity Holdings LLC, a wholly owned subsidiary of Grand River Solar, LLC, a wholly owned subsidiary of NorthStar Clean Energy, holds a Class B membership interest

NorthStar Clean Energy
NorthStar Clean Energy Company, a wholly owned subsidiary of CMS Energy, formerly known as CMS Enterprises Company

NOx
Nitrogen oxides

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

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

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NWO Holdco
NWO Holdco, L.L.C., a VIE in which NWO Holdco I, LLC, a wholly owned subsidiary of Grand River Wind, LLC, a wholly owned subsidiary of NorthStar Clean Energy, holds a Class B membership interest

OPEB
Other post-employment benefits

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










PCB
Polychlorinated biphenyl













PPA
Power purchase agreement







RCRA
Federal Resource Conservation and Recovery Act of 1976

REC
Renewable energy credit




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




SEC
U.S. Securities and Exchange Commission

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







SOFR
Secured overnight financing rate calculated and published by the Federal Reserve Bank of New York and selected as the recommended alternative to replace the London Interbank Offered Rate for dollar-denominated financial contracts by the Alternative Reference Rates Committee

TAES
Toshiba America Energy Systems Corporation, a non-affiliated company

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TBJH
TBJH Inc., a non-affiliated company

TCJA
Tax Cuts and Jobs Act of 2017

Term SOFR
The rate per annum that is a forward-looking term rate based on SOFR

T.E.S. Filer City
T.E.S. Filer City Station Limited Partnership, a VIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of NorthStar Clean Energy, has a 50‑percent interest

Toshiba
Toshiba Corporation, a non-affiliated company










VIE
Variable interest entity

Wolverine Power
Wolverine Power Supply Cooperative, Inc., a non-affiliated company

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Filing Format

This combined Form 10‑Q is separately filed by CMS Energy and Consumers. Information in this combined Form 10‑Q relating to each individual registrant is filed by such registrant on its own behalf. Consumers makes no representation regarding information relating to any other companies affiliated with CMS Energy other than its own subsidiaries.

CMS Energy is the parent holding company of several subsidiaries, including Consumers and NorthStar Clean Energy. None of CMS Energy, NorthStar Clean Energy, nor any of CMS Energy’s other subsidiaries (other than Consumers) has any obligation in respect of Consumers’ debt securities or preferred stock and holders of such securities should not consider the financial resources or results of operations of CMS Energy, NorthStar Clean Energy, nor any of CMS Energy’s other subsidiaries (other than Consumers and its own subsidiaries (in relevant circumstances)) in making a decision with respect to Consumers’ debt securities or preferred stock. Similarly, neither Consumers nor any other subsidiary of CMS Energy has any obligation in respect of securities of CMS Energy.

This report should be read in its entirety. No one section of this report deals with all aspects of the subject matter of this report. This report should be read in conjunction with the consolidated financial statements and related notes and with MD&A included in the 2023 Form 10‑K.

Available Information

CMS Energy’s internet address is www.cmsenergy.com. CMS Energy routinely posts important information on its website and considers the Investor Relations section, www.cmsenergy.com/investor-relations, a channel of distribution for material information. Information contained on CMS Energy’s website is not incorporated herein.

Forward-looking Statements and Information

This Form 10‑Q and other CMS Energy and Consumers disclosures may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. The use of “anticipates,” “assumes,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goals,” “guidance,” “intends,” “may,” “might,” “objectives,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “targets,” “will,” and other similar words is intended to identify forward-looking statements that involve risk and uncertainty. This discussion of potential risks and uncertainties is designed to highlight important factors that may impact CMS Energy’s and Consumers’ businesses and financial outlook. CMS Energy and Consumers have no obligation to update or revise forward-looking statements regardless of whether new information, future events, or any other factors affect the information contained in the statements. These forward-looking statements are subject to various factors that could cause CMS Energy’s and Consumers’ actual results to differ materially from the results anticipated in these statements. These factors include, but are not limited to, the following, all of which are potentially significant:

•the impact and effect of recent events, such as worsening trade relations, geopolitical tensions, war, acts of terrorism, and the responses to these events, and related economic disruptions including, but not limited to, inflation, energy price volatility, and supply chain disruptions

•the impact of new regulation by the MPSC, FERC, and other applicable governmental proceedings and regulations, including any associated impact on electric or gas rates or rate structures

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•potentially adverse regulatory treatment, effects of a failure to receive timely regulatory orders that are or could come before the MPSC, FERC, or other governmental authorities, or effects of a government shutdown

•changes in the performance of or regulations applicable to MISO, Michigan Electric Transmission Company, LLC (a non‑affiliated company), pipelines, railroads, vessels, or other service providers that CMS Energy, Consumers, or any of their affiliates rely on to serve their customers

•the adoption of or challenges to federal or state laws or regulations or changes in applicable laws, rules, regulations, principles, or practices, or in their interpretation, such as those related to energy policy, ROA, the Public Utility Regulatory Policies Act of 1978, infrastructure integrity or security, cybersecurity, gas pipeline safety, gas pipeline capacity, energy waste reduction, the environment, regulation or deregulation, reliability, health care reforms, taxes, accounting matters, climate change, air emissions, renewable energy, the Dodd-Frank Act, and other business issues that could have an impact on CMS Energy’s, Consumers’, or any of their affiliates’ businesses or financial results

•factors affecting, disrupting, interrupting, or otherwise impacting CMS Energy’s or Consumers’ facilities, utility infrastructure, operations, or backup systems, such as costs and availability of personnel, equipment, and materials; weather and climate, including catastrophic weather-related damage and extreme temperatures; natural disasters; fires; smoke; scheduled or unscheduled equipment outages; maintenance or repairs; contractor performance; environmental incidents; failures of equipment or materials; electric transmission and distribution or gas pipeline system constraints; interconnection requirements; political and social unrest; general strikes; the government and/or paramilitary response to political or social events; changes in trade policies or regulations; accidents; explosions; physical disasters; global pandemics; cyber incidents; vandalism; war or terrorism; and the ability to obtain or maintain insurance coverage for these events

•the ability of CMS Energy and Consumers to execute cost-reduction strategies

•potentially adverse regulatory or legal interpretations or decisions regarding environmental matters, or delayed regulatory treatment or permitting decisions that are or could come before agencies such as EGLE, the EPA, FERC, and/or the U.S. Army Corps of Engineers, and potential environmental remediation costs associated with these interpretations or decisions, including those that may affect Consumers’ coal ash management or routine maintenance, repair, and replacement classification under New Source Review, a construction-permitting program under the Clean Air Act

•changes in energy markets, including availability, price, and seasonality of electric capacity and the timing and extent of changes in commodity prices and availability and deliverability of coal, natural gas, natural gas liquids, electricity, oil, gasoline, diesel fuel, and certain related products

•the price of CMS Energy common stock, the credit ratings of CMS Energy and Consumers, capital and financial market conditions, and the effect of these market conditions on CMS Energy’s and Consumers’ interest costs and access to the capital markets, including availability of financing to CMS Energy, Consumers, or any of their affiliates

•the ability of CMS Energy and Consumers to execute their financing strategies

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•the investment performance of the assets of CMS Energy’s and Consumers’ pension and benefit plans, the discount rates, mortality assumptions, and future medical costs used in calculating the plans’ obligations, and the resulting impact on future funding requirements

•the impact of the economy, particularly in Michigan, and potential future volatility in the financial and credit markets on CMS Energy’s, Consumers’, or any of their affiliates’ revenues, ability to collect accounts receivable from customers, or cost and availability of capital

•changes in the economic and financial viability of CMS Energy’s and Consumers’ suppliers, customers, and other counterparties and the continued ability of these third parties, including those in bankruptcy, to meet their obligations to CMS Energy and Consumers

•population changes in the geographic areas where CMS Energy and Consumers conduct business

•national, regional, and local economic, competitive, and regulatory policies, conditions, and developments

•loss of customer demand for electric generation supply to alternative electric suppliers, increased use of self-generation including distributed generation, energy waste reduction, or energy storage

