Second Quarter 2017 Results & Outlook July 28, 2017 PLANET - PowerPoint PPT Presentation

Second Quarter 2017 Results & Outlook July 28, 2017 PLANET PEOPLE 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 E nergy’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 materially 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. During an oral presentation, references to “earnings” are 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 w ith 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. Similarly, management views the ratio of Funds From Operations (FFO)/Average Debt as a key measure of the company’s operating financial performance and its financial position, and uses the ratio for external communications with analysts and investors. Because the company does not establish its target FFO/Average Debt ratio based on a specific target numerator and target denominator, the company is unable to provide a reconciliation to a comparable GAAP financial measure. Adjusted weather-normalized earnings are provided to show the impact of deviations from normal weather. 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 Half Results President & CEO People, Planet, Profit PLANET PROFIT PEOPLE Performance -- Consumers Energy Way Rejji Hayes Financial Results and Outlook Executive VP & CFO 2

First Half Results . . . PROFIT EPS at $1.04 a Same as 2016; up 7% weather-normalized 4¢ ahead of Plan 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

Consumers Among Top Employers PEOPLE 4

Regulatory Update . . . 2017 2018 Customer Benefits PEOPLE Energy Law No subsidies 4/20: Energy Law 12/1: SRM June: Capacity effective capacity charge determined charge implemented Gas Rate Case Safety Monday 7/31: 1/29: Self-impl.; Final order $20 MM Electric Rate Case Reliability By 3/30: 3/31: File; $173 MM; 10/1: Self- 2/28: Final order; Final order 10.5% ROE implement $113 MM; 10.1% ROE $45 MM/yr Palisades rate reduction By 9/28: 2/10: Filed securitization; May: Terminate Final order $172 MM PPA contract . . . robust agenda providing customer value. 5

Reducing Coal Intensity . . . PLANET a a Renewable Energy Coal Energy b 49% Demand from Shut down customers coal Meets c RPS 22% d 15% 15% b 10% 3% 2005 2016 Future 2005 2016 2021 Future _ _ _ _ _ _ _ _ _ _ a CMS Energy _ _ _ _ _ a Consumers Energy _ _ _ _ _ b Includes Classic 7, includes PPA contracts b Includes Classic 7, includes PPA contracts c Excludes Classic 7, includes PPA contracts _ _ _ d Based on ten-year plan with opportunities . . . AND adding more clean renewables. 6

Clean and Lean . . . PLANET PROFIT PEOPLE Old Utility Model Clean And Lean Big Build Supply Supply Fully utilize Modular assets Retirement Excess supply Big Excess Build supply Modular Demand Actual Modular Demand EE & DR O&M O&M Excess Expected Fuel supply Fuel Demand Modular Big Bets Investments Results in excess capacity, higher cost Matches supply with demand . . . matching supply with demand reduces costs. 7

Renewables . . . PLANET Wind Proposed New Tariff Solar • Cross Winds II • Large industrial program • Solar Gardens • Expected COD: Jan 2018 • 44 MW • Purchase 20% to 100% of • Residential rooftop energy use solar program • Cross Winds III • Expected COD: Jan 2020 • Fully bundled service • MPSC evaluating net • 76 MW metering • 3 to 20 year contracts with competitive fixed prices . . . building a clean future for our state. 8

Performance . . . Meter Reading Invoice Reversals Live Calls (MM) (MM) 13 pts 99% 36% 5.5 1.1 Improvement 64% Improvement Improvement 86% 3.5 0.4 2015 2017 YE 2015 2017 YE 2015 2017 YE Forecast Forecast Forecast Savings $(MM) $5 $1½ $2½ (since 2015) . . . improving quality of service. 9

Story of the Month . . . PEOPLE Flint Fueling Pilot • Fueling trucks during off- peak hours (15 - 30 min) • Impacting 450 crews with multiple workers per crew Potential statewide savings: • $3 MM/ yr • 100,000 hours/ yr . . . improving quality of service. 10

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. 11

First Half 2017 EPS . . . a Results By Business Segment 2016 2017 Second Quarter First Half EPS EPS $0.45 $0.33 Actual vs Plan Weather-normalized 0.41 0.35 $1.12 $0.01 Utility Enterprises 0.07 0.03 Interest & other (0.15) -- First Half $1.04 $0.04 CMS Energy $1.04 $1.04 EPS Weather-normalized 1.12 1.20 +8¢ +7% _ _ _ _ _ a Adjusted EPS (non-GAAP) . . . ahead of plan. 12

2017 EPS . . . a First Half Six Months To Go $2.14 - $2.18 Flat 12¢ - 16¢ 6% - 8% 12¢ - 16¢ $2.02 4¢ 7¢ 4¢ 3¢ (7)¢ (11)¢ Managing Work Our Model Customer base Second Half 2016 Discretionary Activities: rates <2% Debt Pre-funding 4¢ Foundation & Low Income 5 Other 5 SubTotal 14¢ First First 2017 Cost Savings & Other (2)¢ - 2¢ Half Half Total 12¢ - 16¢ $1.04 $1.04 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. 13

2017 Outlook . . . Adjusted EPS (non-GAAP) Second Half 2016 Reinvestment: 2016 4¢ Debt Pre-funding 5 Foundation & Low Income Benefits 4¢ 5 Other Property taxes 4 14¢ Total Total 8¢ Weather & Storms Reinvestment last year +6% to +8% Guidance Recovery Recovery Accelerated Financing 3¢ Enterprises 1 EE incentives 2 O&M Choices 4 Sales Mix & Other 3 Total 13¢ January March 31 June 30 September 30 December 31 _ _ _ _ _ a Adjusted EPS (non-GAAP) . . . includes 6% to 8% growth despite early challenges. a 14