CMS Energy Corporation (CMS), the parent company of Consumers Energy, is a leading energy provider serving the state of Michigan. With a steadfast commitment to sustainability, innovation, and customer-centric service, CMS has established itself as a trailblazer in the energy industry. As the company navigates the evolving landscape of the utility sector, it remains laser-focused on delivering clean, reliable, and affordable energy to its 6.8 million customers across Michigan.
Company Overview
CMS Energy Corporation was formed as a corporation in Michigan in 1987 and is an energy company operating primarily in that state. It is the parent holding company of several subsidiaries, including Consumers Energy, an electric and gas utility, and NorthStar Clean Energy, primarily a domestic independent power producer and marketer. Consumers Energy, CMS's primary utility subsidiary, has been in operation since 1886, showcasing its deep roots and long-standing dedication to the state of Michigan. Consumers was incorporated in Maine in 1910 and became a Michigan corporation in 1968. Consumers owns and operates electric generation and distribution facilities and gas transmission, storage, and distribution facilities.
Historical Challenges
Over the decades, CMS Energy and Consumers have faced various challenges. In the early 2000s, CMS Energy sold its interest in the Bay Harbor real estate development after environmental issues arose. Consumers has also had to navigate regulatory changes, such as the introduction of retail open access in Michigan in the early 2000s which allowed customers to choose alternative electric suppliers. More recently, Consumers has had to deal with the retirement of its coal-fired generating units. In 2023, Consumers retired the D.E. Karn coal-fired units and received regulatory approval to recover the remaining book value of those units. Consumers is also planning to retire the J.H. Campbell coal units in 2025. These unit retirements have required Consumers to implement retention programs to ensure necessary staffing through the transition.
Strategic Investments
Despite these challenges, CMS Energy and Consumers have continued to invest in their utility infrastructure and diversify their generation mix. Consumers has made significant investments in renewable energy, including wind and solar projects. The company has also acquired natural gas-fired generation to provide dispatchable power as it transitions away from coal. These strategic moves have allowed CMS Energy and Consumers to maintain reliable service for their customers in Michigan.
Financials
CMS Energy's financial performance has been commendable, with the company reporting robust results in recent years. In 2024, the company achieved a net income of $993 million, representing a year-over-year increase of 13.2%. This strong financial performance is underpinned by CMS Energy's strategic focus on cost optimization, operational efficiency, and prudent capital allocation.
For the most recent quarter, CMS Energy reported revenue of $1.99 billion and a net income of $265 million. The Electric Utility segment generated $5.06 billion in operating revenue in 2024, accounting for 67% of CMS Energy's total operating revenue. The Gas Utility segment contributed $2.14 billion, representing 28% of the total operating revenue. The NorthStar Clean Energy segment generated $316 million in operating revenue, accounting for 4% of the company's total operating revenue.
Liquidity
The company's balance sheet remains healthy, with a debt-to-capital ratio of 49.9% as of December 31, 2024. CMS Energy's liquidity position is also solid, with $178 million in consolidated cash and cash equivalents at the end of 2024. The company's strong financial profile has enabled it to maintain investment-grade credit ratings, which in turn, allows it to access capital markets at favorable terms to fund its growth initiatives.
Environmental Stewardship
CMS Energy's commitment to environmental stewardship is a hallmark of the company's operations. Under its Clean Energy Plan, the company aims to eliminate the use of coal in its owned generation by 2025, effectively transitioning to a cleaner energy mix. This strategic move aligns with the company's goal of achieving 60% renewable energy by 2035 and 100% clean energy by 2040.
Furthermore, CMS Energy's Methane Reduction Plan outlines its ambitious goal of achieving net-zero methane emissions from its natural gas delivery system by 2030. This initiative, coupled with the company's broader efforts to reduce its carbon footprint, demonstrates its unwavering dedication to sustainability and environmental responsibility.
Growth Strategy
CMS Energy's growth strategy is centered around prudent capital investments and strategic acquisitions. In 2023, the company completed the acquisition of the Covert Generating Station, a 1.2 GW natural gas-fueled facility, which will play a crucial role in its clean energy transformation. Additionally, the company has contracted to purchase 400 MW of capacity from battery storage facilities, further diversifying its energy mix and enhancing grid reliability.
The company's Reliability Roadmap, a five-year strategy to improve its electric distribution system and the reliability of the grid, is another key component of its growth strategy. This comprehensive plan, which includes investments in infrastructure upgrades, vegetation management, and grid modernization, aims to deliver better-than-median reliability to Consumers Energy's customers.
Resilience and Adaptability
Despite the challenges posed by the ongoing COVID-19 pandemic and global supply chain disruptions, CMS Energy has demonstrated its resilience and adaptability. The company has implemented robust risk management strategies and maintained its operational continuity, ensuring uninterrupted service to its customers.
Future Outlook
Looking ahead, CMS Energy remains cautiously optimistic about the future. The company's strong financial position, coupled with its strategic investments in clean energy and grid reliability, position it well to capitalize on the growing demand for sustainable and reliable energy solutions. As CMS Energy continues to navigate the evolving energy landscape, it remains committed to its core values of safety, customer satisfaction, and environmental stewardship - qualities that have defined the company's success for decades.
Electric Utility Segment
The Electric Utility segment is a crucial component of CMS Energy's operations. In 2024, this segment delivered 37 billion kWh of electricity, including 4 billion kWh in retail open access (ROA) deliveries, resulting in net bundled sales of 33 billion kWh. The consumption of electric energy is typically higher in the summer months due to increased air conditioning usage.
Peak demand reached 8.03 GW in 2024, including 603 MW of ROA demand. For the 2023-2024 winter season, peak demand was 5.59 GW, including 410 MW of ROA demand. Consumers, the utility subsidiary, owns and operates 7.02 GW of electric generation capacity, including natural gas, coal, hydroelectric, wind, and solar resources. It also has long-term power purchase agreements to supplement its owned generation.
Gas Utility Segment
The Gas Utility segment is another vital part of CMS Energy's business. In 2024, this segment delivered 362 Bcf of natural gas, including 27 Bcf in gas customer choice (GCC) deliveries. Natural gas consumption is typically higher in the winter months for heating purposes.
Consumers owns and operates an extensive natural gas infrastructure, including 2,340 miles of natural gas transmission lines, 15 gas storage fields with a total storage capacity of 309 Bcf, and 28,370 miles of distribution mains. This robust infrastructure enables the company to efficiently serve its customers across Michigan.
NorthStar Clean Energy Segment
CMS Energy's NorthStar Clean Energy segment focuses on domestic independent power production, including the development and operation of renewable generation, as well as the marketing of independent power production. This segment has ownership interests in various independent power plants, including natural gas, solar, and wind generation facilities, with a total gross capacity of 2.02 GW. In 2024, the segment's net generation was 9.13 GWh.
The diversified business model of CMS Energy, with its focus on regulated utility operations and growing renewable energy investments, has enabled the company to deliver consistent financial performance and position itself for the evolving energy landscape in Michigan. As the company continues to execute its clean energy transition and grid modernization plans, it is well-positioned to meet the changing needs of its customers and contribute to a more sustainable energy future.