•loss of customer demand for natural gas due to alternative technologies or fuels or electrification

•the ability of Consumers to meet increased renewable energy demand due to customers seeking to meet their own sustainability goals in a timely and cost-efficient manner

•the reputational or other impact on CMS Energy and Consumers of the failure to achieve or make timely progress on their greenhouse gas reduction goals related to reducing their impact on climate change

•adverse consequences of employee, director, or third‑party fraud or non‑compliance with codes of conduct or with laws or regulations

•federal regulation of electric sales, including periodic re‑examination by federal regulators of CMS Energy’s and Consumers’ market-based sales authorizations

•any event, change, development, occurrence, or circumstance that could impact the implementation of the Clean Energy Plan, including any action by a regulatory authority or other third party to prohibit, delay, or impair the implementation of the Clean Energy Plan

•the availability, cost, coverage, and terms of insurance, the stability of insurance providers, and the ability of Consumers to recover the costs of any insurance from customers

•the effectiveness of CMS Energy’s and Consumers’ risk management policies, procedures, and strategies, including strategies to hedge risk related to interest rates and future prices of electricity, natural gas, and other energy-related commodities

•factors affecting development of electric generation projects, gas transmission, and gas and electric distribution infrastructure replacement, conversion, and expansion projects, including factors related to project site identification, construction material pricing, schedule delays, availability of qualified construction personnel, permitting, acquisition of property rights, community opposition, environmental regulations, and government actions

•changes or disruption in fuel supply, including but not limited to supplier bankruptcy and delivery disruptions

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•potential costs, lost revenues, reputational harm, or other consequences resulting from misappropriation of assets or sensitive information, corruption of data, or operational disruption in connection with a cyberattack or other cyber incident

•potential disruption to, interruption or failure of, or other impacts on information technology backup or disaster recovery systems

•technological developments in energy production, storage, delivery, usage, and metering

•the ability to implement and integrate technology successfully, including artificial intelligence

•the impact of CMS Energy’s and Consumers’ integrated business software system and its effects on their operations, including utility customer billing and collections

•adverse consequences resulting from any past, present, or future assertion of indemnity or warranty claims associated with assets and businesses previously owned by CMS Energy or Consumers, including claims resulting from attempts by foreign or domestic governments to assess taxes on or to impose environmental liability associated with past operations or transactions

•the outcome, cost, and other effects of any legal or administrative claims, proceedings, investigations, or settlements

•the reputational impact on CMS Energy and Consumers of operational incidents, violations of corporate policies, regulatory violations, inappropriate use of social media, and other events

•restrictions imposed by various financing arrangements and regulatory requirements on the ability of Consumers and other subsidiaries of CMS Energy to transfer funds to CMS Energy in the form of cash dividends, loans, or advances

•earnings volatility resulting from the application of fair value accounting to certain energy commodity contracts or interest rate contracts

•changes in financial or regulatory accounting principles or policies

•other matters that may be disclosed from time to time in CMS Energy’s and Consumers’ SEC filings, or in other public documents

All forward-looking statements should be considered in the context of the risk and other factors described above and as detailed from time to time in CMS Energy’s and Consumers’ SEC filings. For additional details regarding these and other uncertainties, see Part I—Item 1. Financial Statements—MD&A—Outlook and Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments; and Part I—Item 1A. Risk Factors in the 2023 Form 10-K.

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Part I—Financial Information

Item 1. Financial Statements

Index to Financial Statements


Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
CMS Energy Consolidated Financial Statements (Unaudited)		46
Consolidated Statements of Income (Unaudited)		46
Consolidated Statements of Comprehensive Income (Unaudited)		47
Consolidated Statements of Cash Flows (Unaudited)		49
Consolidated Balance Sheets (Unaudited)		50
Consolidated Statements of Changes in Equity (Unaudited)		52
Consumers Consolidated Financial Statements (Unaudited)		54
Consolidated Statements of Income (Unaudited)		54
Consolidated Statements of Comprehensive Income (Unaudited)		55
Consolidated Statements of Cash Flows (Unaudited)		57
Consolidated Balance Sheets (Unaudited)		58
Consolidated Statements of Changes in Equity (Unaudited)		60
Notes to the Unaudited Consolidated Financial Statements		61

1:	Regulatory Matters	61
2:	Contingencies and Commitments	62
3:	Financings and Capitalization	67
4:	Fair Value Measurements	69
5:	Financial Instruments	71

6:	Retirement Benefits	72
7:	Income Taxes	73
8:	Earnings Per Share—CMS Energy	74
9:	Revenue	75
10:	Reportable Segments	80
11:	Variable Interest Entities	83
12:	Exit Activities	85

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CMS Energy Corporation

Consumers Energy Company

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

This MD&A is a combined report of CMS Energy and Consumers.

Executive Overview

CMS Energy is an energy company operating primarily in Michigan. It is the parent holding company of several subsidiaries, including Consumers, an electric and gas utility, and NorthStar Clean Energy, primarily a domestic independent power producer and marketer. Consumers’ electric utility operations include the generation, purchase, distribution, and sale of electricity, and Consumers’ gas utility operations include the purchase, transmission, storage, distribution, and sale of natural gas. Consumers’ customer base consists of a mix of primarily residential, commercial, and diversified industrial customers. 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. 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. 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. 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.

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. The triple bottom line balances the interests of employees, customers, suppliers, regulators, creditors, Michigan’s residents,

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the investment community, and other stakeholders, and it reflects the broader societal impacts of CMS Energy’s and Consumers’ activities.

CMS Energy’s Sustainability Report, which is available to the public, describes CMS Energy’s and Consumers’ progress toward world class performance measured in the areas of people, planet, and profit.

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. Accordingly, CMS Energy and Consumers have worked to integrate a set of safety principles into their business operations and culture. These principles include complying with applicable safety, health, and security regulations and implementing programs and processes aimed at continually improving safety and security conditions. Over the last ten years, Consumers’ Occupational Safety and Health Administration recordable incident rate has decreased by 20 percent.

CMS Energy and Consumers also place a high priority on customer value and on providing a hometown customer experience. Consumers’ customer-driven investment program is aimed at improving safety and increasing electric and gas reliability.

In September 2023, Consumers filed its Reliability Roadmap, an update to its previous Electric Distribution Infrastructure Investment Plan filed in 2021, with the MPSC. The Reliability Roadmap outlines a five-year strategy to improve Consumers’ electric distribution system and the reliability of the grid. 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 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

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.

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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.

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.

CMS Energy and Consumers continue to focus on opportunities to protect the environment and reduce their carbon footprint from owned generation. CMS Energy, including Consumers, has decreased its combined percentage of electric supply (self-generated and purchased) from coal by 25 percentage points since 2015. Additionally, as a result of actions already taken through 2023, 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

•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

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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. Consumers began tracking mercury emissions in 2007; since that time, it has reduced such emissions by nearly 93 percent.

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

•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

Consumers is required to file updates to its amended renewable energy plan in November 2024 and its Clean Energy Plan before or in 2027. 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.

Consumers’ Clean Energy Plan details its strategy to meet customers’ long-term energy needs and was most recently revised and approved by the MPSC in 2022 under Michigan’s integrated resource planning process. The Clean Energy Plan outlines Consumers’ long-term strategy for delivering clean, reliable, resilient, and affordable energy to its customers. This strategy includes:

•ending the use of coal-fueled generation in 2025, 15 years sooner than initially planned

•purchasing the Covert Generating Station, a natural gas-fueled generating facility with 1,200 MW of nameplate capacity, allowing Consumers to continue to provide controllable sources of electricity to customers; this purchase was completed in May 2023

•soliciting up to 700 MW of capacity through PPAs from sources able to deliver to Michigan’s Lower Peninsula beginning in 2025

•expanding its investment in renewable energy, adding nearly 8,000 MW of solar generation by 2040

Under the Clean Energy Plan, and as enhanced by the 2023 Energy Law, Consumers earns a return equal to its pre-tax weighted-average cost of capital on permanent capital structure on payments made under new competitively bid PPAs with non‑affiliated entities approved by the MPSC.

