Exhibit 99.1
Investor Meetings
March 24, 2014
Cross Winds Energy Park
Jackson Gas Plant
Consumers Smart Energy Program
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, 2013. 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 (Generally Accepted Accounting Principles) and adjusted (non-GAAP) basis and provides forward-looking guidance on an adjusted basis. Management views adjusted earnings as a key measure of the company’s present operating financial performance, unaffected by discontinued operations, asset sales, impairments, regulatory items from prior years, or other items. These items have the potential to impact, favorably or unfavorably, the company’s reported earnings in future periods. Because the company is not able to estimate the impact of these matters, the company is not providing a reconciliation to the comparable future period reported earnings.
Consumers Energy . . . .
T erritory
O verview
Fourth largest combination utility in the United States
1.8 million electric and 1.7 million gas customers
8,600 MW of owned and purchased generation capacity
312 TBtu of gas storage capacity
Premium regulatory environment
Cross WindsEnergy Park
Lake Winds Energy Park
. . . . one of largest investors and employers in Michigan.
Mindset . .. . . . . . . 20¢ 36¢ 50¢ 66¢ 84¢ 96¢ $1.02 $0.90
$0.96 $1.08 $0.84 $1.21 $1.26 $1.36 $1.45 $1.55
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Future
Dividend
EPS
Int’l Sale
a
10-Year Actual
7% CAGR
Dividend Payout 0% 25% 30% 40% 49% 58% 62% 62% 60%-70%
32% 27% 14% 39% 80%
Peers 4%
$1.78 $1.74 $1.66 $1.08 6% 5% - 7%
5% - 7%
6%
$0.81 _ _ _ _ _ Adjusted EPS (non-GAAP) excluding MTM in 2004-2006
a $1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock drives consistent “real” EPS growth.
3
CMS Energy MODEL . . . .
RESULTS Consistent Predictable
Investment
Ten year - $15 billion
Small, bite size projects
None “Bet The Company”
Imposed Limits
Sustainable base rates < 2% inflation
Investment “Needed Not Wanted”
Upside Catalysts
A. Capex >$15 billion
B. PPA’s expire = 2,000 MW
C. Credit rating
D. Sales
E. Capacity price increases
F. ROA elimination
G. Continuous cost reductions Self-
. . . . benefits customers AND shareowners.
4
Model Delivers . . . .
A bove Average Return
Future Return
Attractive dividend yield 4%
62% payout ratio
EPS growth rate 5%-7%
Driven by $7 billion investment in regulated Utility over next five years
Shareowner return 9%-11%
EP Sa Gr owth vs Peers
7% 4% 5%-7% 4% 6%
CMS Peers CMS Peers
Ten-Year Growth Future
a Adjusted EPS (non-GAAP)
. . . . good, future return opportunity.
5
A. Visible, 10-Year INVESTMENT Plan .
201 3-20 22 10-Year Plan
O pportunity Level
$ 15 Billion $ 20 Billion
Amount (bils)
Generation capacity
PPA replacement $1.7
ROA return Higher renewables ..3
Gas conversions & expansion 1.0
Electric reliability & transmission 2.0
Total Opportunities $5.0
Rate Base 6%
Customer base rates <2 >4
X
P
. . . . . . . reflects catch-up needed to reduce cost and improve reliability.
6
Visible Investment: Catch-Up . . . . 2013 Pct of Market Cap
Cap Inv OCF Liquidity
CMS 21% 20% 24%
Peers 18 16 20
21% 20%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Amount
(bils)
$1.8 $1.5
CMS
Peers
Source: 10K; actual amounts through 2012 smoothed for illustration
. . . . creates unique opportunity; with OCF already stronger than peers.
7
Visible Investments: Customer-Driven . . . .
Clean Power $2.5 Billion
Reliability $4.0 Billion
. . . . small and incremental with no big bets.
Renewable energy New gas acquisition
Main replacements
Propane switching
Pipeline replacements
Gas distribution
Electric reliability
Consumers Smart Energy
Electric distribution Capacity $1.5 Billion
Infrastructure $4.5 Billion
Environmental
Gas conversions
Ludington Pumped Storage
8
Visible Investment: Gas Infrastructure . . . . . . . . accelerating investment opportunities.
$1.4
$2.3
$2.6
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2008 - 2012
2013 - 2017
2018 - 2022
#4 largest gas utility
27,000 miles of distribution mains
24,000 miles of service pipe
1,700 miles of transmission lines
312 TBtu gas storage
G as System
I nvestment Amount (bils) $
9
Visible Investment: Major Generation I n v e s t i n g over $2 billion in generation over the next 5 years.
