CMS

CMS Energy Corp. 2025 Annual Report (10-K) Summary

Business Context and Reporting Period

This Form 10-K covers the fiscal year ended December 31, 2025, for CMS Energy Corporation (CMS Energy) and its wholly-owned subsidiary, Consumers Energy Company (Consumers). CMS Energy is a Michigan-based holding company operating primarily through three segments: Electric Utility, Gas Utility, and NorthStar Clean Energy (non-utility independent power production). Consumers serves approximately 6.8 million residents in Michigan's Lower Peninsula with electricity and natural gas.

Key Financial Metrics (2025)

Material Changes vs. Prior Period (2024)

• Revenue Growth: Consolidated operating revenue increased by $1.02 billion (13.6%) to $8.54 billion, 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. EPS increased from $3.33 to $3.53.
• Segment Performance:
  • Electric Utility: Net income increased $38 million to $719 million, aided by a $210 million rate increase and lower coal generation costs.
  • Gas Utility: Net income surged $81 million to $409 million, primarily due to the absence of 2024 unfavorable weather impacts and rate increases.
  • NorthStar Clean Energy: Net income increased $8 million to $71 million, driven by new renewable project development.
• Cost Pressures: Higher depreciation ($63 million increase), interest charges ($43 million increase), and property taxes ($29 million increase) partially offset revenue gains.
• Capital Spending: Capital expenditures increased significantly by $806 million to $3.82 billion, reflecting robust investment in grid reliability and clean energy transition.

Guidance, Outlook, and Management Commentary

• Regulatory Environment: The company is navigating the implementation of Michigan's 2023 Energy Law, which mandates 60% renewable energy by 2035 and 100% clean energy by 2040. Consumers has filed rate cases seeking recovery for infrastructure investments aimed at reliability and clean energy transition.
• J.H. Campbell Emergency Orders: The planned 2025 retirement of the J.H. Campbell coal plant was delayed by U.S. Secretary of Energy emergency orders requiring continued operation through February 2026 to ensure grid reliability. Consumers is pursuing cost recovery for these compliance costs at FERC.
• Capital Plan: Consumers projects capital expenditures of $24.1 billion over the next five years (2026-2030), with $8.8 billion allocated to electric generation and $15.3 billion to distribution and gas infrastructure.
• Outlook: Management expects weather-normalized electric deliveries to increase over the next five years due to data center expansion and economic growth, while gas deliveries are expected to remain stable.
• Risks: Key risks include regulatory delays in cost recovery, supply chain disruptions, extreme weather events, and the financial impact of continued coal plant operations under emergency orders.

Investor Verification Checklist

• Regulatory Asset Recovery: Verify the status of FERC proceedings regarding cost recovery for the J.H. Campbell emergency order compliance costs.
• Rate Case Outcomes: Monitor the final orders for the 2025 Electric and Gas rate cases filed with the Michigan Public Service Commission (MPSC), specifically regarding the requested $447 million and $240 million increases.
• Capital Expenditure Execution: Track the ability to execute the $24.1 billion five-year capital plan amidst potential supply chain constraints and labor shortages.
• Coal Retirement Timeline: Confirm the final retirement date for J.H. Campbell and the associated stranded asset recovery mechanisms.
• Hydroelectric Sale: Monitor the regulatory approval process for the sale of 13 hydroelectric dams, which is contingent on MPSC and FERC approval.