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Presented in the following illustration is Consumers’ 2021 capacity portfolio and its future capacity portfolio under its Clean Energy Plan, which does not yet incorporate the requirements of the 2023 Energy Law. This illustration includes the effects of purchased capacity and customer programs and uses the nameplate capacity for all energy sources:

1 Does not include RECs.

2 Includes energy waste reduction, demand response, and conservation voltage reduction programs.

3 These amounts and fuel sources will vary and are dependent on a one‑time competitive solicitation to acquire up to 700 MW of capacity through PPAs from sources able to deliver to Michigan’s Lower Peninsula beginning in 2025.

In addition to Consumers’ plan to eliminate its use of coal-fueled generation in 2025, CMS Energy and Consumers have set the net‑zero emissions goals discussed below.

Net-zero methane emissions from natural gas delivery system by 2030: Under its Methane Reduction Plan, Consumers plans to reduce methane emissions from its system by about 80 percent, from 2012 baseline levels, by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices. 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.

Net-zero carbon emissions from electric business by 2040: This goal includes not only emissions from owned generation, but also emissions from the generation of power purchased through long-term PPAs and from the MISO energy market. Consumers expects to meet 90 percent of its customers’ needs with clean energy sources by 2040 through execution of its Clean Energy Plan. New technologies and carbon offset measures may be used to close the gap to achieving net-zero carbon emissions.

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Net-zero greenhouse gas emissions target for the entire business 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. Consumers expects to meet this goal through carbon offset measures, renewable natural gas, energy efficiency and demand response programs, and the adoption of cost-effective emerging technologies once proven and commercially available.

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 2,000 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 660 million gallons towards this goal

•to annually divert a minimum of 90 percent of waste from landfills (through waste reduction, recycling, and reuse); 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. While CMS Energy and Consumers cannot predict the outcome of these matters, which could affect them materially, they intend to continue to move forward with their clean and lean strategy.

Profit: The profit element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to meeting their financial objectives and providing economic development opportunities and benefits in the communities in which they do business. CMS Energy’s and Consumers’ financial strength allows them to maintain solid investment-grade credit ratings and thereby reduce funding costs for the benefit of customers and investors, to attract and retain talent, and to reinvest in the communities they serve.

For the six months ended June 30, 2024, CMS Energy’s net income available to common stockholders was $480 million, and diluted EPS were $1.61. This compares with net income available to common stockholders of $397 million and diluted EPS of $1.36 for the six months ended June 30, 2023. In 2024, gas and electric rate increases and higher earnings at NorthStar Clean Energy were offset partially by higher interest charges and income tax expense. 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. This outlook reflects modest growth in electric and gas demand, offset by the effects of energy waste reduction programs.

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Performance: Impacting the Triple Bottom Line

CMS Energy and Consumers remain committed to achieving world class performance while delivering hometown service and positively impacting the triple bottom line of people, planet, and profit. During the first half of 2024, CMS Energy and Consumers:

•created a Clean Energy Workforce Development Program for people employed in the building trades to receive training and certifications in the areas of advanced energy efficiency, lead abatement, and other work

•announced a targeted undergrounding pilot program, kick-starting Consumers’ long-term plans to move more power lines underground in efforts to improve electric service

•expanded Consumers’ MI Clean Air program to include several renewable natural gas projects being developed across Michigan, increasing options for customers to offset emissions associated with their natural gas use

•collaborated with the Muskegon County Resource Recovery Center to develop Consumers’ first large-scale, self-developed solar project, a 250-MW solar energy center expected to be fully operational by 2026, which could generate enough renewable energy to power 40,000 homes

•announced plans to install nearly 3,000 line sensors, 100 automatic transfer reclosers, and 1,200 iron utility poles to improve electric reliability and help prevent power outages

•updated Consumers’ Transportation Electrification Plan, outlining how it plans to power over 1,500 new fast charging locations and serve one million electric vehicles in Michigan by 2030

CMS Energy and Consumers will continue to utilize the CE Way to enable them to achieve world class performance and positively impact the triple bottom line. Consumers’ investment plan and the regulatory environment in which it operates also drive its ability to impact the triple bottom line.

Investment Plan: Over the next five years, Consumers expects to make significant expenditures on infrastructure upgrades, replacements, and clean generation. While it has a large number of potential investment opportunities that would add customer value, Consumers has prioritized its spending based on the criteria of enhancing public safety, increasing reliability, maintaining affordability for its customers, and advancing its environmental stewardship. Consumers’ investment program, 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 seven percent. This rate-base growth, together with cost-control measures, should allow Consumers to maintain affordable customer prices.

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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. 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.

Regulation: Regulatory matters are a key aspect of Consumers’ business, particularly rate cases and regulatory proceedings before the MPSC, which permit recovery of new investments while helping to ensure that customer rates are fair and affordable. Important regulatory events and developments not already discussed are summarized below.

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. 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. Second, Consumers requested approval of a surcharge for the recovery of $22 million of distribution investments made in 2023 that exceeded the rates authorized in accordance with previous electric rate orders.

2023 Electric Rate Case: In March 2024, the MPSC issued an order authorizing an annual rate increase of $92 million, which is inclusive of a $9 million surcharge for the recovery of select distribution investments made in 2022 that exceeded the rates authorized in accordance with the December 2021 electric rate order. The approved rate increase is based on a 9.9-percent authorized return on equity. The new rates became effective March 15, 2024.

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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. 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. Additionally, the settlement approves the use of $27.5 million, or one-fourth, of the gain on the sale of Consumers’ unregulated ASP business as an offset to the revenue deficiency in lieu of additional rate relief during the test year. This results in effective rate relief of $62.5 million for the test year. The settlement agreement also provides for the remaining three-fourths of the $110 million gain on the sale of the ASP business, or $82.5 million, to be provided to customers as a bill credit over a three-year period. The new rates, including the bill credit, will become effective October 1, 2024.

Looking Forward

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

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Results of Operations

CMS Energy Consolidated Results of Operations


In Millions, Except Per Share Amounts
	Three Months Ended									Six Months Ended
June 30	2024			2023			Change			2024			2023			Change
Net Income Available to Common Stockholders		$	195		$	195		$	—		$	480		$	397		$	83
Basic Earnings Per Average Common Share		$	0.65		$	0.67		$	(0.02)		$	1.61		$	1.36		$	0.25
Diluted Earnings Per Average Common Share		$	0.65		$	0.67		$	(0.02)		$	1.61		$	1.36		$	0.25


In Millions
	Three Months Ended									Six Months Ended
June 30	2024			2023			Change			2024			2023			Change
Electric utility		$	170		$	147		$	23		$	267		$	217		$	50
Gas utility		15			23			(8)			184			177			7
NorthStar Clean Energy		16			3			13			47			10			37
Corporate interest and other		(6)			22			(28)			(18)			(7)			(11)
Net Income Available to Common Stockholders		$	195		$	195		$	—		$	480		$	397		$	83

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Amounts in the following tables are presented pre-tax, with the exception of income tax changes.

