First Quarter 2017 Results & Outlook May 1, 2017 PEOPLE PLANET - PowerPoint PPT Presentation

First Quarter 2017 Results & Outlook May 1, 2017 PEOPLE PLANET PROFIT CMS Energy: World Class Performance Delivering Hometown Service

This presentation is made as of the date hereof and contains “forward - looking statements” as defined in Rule 3b -6 of the Securities Exchange Act of 1934, Rule 175 of the Securities Act of 1933, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. All forward-looking statements should be considered in the context of the risk and other factors detailed from time to time in CMS Energy’s and Consumers Energy’s Securities and Exchange Commission filings. Forward -looking statements should be read in conjunction with “FORWARD - LOOKING STATEMENTS AND INFORMATION” and “RISK FACTORS” sections of CMS Energy’s and Consumers Energy’s Form 10 -K for the year ended December 31, 2016 and as updated in subsequent 10-Qs. CMS Energy’s and Consumers Energy’s “FORWARD - LOOKING STATEMENTS AND INFORMATION” and “RISK FACTORS” sections are incorporated herein by reference and discuss important factors that could cause CMS Energy’s and Consumers Energy’s results to differ mate rially from those anticipated in such statements. CMS Energy and Consumers Energy undertake no obligation to update any of the information presented herein to reflect facts, events or circumstances after the date hereof. The presentation also includes non- GAAP measures when describing CMS Energy’s results of operations and financial performance. A reconciliation of each of these measures to the most directly comparable GAAP measure is included in the appendix and posted on our website at www.cmsenergy.com. CMS Energy provides historical financial results on both a reported (GAAP) and adjusted (non-GAAP) basis and provides forward-looking guidance on an adjusted basis. Adjustments could include items such as discontinued operations, asset sales, impairments, restructuring costs, regulatory items from prior years, or other items. Management views adjusted earnings as a key measure of the company’s present operating financial performance and uses adjusted earnings for external communications with analysts and investors. Internally, the company uses adjusted earnings to measure and assess performance. Because the company is not able to estimate the impact of specific line items, which have the potential to significantly impact, favorably or unfavorably, the company's reported earnings in future periods, the company is not providing reported earnings guidance nor is it providing a reconciliation for the comparable future period earnings. The adjusted earnings should be considered supplemental information to assist in understanding our business results, rather than as a substitute for the reported earnings. Investors and others should note that CMS Energy routinely posts important information on its website and considers the Investor Relations section, www.cmsenergy.com/investor-relations, a channel of distribution. 1

Agenda Patti Poppe First Quarter Results President & CEO People, Planet, Profit PLANET PROFIT PEOPLE Performance -- Consumers Energy Way Tom Webb Financial Results and Outlook Executive VP & CFO 2

First Quarter Results . . . . PROFIT First Quarter EPS at 71¢ a Up 12¢ from 2016; up 14¢ or 20% weather-normalized Mild weather and storm fully mitigated a Reaffirm Full Year EPS guidance: $2.14 to $2.18 +6% to +8% a Long-term Growth: 6% to 8% _ _ _ _ _ a Adjusted EPS (non-GAAP) . . . . on track for 6% to 8% EPS growth. a 3

The Triple Bottom Line . . . . PEOPLE • PLANET • PROFIT PLANET PROFIT PEOPLE PERFORMANCE . . . . world class performance delivering hometown service. 4

Strong Commission . . . . Tier 1 State Ranking Updated Terms Tier Sally Talberg (I), Chairman Term Ends: July 2, 2021 Michigan 1 6 Prior: July 2, 2019 2 9 Switched term-end dates 3 Norm Saari (R) 18 Term Ends: July 2, 2019 Prior: July 2, 2021 4 9 Rachael Eubanks (I) Term Ends: July 2, 2023 5 6 Prior: July 2, 2017 Reappointed Barclays Research, 2016 state rankings . . . . constructive regulation. 5

Regulatory Update . . . . 2018 2017 PEOPLE Jan. 1 Energy Law 4/20: Energy Law 12/1: SRM Spring: AES effective capacity charge finalized Capacity charge effective Gas Rate Case By 7/31: 1/29: Self-impl.; Final Order $20 mil Electric Rate Case By 3/30: 3/31: File; $173 10/1: Self- 2/28: Final order; Final order mil; 10.5% ROE implement $113 mil; 10.1% ROE Palisades By 8/31: 2/10: Filed securitization; August: Gas RFP May: Terminate Final order $172 mil Results PPA contract . . . . smooth progression through significant dates. 6

Customer Satisfaction . . . . PEOPLE J.D. Power Customer Satisfaction Index Residential Customers Business Customers 757 738 22% 24% 613 606 2010 2010 2016 2016 . . . . steadily improving. 7