C ro ss Winds Energy Park J ackson Plant
L u dington Pumped Storage Plant
C ampbell Generating Plant
K a rn/Weadock Generating Complex
Generation Reliability $0.7 B Environmental Controls $1.0 B
New Capacity $0.4 B
O ver 6 GWs of Generation Assets 10
Visible Investment: Renewable Energy . . . .
Mic hig an e ne rgy la w r e qu ire s:
1 0% renewa ble s by 2015
Purchase 50% and build 50%
Lake WindsEnergy Park
100 MW, 56 Vestas turbines
Commercial operation – November 2012
$235 million
Cross WindsEnergy Park Phase I
105 MW, 62 GE turbines
Commercial operation – November 2014
$255 million
. . . . Michigan’s largest renewable energy supplier.
11
Visible Investment: Rate Base Growth . . . .
Gas Electric
$3 $4 $6 $11 $15 $19 0 5 10 15 20 2013 2017 2022
Amount (bils)
$
Base Rate Increases <2% <2% C apital Investment “Checklist”
üAdd Customer Value
üReduce O&M Costs
üReduce Fuel Costs
üMandated by State or Federal Regulators
$8 $11
$13
. . . . drives EPS, cash flow, and dividend growth.
12
B. Expiring PPA’S . . . .
Replace PPA contracts with owned generation
Provides incremental rate base (and earnings potential) with no impact to customer rates
. . . . will provide investment headroom.
5,000
6,000
7,000
8,000
9,000
10,000
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2025
CE Portfolio
Jackson Plant
Capacity Shortfall
Smart Energy, EO, Interruptibles
Net Peak Demand Plus Reserves
Total Peak Demand Plus ReservesPalisades PPA Termination (778 MW)
MCV PPA Termination (1,240 MW) Planned Demand Reductions
Jackson Plant Classic 7 Mothballed (950 MW)
? 0 MW Capacity Shortfall
13
C. Credit RATINGS . . . . . . . . just upgraded, more ahead?
Consistent Performance
Less Risk
Customer Focus
Constructive Regulation
Good Energy Policy
R eflects Present Prior 2002
Scale | ||||||||||||||||||||||||
S&P / Fitch | Moody’s | S&P (March) | | Moody’s | |
| Fitch (February |
) | ||||||||||||||||
A+ | A1 | |||||||||||||||||||||||
A | A2 |
| | Consumers | | |||||||||||||||||||
A- | A3 | |||||||||||||||||||||||
BBB+ | Baa1 | |||||||||||||||||||||||
BBB | Baa2 | |||||||||||||||||||||||
BBB- | Baa3 | |||||||||||||||||||||||
BB+ | Ba1 | |||||||||||||||||||||||
CMS Unsecured | ||||||||||||||||||||||||
BBB | Baa2 | |||||||||||||||||||||||
BBB- | Baa3 | |||||||||||||||||||||||
BB+ | Ba1 | |||||||||||||||||||||||
BB | Ba2 | |||||||||||||||||||||||
BB- | Ba3 | |||||||||||||||||||||||
B+ | B1 | |||||||||||||||||||||||
B | B2 | |||||||||||||||||||||||
B- | B3 | |||||||||||||||||||||||
Outlook | Positive | Stable |
|
| Stable |
| ||||||||||||||||||
14
D. Consumers SALES Growth . . . . . . . . best economic indicators in State. E conomic Indicators
Grand Rapids | Michigan | U.S | ||||||||||
Unemployment December 2013 |
| 5.6 | % |
| 8.4 | % |
| 6.7 | % | |||
GDP (real) 2010 thru 2012 |
| 14 |
|
| 11 |
|
| 7 |
| |||
Population 2010 Census thru July 2012 |
| 2 |
|
| 0 |
|
| 2 |
| |||
E le ct ric
Gas
Combination Dart Container 2 MW
Enbridge 28 MW Secant 7 MW
Norplas 5 MW MACI 6 MW
E xamples of New Business I ndustrial Sales
-5% 6%
<1% -6%
2%
2008-2009
Recession
2010-2012
Recovery
2013-17 Plan
Assumptions
CMS
U.S. UtilitiesBetz Industries 8 MW
Magna-Cosma Casting 4 MW Eco-Bio Plastics 3 MW
Plan Conservatively 15
E. CAPACITY Price Market Increases . . . . . . . . could add value to the 700 MW “DIG” plant.
$0.50
$4.50
$7.50
Capacity price < ($ kW per month) Today (mils)
Future Scenarios
(mils) $5
+$30 $55
$35 +$50 16
F. Retail Open Access Policy (ROA) . . . . . . . . change could allow for lower industrial rates.
310 “ROA” Electric Customers 1 .8 Million Consumers Energy Customers = 99.98%
0.02%
Governor wants affordable residential bills and competitive industrial rates
Eliminating ROA could:
Lower industrial rates by 10% or all customers by 4%
Policy has big impact on competitiveness
$150 million cost opportunity
17
Michigan’s Energy Future . . . .