Presented in the following table is a summary of changes to net income available to common stockholders for the three and six months ended June 30, 2024 versus 2023:


In Millions
	Three Months Ended					Six Months Ended
June 30, 2023				$	195				$	397
Reasons for the change
Consumers electric utility and gas utility
Electric sales		$	13				$	31
Gas sales		(48)					(57)
Electric rate increase		71					103
Gas rate increase		16					56
Absence of 2023 voluntary separation program expenses		28					28
Lower other maintenance and operating expenses		11					15
Higher other income, net of expenses		3					8



Higher interest charges		(16)					(43)
Higher income tax expense		(4)					(30)
Higher depreciation and amortization		(16)					(28)
Higher property taxes, reflecting higher capital spending, and other		(5)					(18)
Higher service restoration costs		(38)					(8)
				$	15				$	57
NorthStar Clean Energy				13					37
Corporate interest and other				(28)					(11)

June 30, 2024				$	195				$	480

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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 the three and six months ended June 30, 2024 versus 2023:


In Millions
	Three Months Ended					Six Months Ended
June 30, 2023				$	147				$	217
Reasons for the change
Electric deliveries1 and rate increases
Rate increase, including return on higher renewable capital spending		$	71				$	103
Higher revenue due primarily to favorable weather and non-weather sales		18					32

Lower energy waste reduction program revenues		(2)					(9)
Lower other revenues		(5)					(1)
				$	82				$	125
Maintenance and other operating expenses


Absence of 2023 voluntary separation program expenses		17					17
Lower energy waste reduction program costs		2					9


Higher service restoration costs		(38)					(8)


Lower other maintenance and operating expenses		—					4
				(19)					22
Depreciation and amortization
Increased plant in service, reflecting higher capital spending				(18)					(39)

General taxes
Higher property taxes, reflecting higher capital spending, and other				(4)					(10)


Other income, net of expenses				(2)					1




Interest charges				(8)					(25)
Income taxes
Higher renewable energy tax credits		—					3
Higher electric utility pre-tax earnings		(7)					(18)
Absence of 2023 deferred tax liability reversal2		—					(9)
Higher other income taxes		(1)					—
				(8)					(24)
June 30, 2024				$	170				$	267

1For the three months ended June 30, deliveries to end-use customers were 9.0 billion kWh in 2024 and 8.9 billion kWh in 2023. For the six months ended June 30, deliveries to end-use customers were 17.9 billion kWh in 2024 and 17.7 billion kWh in 2023.

2See Note 7, Income Taxes.

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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 the three and six months ended June 30, 2024 versus 2023:


In Millions
	Three Months Ended					Six Months Ended
June 30, 2023				$	23				$	177
Reasons for the change
Gas deliveries1 and rate increases
Rate increase		$	16				$	56

Higher energy waste reduction program revenues		—					10
Lower revenue due primarily to unfavorable weather		(34)					(43)
Lower ASP business revenue2		(14)					(14)
				$	(32)				$	9
Maintenance and other operating expenses
Lower ASP business expense2		11					15
Absence of 2023 voluntary separation program expenses		11					11

Higher energy waste reduction program costs		—					(10)
Higher maintenance and other operating expenses		—					(4)
				22					12
Depreciation and amortization
Lower depreciation rates, offset partially by higher capital spending				2					11
General taxes
Higher property taxes, reflecting higher capital spending and other				(1)					(8)
Other income, net of expenses				5					7




Interest charges				(8)					(18)
Income taxes
Absence of 2023 deferred tax liability reversal3		—					(4)
Lower (higher) gas utility pre-tax earnings		3					(3)

Lower other income taxes		1					1
				4					(6)
June 30, 2024				$	15				$	184

1For the three months ended June 30, deliveries to end-use customers were 41 Bcf in 2024 and 49 Bcf in 2023. For the six months ended June 30, deliveries to end-use customers were 158 Bcf in 2024 and 168 Bcf in 2023.

2See Note 12, Exit Activities.

3See Note 7, Income Taxes.

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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 the three and six months ended June 30, 2024 versus 2023:


In Millions
	Three Months Ended			Six Months Ended
June 30, 2023		$	3		$	10
Reason for the change
Higher earnings from renewable projects		$	8		$	24
Higher operating earnings, primarily at DIG		8			15


Lower renewable energy tax credits		(3)			(2)
June 30, 2024		$	16		$	47

Corporate Interest and Other Results of Operations

Presented in the following table are the detailed changes to corporate interest and other results for the three and six months ended June 30, 2024 versus 2023:


In Millions
	Three Months Ended			Six Months Ended
June 30, 2023		$	22		$	(7)
Reasons for the change
Lower income tax expense due to lower pre-tax earnings		$	6		$	3
Lower gain on extinguishment of debt1		(36)			(14)

Lower discontinued operations		(1)			(1)
Other		3			1

June 30, 2024		$	(6)		$	(18)

1See Note 3, Financings and Capitalization.

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Cash Position, Investing, and Financing

At June 30, 2024, CMS Energy had $789 million of consolidated cash and cash equivalents, which included $90 million of restricted cash and cash equivalents. At June 30, 2024, Consumers had $696 million of consolidated cash and cash equivalents, which included $89 million of restricted cash and cash equivalents.

Operating Activities

Presented in the following table are specific components of net cash provided by operating activities for the six months ended June 30, 2024 versus 2023:


In Millions
CMS Energy, including Consumers
Six Months Ended June 30, 2023	$	1,705
Reasons for the change
Higher net income	$	61
Non‑cash transactions1	56


Unfavorable impact of changes in core working capital,2 due primarily to lower collections and lower prices on gas sold to customers	(212)
Favorable impact of changes in other assets and liabilities	53
Six Months Ended June 30, 2024	$	1,663
Consumers
Six Months Ended June 30, 2023	$	1,759
Reasons for the change
Higher net income	$	54
Non‑cash transactions1	28

Unfavorable impact of changes in core working capital,2 due primarily to lower collections and lower prices on gas sold to customers	(205)
Favorable impact of changes in other assets and liabilities	55
Six Months Ended June 30, 2024	$	1,691

1Non‑cash transactions comprise depreciation and amortization, changes in deferred income taxes and investment tax credits, and other non‑cash operating activities and reconciling adjustments.

2Core working capital comprises accounts receivable, accrued revenue, inventories, accounts payable, and accrued rate refunds.

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Investing Activities

Presented in the following table are specific components of net cash used in investing activities for the six months ended June 30, 2024 versus 2023:


In Millions
CMS Energy, including Consumers
Six Months Ended June 30, 2023	$	(2,079)
Reasons for the change
Higher capital expenditures	$	(107)
Absence of purchase of Covert Generating Station in 2023	810




Proceeds from sale of ASP business	124


Other investing activities	6
Six Months Ended June 30, 2024	$	(1,246)
Consumers
Six Months Ended June 30, 2023	$	(1,971)
Reasons for the change
Higher capital expenditures	$	(147)
Absence of purchase of Covert Generating Station in 2023	810
Proceeds from sale of ASP business	124

Other investing activities	8
Six Months Ended June 30, 2024	$	(1,176)

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Financing Activities

Presented in the following table are specific components of net cash provided by financing activities for the six months ended June 30, 2024 versus 2023:


In Millions
CMS Energy, including Consumers
Six Months Ended June 30, 2023	$	598
Reasons for the change
Lower debt issuances	$	(1,701)
Lower debt retirements	1,032

Higher repayments of notes payable	(73)
Higher issuances of common stock, primarily the settlement of forward sale contracts under the equity offering program1	272

Higher payments of dividends on common stock	(24)




Other financing activities, primarily lower debt issuance costs	20
Six Months Ended June 30, 2024	$	124
Consumers
Six Months Ended June 30, 2023	$	268
Reasons for the change
Lower debt issuances	$	(921)
Lower debt retirements	1,299
Higher repayments of notes payable	(73)
Absence of a repayment of borrowings from CMS Energy in 2023	69
Lower stockholder contribution from CMS Energy	(155)
Return of stockholder contribution to CMS Energy	(320)
Higher payments of dividends on common stock	(54)

Other financing activities, primarily lower debt issuance costs	12
Six Months Ended June 30, 2024	$	125

1Note 3, Financings and Capitalization—Issuance of Common Stock.

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Capital Resources and Liquidity

CMS Energy and Consumers expect to have sufficient liquidity to fund their present and future commitments. CMS Energy uses dividends and tax-sharing payments from its subsidiaries and external financing and capital transactions to invest in its utility and non‑utility businesses, retire debt, pay dividends, and fund its other obligations. The ability of CMS Energy’s subsidiaries, including Consumers, to pay dividends to CMS Energy depends upon each subsidiary’s revenues, earnings, cash needs, and other factors. In addition, Consumers’ ability to pay dividends is restricted by certain terms included in its articles of incorporation and potentially by FERC requirements and provisions under the Federal Power Act and the Natural Gas Act. For additional details on Consumers’ dividend restrictions, see Notes to the Unaudited Consolidated Financial Statements—Note 3, Financings and Capitalization—Dividend Restrictions. During the six months ended June 30, 2024, Consumers paid $359 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. Consumers also uses these sources of funding to contribute to its employee benefit plans.

