Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2025, for CMS Energy Corporation (the parent holding company) and its wholly-owned subsidiary, Consumers Energy Company (the regulated utility). CMS Energy operates in three segments: Electric Utility, Gas Utility, and NorthStar Clean Energy (non-utility operations). Consumers Energy serves approximately 6.8 million residents in Michigan's Lower Peninsula with electricity and natural gas.
Key Financial Metrics (2025)
| Metric | CMS Energy (Consolidated) | Consumers Energy |
|---|---|---|
| Operating Revenue | $8.54 billion | $8.13 billion |
| Net Income Available to Common Stockholders | $1.06 billion | $1.13 billion |
| Diluted Earnings Per Share (CMS) | $3.53 | N/A |
| Operating Cash Flow | $2.24 billion | $2.24 billion |
| Capital Expenditures | $3.97 billion | $3.47 billion |
| Total Assets | $39.94 billion | $37.09 billion |
| Long-Term Debt | $17.81 billion | $11.52 billion |
| Cash and Cash Equivalents | $615 million | $111 million |
Material Changes vs. Prior Period
- Revenue Growth: CMS Energy consolidated revenue increased 13.6% to $8.54 billion (from $7.52 billion in 2024), driven by higher gas and electric sales due to favorable weather and approved rate increases.
- Profitability: Net income available to common stockholders rose 6.8% to $1.06 billion. Diluted EPS increased to $3.53 from $3.33.
- Segment Performance:
- Electric Utility: Net income increased to $719 million, aided by a $210 million rate increase and lower coal generation costs.
- Gas Utility: Net income surged to $409 million (from $328 million), primarily due to the absence of unfavorable weather impacts seen in 2024 and rate increases.
- NorthStar Clean Energy: Net income grew to $71 million, driven by new renewable project development, partially offset by a planned major outage at the Dearborn Industrial Generation (DIG) facility.
- Cost Pressures: Higher depreciation ($63 million increase), interest charges ($43 million increase), and property taxes ($29 million increase) offset some revenue gains. Service restoration costs related to storms in March/April 2025 increased expenses by $25 million.
Guidance, Outlook, and Risks
Outlook and Capital Plan
Consumers Energy projects capital expenditures of $24.1 billion over the next five years (2026–2030), with $4.1 billion planned for 2026. The company expects weather-normalized electric deliveries to increase due to strong demand growth, while gas deliveries are expected to remain stable.
Regulatory and Operational Highlights
- J.H. Campbell Emergency Orders: The planned 2025 retirement of the J.H. Campbell coal plant was extended by U.S. Secretary of Energy emergency orders through February 17, 2026, to ensure grid reliability. Consumers is pursuing cost recovery at FERC for compliance costs.
- Rate Cases:
- 2025 Electric Rate Case: Consumers filed for a $447 million annual increase (revised from $460 million) to recover infrastructure investments. A final order is expected by April 2026.
- 2025 Gas Rate Case: Consumers filed for a $240 million annual increase. A final order is expected by October 2026.
- Hydroelectric Sale: Consumers signed an agreement to sell 13 river hydroelectric dams, contingent on MPSC and FERC approval. The transaction includes a 30-year power purchase agreement.
Key Risks
- Regulatory Uncertainty: Outcomes of rate cases and FERC proceedings regarding J.H. Campbell cost recovery could materially impact financial results.
- Environmental Compliance: Significant costs are anticipated for coal ash disposal ($241 million estimated 2026–2030) and methane reduction initiatives.
- Weather and Demand: Results are seasonal and sensitive to weather fluctuations. Mild weather or reduced demand from energy efficiency programs could negatively impact sales.
- Capital Markets: Access to capital markets is critical for funding the robust capital plan; disruptions could force deferral of expenditures.
Investor Verification Checklist
- J.H. Campbell Cost Recovery: Verify the status of the FERC proceeding regarding the recovery of costs associated with the emergency order extensions for the J.H. Campbell plant.
- Rate Case Outcomes: Monitor the final orders for the 2025 Electric and Gas rate cases to confirm the approved rate increases and return on equity.
- Hydroelectric Transaction: Track the regulatory approval timeline for the sale of the 13 hydroelectric dams and the associated power purchase agreement.
- Capital Expenditure Execution: Assess the company's ability to execute its $24.1 billion five-year capital plan amidst supply chain constraints and labor availability.
- Environmental Liabilities: Review updates on coal ash disposal costs and the impact of new EPA regulations on legacy impoundments.