G overnor’s 2025 Energy Goals |
Adaptability |
Eliminate energy waste Reduce coal, replace with renewables and gas |
Reliability |
Top quartile performance (SAIFI) Top half performance (SAIDI) |
Affordability |
Residential bills below U.S. average Competitive industrial rates |
Environmental Protection |
Reduce mercury, acid rain, particulates Increase renewables |
. . . . will continue to strengthen with sound policy and strong leadership. R egulatory Support
(from the right)
Michigan Governor Rick Snyder
MPSC Chairman John Quackenbush
Michigan Energy Office Director Steve Bakkal 18
The Governor on Retail Open Access. . . .
“Choice creates a lot of challenges and problems so I wouldn’t jump to say increasing choice is the answer. I’m concerned about people bouncing back and forth depending on what’s going on with rates, essentially trying to arbitrage markets.” Governor Rick Snyder
Question: “You seem to agree with utilities’ argument on choice. Does that mean you will eliminate shopping altogether or keep the 10% cap in place?” . . . . choice is not the solution to industrial competitiveness.
The Jackson City Council voted unanimously to pass a resolution opposing House Bill 5184. 19
G. Self-Initiated COST Control . . . . . . . . . holds down rates and allows better system reliability.
Average Annual O&M Change
-2% +2%
-10% +1%
2006-2012
2012
2013
2014
2014-2018
Peers
w/o Storm Changes
Actual/Plan+6%
Peers 2013 Reinvestment
-8%
-2% Major Storms
-6%
-3% Major 2013 Storms
CMS Flat
-2%
Average -3.7%
Plan Conservatively
. holds down rates and allows better system reliability.
20
G. Continuous COST Reduction . . . .
. . . . . a way of life at CMS.
P ast Progress $100k Each
$60k Each
7,600 1,000
600
7,200
2010
2012
F uture Examples
Fuel Mix Benefits
MW | Employees | |||||||||||
2016 | Retire Coal | - 900 | | - | | |||||||
2016 | Add GCC | + 540 | | + | | |||||||
Total | -360 | - 280 |
| |||||||||
Future Savings (mils) | $25 |
| ||||||||||
People Productivity = $64 million
Headcount
Future Annual Savings (mils) | ||||||||
2002-2012 | Actions completed | $ | 25 |
| ||||
2013 | EGWP, OPEB & other |
| 50 |
| ||||
Future savings | $75 |
| ||||||
Fuel and Benefits | $100 |
| ||||||
. a way of life at CMS.
21
Michigan Energy Law . . . .
22
. . . . . has the potential to be even better!.
Pre 2008 | 2008 Energy | 2015 | ||||||
Historical test year No cap choice 12-18 months regulatory lag | | 10 Energy 10 File-and- | % % ROA | | Higher Continued Additional Eliminate | | ||
More
capex Faster, smoother
has the potential to be even better!.
22
54321
Constructive Regulation . . . .
. . . . strong law on the books supported by a quality commission. Commission
John Quackenbush (R), Chairman
Term Ends: July 2, 2017
Sally Talberg (I) Term Ends: July 2, 2019
Greg White (I) Term Ends: July 2, 2015
T i er 1 State Ranking
Barclays Research
Michigan
strong law on the books supported by a quality commission.
23
Customer Rates – Working With MPSC To Be . . . . . . . . affordable and sustainable. ~1%
~1%
Electric
Gas
2% Inflation
a Includes surcharges
201 3-2017
Annual Average Base Rate Increasesa
C ost Reductions
üEliminate 2014 base rate increases:
Electric
Gas
üEliminated renewable surcharge
üEliminated rate skewing
üLowered summer block rates
affordable and sustainable.
24
CMS Mindset . . . .
. . . . deliver for customers AND investors.
2 0 1 3 Cold Winter & Cost Savings
$1.66 +7%
Guidance
2012 Warm Winter 2012 Cost Saving 2012 Hot Summer
Reinvested earlier
2014 Cold Winter
2013 Mild Summer Icy Late December O&M B/(W) Than Forecast (mils)
Storm(total $50 M) $(37)
Insurance 16
Lower contributions 9
Sales-weather 12 Total $ 0
Reinvestment (January-October) Amount (mils)
Improve gas reliability $16
Improve electric reliability 14
Accelerate generation maintenance 7
Prefund pension & storm response 21
Total $58
deliver for customers AND investors.