Under the Inflation Reduction Act of 2022, renewable energy tax credits produced after 2022 are transferable to third parties. In April 2024, Consumers sold renewable energy tax credits generated in 2023 and received proceeds of $37 million. In June 2024, Consumers entered into an agreement to sell renewable energy tax credits generated in 2024 for $51 million, subject to adjustment for actual production.

Financing and Capital Resources: CMS Energy and Consumers rely on the capital markets to fund their robust capital plan. Barring any sustained market dislocations or disruptions, CMS Energy and Consumers expect to continue to have ready access to the financial and capital markets and will continue to explore possibilities to take advantage of market opportunities as they arise with respect to future funding needs. If access to these markets were to diminish or otherwise become restricted, CMS Energy and Consumers would implement contingency plans to address debt maturities, which could include reduced capital spending.

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.

CMS Energy, NorthStar Clean Energy, and Consumers use revolving credit facilities for general working capital purposes and to issue letters of credit. In May 2024, NorthStar Clean Energy entered into a secured revolving credit agreement which provides for up to $150 million in borrowings. At June 30, 2024, CMS Energy had $521 million of its revolving credit facility available, NorthStar Clean Energy had $45 million of its revolving credit facility available, and Consumers had $1.3 billion available under its revolving credit facilities.

An additional source of liquidity is Consumers’ commercial paper program, which allows Consumers to issue, in one or more placements, up to $500 million in aggregate principal amount of commercial paper notes with maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities. 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 June 30, 2024, there were no commercial paper notes outstanding under this program. For additional details on CMS Energy’s

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and Consumers’ secured revolving credit facilities and commercial paper program, see Notes to the Unaudited Consolidated Financial Statements—Note 3, Financings and Capitalization.

Certain of CMS Energy’s, NorthStar Clean Energy’s, and Consumers’ credit agreements contain covenants that require each entity to maintain certain financial ratios, as defined therein. At June 30, 2024, no default had occurred with respect to any of the financial covenants contained in these credit agreements. Each of the entities was in compliance with the covenants contained in their respective credit agreements as of June 30, 2024, as presented in the following table:


	Limit	Actual
CMS Energy, parent only
Debt to Capital1	< 0.70 to 1.0	0.57 to 1.0
NorthStar Clean Energy, including subsidiaries
Debt to Capital2	< 0.50 to 1.0	0.13 to 1.0
Debt Service Coverage2	> 2.00 to 1.0	26.00 to 1.0
Consumers
Debt to Capital3	< 0.65 to 1.0	0.50 to 1.0

1Applies to CMS Energy’s revolving credit agreement and letter of credit reimbursement agreement.

2Applies to NorthStar Clean Energy’s revolving credit agreement. In addition to the financial covenants presented in the table, the aggregate book value of the pledged equity interests under the revolving credit agreement was at least two-times the aggregate commitment under the revolving credit agreement at June 30, 2024.

3Applies to Consumers’ revolving credit agreements.

Outlook

Several business trends and uncertainties may affect CMS Energy’s and Consumers’ financial condition and results of operations. These trends and uncertainties could have a material impact on CMS Energy’s and Consumers’ consolidated income, cash flows, or financial position. For additional details regarding these and other uncertainties, see Forward-looking Statements and Information; Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments; and Part II—Item 1A. Risk Factors.

Consumers Electric Utility Outlook and Uncertainties

Clean Energy Plan: Consumers’ Clean Energy Plan details its strategy to meet customers’ long-term energy needs and provides the foundation for its goal to achieve net-zero carbon emissions from its electric business by 2040. Under this net-zero goal, Consumers plans to eliminate the impact of carbon emissions created by the electricity it generates or purchases for customers. Additionally, through its Clean Energy Plan, Consumers continues to make progress on expanding its customer programs, namely its demand response, energy efficiency, and conservation voltage reduction programs, as well as increasing its renewable energy generation.

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The Clean Energy Plan was most recently revised and approved by the MPSC in 2022. Under this plan, Consumers will eliminate the use of coal-fueled generation in 2025 and expects to meet 90 percent of its customers’ needs with clean energy sources by 2040. Specifically, the Clean Energy Plan provides for:

•the retirement of the D.E. Karn coal-fueled generating units, totaling 515 MW of nameplate capacity; these units closed in June 2023

•the retirement of the J.H. Campbell coal-fueled generating units, totaling 1,407 MW of nameplate capacity, in 2025

•the retirement of the D.E. 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. Additionally, the MPSC has authorized regulatory asset treatment for Consumers to recover the remaining book value of the J.H. Campbell coal-fueled generating units, as well as a 9.0‑percent return on equity, commencing in 2025.

Under the Clean Energy Plan, Consumers:

•purchased the Covert Generating Station, a natural gas-fueled generating facility with 1,200 MW of nameplate capacity in Van Buren County, Michigan in May 2023

•conducted a one‑time competitive solicitation for up to 700 MW of capacity through PPAs from sources able to deliver to Michigan’s Lower Peninsula beginning in 2025 (including up to 500 MW from dispatchable sources)

These actions are expected to help Consumers continue to provide controllable sources of electricity to customers while expanding its investment in renewable energy. The Clean Energy Plan forecasts renewable energy capacity levels of 30 percent in 2025, 43 percent in 2030, and 61 percent in 2040, including the addition of nearly 8,000 MW of solar generation. Additionally, Consumers plans to deploy battery storage beginning in 2024, with 75 MW of energy storage expected by 2027 and an additional 475 MW by 2040. The 2023 Energy Law, enacted in November 2023, set more ambitious standards for renewable energy and energy storage. Consumers is required to file updates to its amended renewable energy plan in November 2024 and its Clean Energy Plan before or in 2027. Together, these updated plans will outline a path to meeting these accelerated timelines.

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. Additionally, Consumers earns a return equal to its pre-tax weighted-average cost of capital on permanent capital structure on payments made under new competitively bid PPAs with non‑affiliated entities approved by the MPSC.

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As a result of requests for proposals, Consumers has entered into PPAs to purchase renewable capacity, energy, and RECs from solar generating facilities and battery storage facilities, as well as build transfer agreements to purchase solar generating facilities. Presented in the following illustration is the aggregate renewable capacity that Consumers expects to add to its portfolio as a result of these agreements:

Consumers continues to evaluate the acquisition of additional capacity from intermittent resources and dispatchable, non‑intermittent clean capacity resources (including battery storage resources). Any resulting contracts are subject to MPSC approval.

Renewable Energy Plan: The 2023 Energy Law raises the renewable energy standard from the present 15‑percent requirement to 50 percent by 2030 and 60 percent by 2035. Consumers is required to submit RECs, which represent proof that the associated electricity was generated from a renewable energy resource, in an amount equal to at least the required percentage of Consumers’ electric sales volume each year. Under its renewable energy plan, Consumers has met and expects to continue to meet its renewable energy requirement each year with a combination of newly generated RECs and previously generated RECs carried over from prior years.

The MPSC has approved the acquisition of up to 525 MW of new wind generation projects and authorized Consumers to earn a 10.7‑percent return on equity on any projects approved by the MPSC under Consumers’ amended renewable energy plan. Specifically, the MPSC has approved the following:

•purchase and construction of a 150‑MW wind generation project in Gratiot County, Michigan; the project became operational and Consumers took full ownership in 2020

•purchase of a 166‑MW wind generation project in Hillsdale, Michigan; the project became operational and Consumers took full ownership in 2021

•purchase of a 201‑MW wind generation project in Gratiot County, Michigan; the project became operational and Consumers took full ownership of the project in December 2023

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The MPSC also approved the execution of a 20‑year PPA under which Consumers will purchase 100 MW of renewable capacity, energy, and RECs from a 149‑MW solar generating facility to be constructed in Calhoun County, Michigan; the facility is targeted to be operational in 2024.