Reducing Coal Intensity . . . . PLANET Coal Capacity Coal Energy Renewables a 49% Optimize Wind for Shut down gas MCV PPA coal a 41% c 30% b b 22% 21% 15% c c 15% 15% RPS 10% 3% 2005 2016 Future 2005 2016 Future 2005 2016 Future _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ a Includes Classic 7, includes PPA contracts b Excludes Classic 7, includes PPA contracts c Based on ten-year plan with opportunities . . . . AND adding more clean renewables. 8

Future Capex Opportunities . . . . PLANET Replacement MCV PPA Opportunities • 1,240 MW • Renewables • Storage • Expires 2025 • Energy efficiency • Demand response Add ~$3 billion renewables . . . . Clean and Lean. 9

Performance: Consumers Energy Way . . . . March Wind Storm Restoring Power to our Customers Photo courtesy of Mlive/Jackson Citizen Patriot • Over 360,000 customers affected • Worst in Michigan’s history • New storm response standard Fast Facts minutes: turn-around time for social media responses hits per second on our outage map on Day 1 people involved in restoration activities . . . . storms mitigated by dedicated coworkers. 10

Performance: Story of the Month . . . . In Action Smart Meters • $750 million customer investment  Improve customer experience and reduce costs • 1.8 million meters; to be completed in 2017  Reduce unnecessary truck rolls • Utilizing cellular connectivity Smart meter  Allow faster response to known installations; 15% remaining outages  Shorten reported outage durations . . . . is smart meters improve quality while reducing costs. 11

Consistent Growth Through . . . . 7% CAGR a EPS +6% to +8% Dividend Weather Recession Recession Help Hurt _ _ _ _ _ a Adjusted EPS (non-GAAP) Cold 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Feb. Cold Summer- Cold Mild Hot Hot Warm Mild Polar Mild Hot Warm Cold Feb. Warm Warm winter winter “less” summer summer winter summer vortex summer winter summer Winter Winter summer Warm Dec. Governor (D) Governor (R) Commission (D) Commission (D) Commission (R) Commission (I) Whipple Joos Russell Poppe . . . . recessions, adverse weather, and leadership changes. 12

2017 First Quarter EPS . . . . a Results By Business Segment 2016 2017 EPS $0.59 $0.71 EPS +12¢ $0.75 Utility +20% Enterprises 0.04 Weather-normalized $0.71 $0.85 Interest & other (0.08) +14¢ $0.71 CMS Energy +20% Fact Set 65¢ _ _ _ _ _ a Adjusted EPS (non-GAAP) . . . . impacted by weather. 13

2017 EPS . . . . a First Quarter Nine Months To Go 12¢ (Up 20%) 0¢ - 4¢ $2.14 - $2.18 6% - 8% 4¢ - 8¢ 6¢ 7¢ 2¢ $2.02 8¢ (11)¢ (4)¢ Managing Work Our Model Customer base rates <2% First First Quarter Quarter $0.59 $0.71 2016 Weather & Cost Rates & Economy, Absence of Rates & Cost 2017 Storms Savings Investment Enterprises, 2016 Investment Savings & & Other Weather Other _ _ _ _ _ a Adjusted EPS (non-GAAP) . . . . guidance reaffirmed. 14

2017 Outlook . . . . Adjusted EPS (non-GAAP) Benefits 4¢ Property taxes 4 Total 8¢ +6% to +8% Guidance Recovery Recovery Accelerated Financing 3¢ Weather Enterprises 1 & Storms EE incentives 2 Sales Mix & Other 2 Total 8¢ January March 31 June 30 September 30 December 31 . . . . includes 6% to 8% growth despite early challenges. 15

Managing Work Every Year . . . . 2008 2009 2010 2011 2012 2013 2014 2015 2016 a EPS Mild $2.20 +7% Summer +17¢ +18¢ Cost +7% productivity above plan $2.00 Cost productivity +7% above plan +13¢ Reinvestment Storms +7¢ -13¢ Hot Mild $1.80 +7% Summer Reinvestment Winter RECORD WARM Hot Offsets +7% Cost Summer -9¢ productivity $1.60 Reinvestment above plan +7% Hot Cost “ Summerless ” Summer +7% Productivity Summer $1.40 -13¢ Storms 2013 – 2016 +7% Mild Summer Customer O&M Reinvestment = +7% $1.20 $340 million Cost productivity (Source: ½ cost; ½ weather) Cost Cost productivity productivity 0 $1.00 _ _ _ _ _ a Adjusted EPS (non-GAAP) . . . . maximizes benefits for customers AND investors. 16