25
Operating Cash Flow Growth . . . . (0.5)
0.0
0.5
1.0
1.5
2.0
2.5
2012
2013
2014
2015
2016
2017
2018Amount (bils) $
Investment
Cash flow before dividend
a Non-GAAP NOLs & Credits $0.7 $0.6 $0.4 $0.5 $0.4 $0.2 $0.1
Gross operating cash flowa up $0.1 billion per year
. . . . self-funds investment and strategy. Up $0.5 Billion $2.1
Interest
Working capital and taxes
$1.6 $1.9
$2.0
$1.7 $1.8 $1.45
$2.2
$1.4
$1.5 26
Key Takeaways . . . .
. . . . distinguish CMS favorably with customers and owners. _ _ _ _ _ a Adjusted EPS (non-GAAP) excluding MTM in 2004-2006
EPS a “Real” Growth
$2.00
C ore Fu nda men tal s
üVisible Investment
üCost Controls
üPlan Conservatively
üSupportive Regulatory
üCatalysts Upside
Target 5% - 7%
Actual = 7% +11%
Target 6% - 8% Actual EPS = 8%
+7% +12%
+12%
+4% +7%
+7% +7%
+8%
7% 5%
7%
5%
2003 2004 2005 2006
2007 2008 2009 2010 2011
2012 2013 2014
Beyond27
Appendix
Capital Expenditures 201320142015201620172018Total(mils)(mils)(mils)(mils)(mils)(mils)(mils)ElectricDistribution199$ 190$ 197$ 202$ 211$ 208$ 1,008$ Generation89 96 93 88 60 155 492 New Customers48 47 38 39 38 34 196 Other96 102 81 82 84 61 410 Electric Base Capital432$ 435$ 409$ 411$ 393$ 458$ 2,106$ GasDistribution177$ 152$ 181$ 177$ 193$ 212$ 915$ New Customers45 45 40 36 36 35 192 Other88 60 53 53 49 44 259 - Gas Base Capital310$ 257$ 274$ 266$ 278$ 291$ 1,366$ Total Base Capital742$ 692$ 683$ 677$ 671$ 749$ 3,472$ Investment ChoicesEnvironmental292$ 280$ 200$ 122$ 114$ 111$ 827$ Electric Reliability102 156 208 108 129 133 734 Gas Infrastructure117 182 198 178 202 211 971 New Gas Plant Capacity- - - 155 10 100 265 Renewables83 163 9 - - - 172 Consumers Smart Energy66 84 134 175 120 - 513 Ludington Hydro & other62 90 55 58 56 145 404 Total Choices722$ 955$ 804$ 796$ 631$ 700$ 3,886$ Total Utility1,464$ 1,647$ 1,487$ 1,473$ 1,302$ 1,449$ 7,358$ 2014-2018 Plan29
GAAP Reconciliation
20032004200520062007200820092010201120122013Reported earnings (loss) per share - GAAP($0.30)$0.64($0.44)($0.41)($1.02)$1.20$0.91$1.28$1.58$1.42$1.66After-tax items:Electric and gas utility0.21(0.39)- - (0.07)0.050.330.03- 0.17- Enterprises0.740.620.04(0.02)1.25(0.02)0.09(0.03)(0.11)(0.01)*Corporate interest and other0.16(0.03)0.040.27(0.32)(0.02)0.01*(0.01)**Discontinued operations (income) loss(0.16)0.02(0.07)(0.03)0.40(*)(0.08)0.08(0.01)(0.03)*Asset impairment charges, net- - 1.820.760.60- - - - - - Cumulative accounting changes0.160.01- - - - - - - - - Adjusted earnings per share, including MTM - non-GAAP$0.81$0.87$1.39$0.57$0.84$1.21(a)$1.26$1.36$1.45$1.55$1.66Mark-to-market impacts0.03(0.43)0.51Adjusted earnings per share, excluding MTM - non-GAAPNA$0.90$0.96$1.08NANANANANANANA*Less than $500 thousand or $0.01 per share.(a) $1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock.Earnings Per Share By Year GAAP Reconciliation(Unaudited)31
2012201320142015201620172018Consumers Operating Income + Depreciation & Amortization1,635$ (a)1,740$ 1,800$ 1,876$ 1,952$ 2,054$ 2,162$ Enterprises Project Cash Flows17 16 25 30 28 35 36 Gross Operating Cash Flow1,652$ 1,756$ 1,825$ 1,906$ 1,980$ 2,089$ 2,198$ (411) (335) (375) (356) (730) (739) (748) Net cash provided by operating activities1,241$ 1,421$ 1,450$ 1,550$ 1,250$ 1,350$ 1,450$ (a) excludes $(59) million 2012 disallowance related to electric decouplingCMS EnergyReconciliation of Gross Operating Cash Flow to GAAP Operating Activities(unaudited)(mils)Other operating activities including taxes, interest payments and working capital32