Voluntary Large Customer Renewable Energy Program: Consumers provides service under a program that provides large full-service electric customers with the opportunity to advance the development of renewable energy beyond the present 15‑percent requirement. In September 2023, Consumers filed an application to amend its renewable energy plan. Among other things, Consumers requested that the MPSC remove the 1,000‑MW limit on new wind and solar generation, which will allow Consumers to meet growing customer demand for the program. Consumers competitively solicits for additional renewable energy assets based on customer applications.

As part of this program, the 2022 request for proposals resulted in the execution of a build transfer agreement for a 309‑MW solar generating facility to be constructed in Calhoun County, Michigan; the facility is targeted to be operational in 2026. The build transfer agreement was approved by the MPSC in September 2023. Additionally, the request for proposals resulted in the selection of a solar generation project that Consumers will develop and construct at its D.E. Karn generating site, with a capacity of up to 85 MW. The facility is expected to be operational in 2026.

Electric Customer Deliveries and Revenue: Consumers’ electric customer deliveries are seasonal and largely dependent on Michigan’s economy. The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment. In addition, Consumers’ electric rates, which follow a seasonal rate design, are higher in the summer months than in the remaining months of the year. Each year in June, electric residential customers transition to a summer peak time-of-use rate that allows them to take advantage of lower-cost energy during off-peak times during the summer months. Thus, customers can reduce their electric bills by shifting their consumption from on‑peak to off‑peak times.

Over the next five years, Consumers expects weather-normalized electric deliveries to remain relatively stable compared to 2023. This outlook reflects modest growth in electric demand, offset by the effects of energy waste reduction programs. 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 industrial 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. At June 30, 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. The law also authorized the MPSC to ensure that alternative electric suppliers have procured enough capacity to cover their anticipated capacity requirements for the four‑year forward period. In 2017, the MPSC issued an order establishing a state reliability mechanism for Consumers. 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.

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During 2017, the MPSC issued orders finding that it has statutory authority to determine and implement a local clearing requirement, which requires all electric suppliers to demonstrate that a portion of the capacity used to serve customers is located in the MISO footprint in Michigan’s Lower Peninsula. In 2020, the Michigan Supreme Court affirmed the MPSC’s statutory authority to implement a local clearing requirement on individual electric providers.

In 2020, ABATE and another intervenor filed a complaint against the MPSC in the U.S. District Court for the Eastern District of Michigan challenging the constitutionality of a local clearing requirement. The complaint requests the federal court to issue a permanent injunction prohibiting the MPSC from implementing a local clearing requirement on individual electric providers. In February 2023, the U.S. District Court for the Eastern District of Michigan dismissed the complaint. In March 2023, ABATE and the other intervenor filed a claim of appeal of the Eastern District Court’s decision with the U.S. Court of Appeals for the Sixth Circuit. Oral arguments occurred in December 2023.

Hydroelectric Facilities: In February 2024, Consumers issued a request for proposals to explore the possibility of selling its 13 river hydroelectric dams located throughout Michigan. Consumers has solicited community feedback on the dams’ futures, as federal operating licenses for the dams begin to expire in 2034. Consumers continues to evaluate each dam’s future, options for which include, but are not limited to, renewing operating licenses, transferring ownership, or removing the facilities.

Electric Rate Matters: Rate matters are critical to Consumers’ electric utility business. For additional details on rate matters, see Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments.

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. Consumers responded to the MPSC’s order as directed.

Additionally, as directed by the MPSC, the MPSC Staff has engaged a third‑party auditor to review all equipment and operations of the two utilities’ distribution systems; this audit began in August 2023. The MPSC Staff released a report prepared by the third-party auditor to summarize the audit’s progress in December 2023, and a final report is expected in late summer 2024. Consumers is committed to working with the third‑party auditor and the MPSC to continue improving electric reliability and safety in Michigan.

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Presented in the following table are the components of the requested increase in revenue:


In Millions
Projected 12-Month Period Ending February 28	2026
Components of the requested rate increase
Investment in rate base	$	180
Operating and maintenance costs	14
Sales and other revenue	41
Cost of capital	68
Subtotal	$	303
Surcharge	22
Total	$	325

Retention Incentive Program: Under its Clean Energy Plan, Consumers will retire the J.H. Campbell coal-fueled generating units in 2025. In order to ensure necessary staffing at J.H. 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 $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 Notes to the Unaudited Consolidated Financial Statements—Note 12, Exit Activities.

Electric Environmental Outlook: Consumers’ electric operations are subject to various federal, state, and local environmental laws and regulations. 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’ 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’ electric utility.

MATS, emission standards for electric generating units published by the EPA based on Section 112 of the Clean Air Act, continue to apply to Consumers. The company has complied, and continues to comply, with the MATS regulation and does not expect MATS to materially impact its environmental strategy.

CSAPR requires Michigan and many other states to improve air quality by reducing power plant emissions that, according to EPA modeling, contribute to ground-level ozone in other downwind states. Since its 2015 effective date, CSAPR has been revised several times. In June 2023, the EPA published the Good Neighbor Plan, a revision to CSAPR. This 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. Consumers expects this regulation will have minimal financial and operational impact in the near and/or long term. However, due to the dynamic nature of this regulation, it is difficult to forecast the long-term impact.

In 2015, the EPA lowered the NAAQS for ozone and made it more difficult to construct or modify power plants and other emission sources in areas of the country that do not meet the ozone standard. As of May 2023, three counties in western Michigan have been designated as not meeting the ozone standard. None of Consumers’ fossil-fuel-fired generating units are located in these areas.

Additionally, in March 2024, the EPA published a lower fine particulate matter NAAQS, which will likely result in newly designated nonattainment areas in Michigan starting in 2026. Consumers does not

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expect this rule to have significant impacts on its fossil-fuel-fired generating assets or its clean energy strategy. Consumers will continue to monitor NAAQS rulemakings and litigation to evaluate potential impacts to its generating assets.

Consumers continues to evaluate these rules in conjunction with other EPA and EGLE rulemakings, litigation, executive orders, treaties, and congressional actions. This evaluation could result in:

•a change in Consumers’ fuel mix

•changes in the types of generating units Consumers may purchase or build in the future

•changes in how certain units are operated, including the installation of additional emission control equipment

•the retirement, mothballing, or repowering with an alternative fuel of some of Consumers’ generating units

•changes in Consumers’ environmental compliance costs

•the purchase or sale of allowances

Greenhouse Gases: There have been numerous legislative and regulatory initiatives at the state, regional, national, and international levels that involve the potential regulation and reporting of greenhouse gases. Consumers continues to monitor and comment on these initiatives, as appropriate.

In April 2024, the EPA finalized its rule under Section 111 of the Clean Air Act to address greenhouse gas emissions from new gas-fueled units and existing coal- and oil-fueled electric generating units. Notably, these rules do not address existing gas-fueled electric generating units, though the EPA has announced that it will release a draft rule for these types of units at a later time. Under its Clean Energy Plan, Consumers will eliminate the use of coal-fueled generation in 2025 and does not expect this rule will have a significant impact on its generating assets or its Clean Energy Plan. Future EPA regulations addressing greenhouse gas emissions from existing gas-fueled electric generating units may apply to Consumers’ gas-fueled facilities and may have a material financial and operational impact. Consumers will continue to follow the EPA rules that address greenhouse gas emissions and will continue to evaluate potential impacts to its operations.

Under the Paris Agreement, an international agreement addressing greenhouse gas emissions, the U.S. has committed to reduce greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. Under its Clean Energy Plan, Consumers plans to reduce carbon emissions from its electric business by 60 percent from 2005 levels in 2025. At this time, Consumers does not expect any adverse changes to its environmental strategy as a result of this event, as its plans exceed the nationally committed reduction. The commitment made by the U.S. is not binding without new Congressional legislation.

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 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.

Increased frequency or intensity of severe or extreme weather events, including those due to climate change, could materially impact Consumers’ facilities, energy sales, and results of operations. 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

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addressing the physical risks of climate change on its infrastructure in 2022. Consumers is taking steps to mitigate these risks as appropriate.

While Consumers cannot predict the outcome of changes in U.S. policy or of other legislative, executive, or regulatory initiatives involving the potential regulation or reporting of greenhouse gases, it intends to move forward with its Clean Energy Plan, its present net-zero goals, and its emphasis on reliable and resilient electric supply. Litigation, international treaties, executive orders, federal laws and regulations (including regulations by the EPA), and state laws and regulations, if enacted or ratified, could ultimately impact Consumers. 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.

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. Due to continued litigation, many aspects of the rule have been remanded to the EPA, resulting in more proposed and final rules.

In May 2024, the EPA finalized a rule regulating legacy CCR surface impoundments and CCR management units in response to litigation that exempted inactive impoundments at inactive facilities from the 2015 CCR rule. The new rule adopts minimum standards for impoundments at power generation sites that became inactive prior to the effective date of the 2015 CCR rule. Owners and operators must first determine if a legacy surface impoundment is within the scope of the new rule before following the compliance requirements. The EPA established groundwater monitoring, corrective action, closure, and post-closure care requirements for CCR surface impoundments and landfills closed prior to the effective date of the 2015 CCR rule, including CCR landfills that were previously exempted from regulation but are now defined within a broader class of CCR units called CCR management units. Owners are required to identify and assess these areas to determine an appropriate course of action (closure, groundwater treatment, etc.) and perform compliance requirements set forth under the rules.

Separately, Congress passed legislation in 2016 allowing participating states to develop permitting programs for CCRs under RCRA Subtitle D. The EPA was granted authority to review these permitting programs to determine if permits issued under the proposed program would be as protective as the federal rule. Once approved, permits issued from an authorized state would replace the requirement to certify compliance with each aspect of the 2015 CCR rule. 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

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set forth in the 2015 CCR rule. Consumers has historically been authorized to recover in electric rates costs related to coal ash disposal sites. Consumers is evaluating the new CCR rule, its impact on the state permit program, and performing the required applicability determinations in order to assess the overall impacts of the rule and appropriate next steps.

Water: Multiple water-related regulations apply, or may apply, to Consumers.

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 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 also regulates the discharge of wastewater through its effluent limitation guidelines for steam electric generating plants. In 2020, the EPA revised previous guidelines related to the discharge of certain wastewater, but allowed for extension of the compliance deadline from the end of 2023 to the end of 2025, upon approval by EGLE through the NPDES permitting process. Consumers received such an extension for its J.H. Campbell coal-fueled generating units, which it plans to retire in 2025. In April 2024, the EPA released a final rule updating its effluent limitation guidelines for existing coal-fueled units. This rule regulates additional wastewater streams previously not regulated, including combustion residual leachate and legacy wastewater. Consumers is evaluating these new portions of the rule for their potential impacts on its coal-fueled generating facilities and the associated storage of CCRs.

In recent years, the EPA and the U.S. Army Corps of Engineers have proposed changes to the scope of federal jurisdiction over bodies of water and to the frequency of dual jurisdiction in states with authority to regulate the same waters; Michigan is one such state. A 2022 rule changed the definition of “Waters of the United States,” which defines the scope of waters protected under the Clean Water Act. Additionally, in May 2023, the U.S. Supreme Court issued a decision reducing the scope of “Waters of the United States.” Consumers does not expect adverse changes to its environmental strategy as a result of the current interpretations and court decision.

Many of Consumers’ facilities maintain NPDES permits, which are vital to the facilities’ operations. Consumers applies for renewal of these permits every five years. 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.

Protected Wildlife: Multiple regulations apply, or may apply, to Consumers relating to protected species and habitats.

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. In February 2024, the U.S. Fish and Wildlife Service published a final rule, effective April 2024, providing for bald eagle general permits for qualifying wind farms and electric distribution systems. While any resulting permitting and monitoring fees and/or restrictions on operations could impact Consumers’ existing and future operations, Consumers does not expect any material changes to its environmental strategy or Clean Energy Plan as a result of this rule.

Additionally, Consumers is monitoring proposed changes to the listing status of several species within its operational area due to an increase in wildlife-related regulatory activity at federal and state levels. A change in species listed under the Endangered Species Act may impact Consumers’ costs to mitigate its

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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 Notes to the Unaudited Consolidated Financial Statements—Note 2, Contingencies and Commitments—Consumers Electric Utility Contingencies—Electric Environmental Matters.

Consumers Gas Utility Outlook and Uncertainties

Gas Deliveries: Consumers’ gas customer deliveries are seasonal. 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 2023. This outlook reflects modest growth in gas demand, offset by the effects of energy waste reduction programs. 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. For additional details on rate matters, see Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments.

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. Additionally, the settlement approves the use of $27.5 million, or one-fourth, of the gain on the sale of Consumers’ unregulated ASP business as an offset to the revenue deficiency in lieu of additional rate relief during the test year. This results in effective rate relief of $62.5 million for the test year.

The settlement agreement also provides for the remaining three-fourths of the $110 million gain on the sale of the ASP business, or $82.5 million, to be provided to customers as a bill credit over a three-year period. The new rates, including the bill credit, will become effective October 1, 2024. The settlement also authorizes the continuation of the cost deferral mechanism allowing Consumers to defer for future recovery or refund pension and OPEB expense above or below the amounts used to set rates. For additional details on Consumers’ sale of its ASP business, see Note 12, Exit Activities.

Gas Pipeline and Storage Integrity and Safety: The U.S. 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

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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. 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.

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.

Gas Environmental Outlook: Consumers expects to incur response activity costs at a number of sites, including 23 former MGP sites. For additional details, see Notes to the Unaudited Consolidated Financial Statements—Note 2, Contingencies and Commitments—Consumers Gas Utility Contingencies.

Consumers’ gas operations are subject to various federal, state, and local environmental laws and regulations. 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 2015, the EPA lowered the NAAQS for ozone and made it more difficult to construct or modify natural gas compressor stations and other emission sources in areas of the country that do not meet the ozone standard. As of May 2023, three counties in western Michigan have been designated as not meeting the ozone standard. One of Consumers’ compressor stations is in an ozone nonattainment area. Consequently, Consumers has initiated plans to retrofit equipment at this compressor station to lower NOx emissions and comply with a rule proposed by the State of Michigan, as required for a source located in a moderate ozone nonattainment area. 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. In January 2024, the EPA proposed a new fee for emitting certain waste from petroleum and natural gas systems, as directed under the Inflation Reduction Act of 2022. The proposed fees could apply to methane emissions from transmission pipeline, compression, or underground storage that exceed annual thresholds; however, initial analysis indicates Consumers would not be subject to fees under its routine operations. 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.

Under the Paris Agreement, an international agreement addressing greenhouse gas emissions, the U.S. has committed to reduce greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. The commitment made by the U.S. is not binding without new Congressional legislation. Consumers continues to monitor these initiatives and comment as appropriate. Consumers cannot predict the impact of any potential future legislation or regulation on its gas utility.

Consumers is making voluntary efforts to reduce its gas utility’s methane emissions. Under its Methane Reduction Plan, Consumers has set a goal of net-zero methane emissions from its natural gas delivery

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system by 2030. Consumers plans to reduce methane emissions from its system by about 80 percent, from 2012 baseline levels, by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices. 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.

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 20 percent by 2030. Consumers’ Natural Gas Delivery Plan, a rolling ten‑year investment plan to deliver safe, reliable, clean, and affordable natural gas to customers, outlines ways in which Consumers can make early progress toward these goals in a cost-effective manner, including energy waste reduction, carbon offsets, and renewable natural gas supply.

Consumers has already initiated work in these key areas, continuing to expand its energy waste reduction targets, launching a program allowing gas customers to purchase carbon offset credits on a voluntary basis, and announcing plans to begin development of renewable natural gas facilities that will capture methane from manure generated at Michigan-based farms and convert it into renewable natural gas. Consumers is evaluating and monitoring newer technologies to determine their role in achieving Consumers’ interim and long-term net-zero goals, including hydrogen, biofuels, and synthetic methane; carbon capture sequestration systems; and other innovative technologies.

NorthStar Clean Energy Outlook and Uncertainties

CMS Energy’s primary focus with respect to its NorthStar Clean Energy businesses is to maximize the value of generating assets, its share of which represents 1,658 MW of capacity, and to pursue opportunities for the development of renewable generation projects.

NorthStar Clean Energy’s operations may be subject to various federal, state, and local environmental laws and regulations. Multiple environmental laws and regulations are subject to litigation. NorthStar Clean Energy’s primary environmental compliance focus includes, but is not limited to, the following matters.

CSAPR requires Michigan and many other states to improve air quality by reducing power plant emissions that, according to EPA modeling, contribute to ground-level ozone in other downwind states. Since its 2015 effective date, CSAPR has been revised several times. In June 2023, the EPA published the Good Neighbor Plan, a revision to CSAPR. This 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. NorthStar Clean Energy may incur increased costs to purchase allowances or retrofit equipment.

For additional details regarding the ozone or fine particulate matter NAAQS or CSAPR, including the Good Neighbor Plan, see Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook.

In April 2024, the EPA finalized its rule under Section 111 of the Clean Air Act to address greenhouse gas emissions from new gas-fueled units and existing coal- and oil-fueled electric generating units. Notably, these rules do not address existing gas-fueled electric generating units, though the EPA has announced that it will release a draft rule for these types of units at a later time. Due to the anticipated replacement of coal as a fuel at its one remaining coal-fueled electric generating facility, these regulations will not apply to NorthStar Clean Energy’s facilities. Future EPA regulations addressing greenhouse gas emissions from existing gas-fueled electric generating units may apply to NorthStar Clean Energy facilities and may have a material financial and operational impact. NorthStar Clean Energy will continue

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to follow the EPA rules that address greenhouse gas emissions and will continue to evaluate potential impacts to its operations.

Many of NorthStar Clean Energy’s facilities maintain NPDES permits, which are vital to the facilities’ operations. 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.

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 Notes to the Unaudited Consolidated Financial Statements—Note 2, Contingencies and Commitments—Guarantees.

Other Outlook and Uncertainties

Litigation: CMS Energy, Consumers, and certain of their subsidiaries are named as parties in various litigation matters, as well as in administrative proceedings before various courts and governmental agencies, arising in the ordinary course of business. For additional details regarding these and other legal matters, see Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments.

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.

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CMS Energy Corporation

Consolidated Statements of Income (Unaudited)


In Millions, Except Per Share Amounts
	Three Months Ended						Six Months Ended
June 30	2024			2023			2024			2023
Operating Revenue		$	1,607		$	1,555		$	3,783		$	3,839
Operating Expenses
Fuel for electric generation		114			110			270			247
Purchased and interchange power		349			342			663			683
Purchased power – related parties		16			17			34			36
Cost of gas sold		66			84			417			631
Maintenance and other operating expenses		404			406			806			837
Depreciation and amortization		273			255			641			608
General taxes		102			97			257			239
Total operating expenses		1,324			1,311			3,088			3,281
Operating Income		283			244			695			558
Other Income (Expense)




Non-operating retirement benefits, net		41			45			85			90
Other income		77			103			121			118
Other expense		(5)			(2)			(7)			(6)
Total other income		113			146			199			202
Interest Charges
Interest on long-term debt		171			152			343			296
Interest expense – related parties		3			3			6			6
Other interest expense		5			6			7			6
Allowance for borrowed funds used during construction		(6)			(1)			(6)			(1)
Total interest charges		173			160			350			307
Income Before Income Taxes		223			230			544			453
Income Tax Expense		41			41			99			70
Income From Continuing Operations		182			189			445			383
Income From Discontinued Operations, Net of Tax of $— for all periods		—			1			—			1
Net Income		182			190			445			384
Loss Attributable to Noncontrolling Interests		(16)			(8)			(40)			(18)
Net Income Attributable to CMS Energy		198			198			485			402
Preferred Stock Dividends		3			3			5			5
Net Income Available to Common Stockholders		$	195		$	195		$	480		$	397




Basic Earnings Per Average Common Share		$	0.65		$	0.67		$	1.61		$	1.36



Diluted Earnings Per Average Common Share		$	0.65		$	0.67		$	1.61		$	1.36

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consolidated Statements of Comprehensive Income (Unaudited)


In Millions
	Three Months Ended						Six Months Ended
June 30	2024			2023			2024			2023
Net Income		$	182		$	190		$	445		$	384
Retirement Benefits Liability
Net gain arising during the period, net of tax of $— for all periods		—			—			—			1


Amortization of net actuarial loss, net of tax of $— for all periods		—			1			1			1
Amortization of prior service credit, net of tax of $— for all periods		—			(1)			—			(1)







Other Comprehensive Income		—			—			1			1
Comprehensive Income		182			190			446			385
Comprehensive Loss Attributable to Noncontrolling Interests		(16)			(8)			(40)			(18)
Comprehensive Income Attributable to CMS Energy		$	198		$	198		$	486		$	403

The accompanying notes are an integral part of these statements.

Table of Contents

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Table of Contents

CMS Energy Corporation

Consolidated Statements of Cash Flows (Unaudited)


In Millions
Six Months Ended June 30	2024			2023
Cash Flows from Operating Activities
Net income		$	445		$	384
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		641			608
Deferred income taxes and investment tax credits		79			71




Other non‑cash operating activities and reconciling adjustments		(107)			(122)

Changes in assets and liabilities
Accounts receivable and accrued revenue		153			474
Inventories		158			236
Accounts payable and accrued rate refunds		(2)			(189)
Other current assets and liabilities		129			92
Other non‑current assets and liabilities		167			151
Net cash provided by operating activities		1,663			1,705
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under finance lease)		(1,294)			(1,187)
Covert Generating Station acquisition		—			(810)





Proceeds from sale of ASP business		124			—


Cost to retire property and other investing activities		(76)			(82)
Net cash used in investing activities		(1,246)			(2,079)
Cash Flows from Financing Activities

CMS ENERGY CORP [CMS-PC] Filings
CMS ENERGY CORP [CMS] Filings
CMS ENERGY CORP [CMSA] Filings
CMS ENERGY CORP [CMSC] Filings
CMS ENERGY CORP [CMSD] Filings
10-Q	[2024-07-25]
10-Q	[2024-04-25]
10-K	[2024-02-08]
10-Q	[2023-10-26]
10-Q	[2023-07-27]
10-Q	[2023-04-27]
10-K	[2023-02-09]
10-Q	[2022-10-27]
10-Q	[2022-07-28]
10-Q	[2022-05-03]
10-K	[2022-02-10]
10-Q	[2021-10-28]
10-Q	[2021-07-29]
10-Q	[2021-04-29]
10-K	[2021-02-11]
10-Q	[2020-10-29]
10-Q	[2020-08-03]
10-Q	[2020-04-27]
10-K	[2020-02-06]
10-Q	[2019-10-24]
10-Q	[2019-07-25]
10-Q	[2019-04-25]
10-K	[2019-02-05]
10-Q	[2018-10-25]
10-Q	[2018-07-26]
10-Q	[2018-04-26]
10-K	[2018-02-14]
10-Q	[2017-10-26]
10-Q	[2017-07-28]
10-Q	[2017-05-01]
10-K	[2017-02-07]
10-Q	[2016-10-27]
10-Q	[2016-07-28]
10-Q	[2016-04-28]
10-K	[2016-02-11]
10-Q	[2015-10-29]
10-Q	[2015-07-23]
10-Q	[2015-04-23]
10-K	[2015-02-05]
10-Q	[2014-10-23]
10-Q	[2014-07-24]
10-Q	[2014-04-24]
10-K	[2014-02-06]
10-Q	[2013-10-24]
10-Q	[2013-07-25]
10-Q	[2013-04-25]
10-K	[2013-02-21]
10-Q	[2012-10-25]
10-Q	[2012-07-26]
10-Q	[2012-04-26]
10-K	[2012-02-23]

CMS ENERGY CORP [CMS-PC] Filings

CMS ENERGY CORP [CMS] Filings

CMS ENERGY CORP [CMSA] Filings

CMS ENERGY CORP [CMSC] Filings

CMS ENERGY CORP [CMSD] Filings