Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone, and welcome to the CMS Energy's 2023 First Quarter Results. The earnings news release issued earlier today and the presentation used in this webcast are available on the CMS Energy's website in the Investor Relations section. This call is being recorded.

[Operator Instructions]

Just a reminder, there will be a rebroadcast of this conference call today beginning at 12:00 p.m. May through running Time X. Eastern also This on and available webcast Energy's presentation website is CMS section. in is Relations being the Investor

this Treasurer like to At Finance would the Relations. I over call and to Investor Mr. Vice and turn Maddipati, President of Sri time,

Sri Maddipati

With Executive and Billy. today. Officer; Hayes, Vice morning, President and Financial joining Good Rochow, Officer. Garrick you, and thank Rejji are Thank for President Chief you everyone, us me and Chief Executive

risks other included and forward-looking SEC actual statements, our which most could This to includes measures. comparable materially. to information are This presentation measures cause differ posted Please presentation on the our the non-GAAP uncertainties. directly GAAP subject Reconciliations filings regarding in contains refer and the website. factors our more appendix these for of to to are also risks results and that measures

turn I'll Now call the Garrick. to over

Garrick Rochow

for today. and you, us you, joining everyone, Thank thank Sri,

spans year, for and you, it's CMS commitment Energy our investors. this is different. have performance and year Our for no experienced expect and that and governors, time, commissions, -- that we have performance. changes industry-leading thesis the unplanned It's foundational we've premium customers in the come you name like each our it's In performance to every a storms, delivered from and this legislatures investment to to a recession and Over and our financial two weather decades pandemic. is

aging and and billion critical gas decarbonization investment and needed are are customer our to These by We five-year in by remain system, squarely Michigan's framework. and focused and $XX.X supported expansive systems enhance in at regulatory legislation our plan. and making our constructive on of customer our reliability and investments affordability investments Energy, resiliency electric mission safety, reliability CMS the balanced

the value keeping manage field waste helps drive investments are from Way, the and office helps is and to to efficiency, see eliminate our cost. ensuring us coupled lean while with ongoing system, bills lower deliver evident improve and our customer affordable. which operating CE Our the This we

committed to the industry. do believe we better any are We I than this, company almost and in it

As of highlights. XXXX, share quarter few to a we the round I out first want

Battery important brings announcement X,XXX the is of growing the win, and This of projects service Park. which adds another jobs $X.X in Blue First, Oval list billion, economic development representing our Board's in territory. our program, voluntary X,XXX a pricing large the We and total of first supporting approved. our enrollments megawatt solar additional build-out XXX green saw tranche of of megawatts to owned

year, generating the pipeline of mid-Michigan scheduled in acquisition for Covert for construction began approved gas million, to natural at our to by positioned of June of transition business, after and and facility enhance the our be our as deliverability deliver. continue of And $XXX pipeline regardless system. Energy, safety XX-mile are year Preparations our gas I want clear, we CMS we conditions, IRP. to of

weather event second Now February faced service March, in the late address In the our territory. first quarter. the we experienced let me early largest in extreme and storm we

in the experienced and of their with served Our dedication. parts hands line able business, customers by and well our and the and most showed of crews they some were skilled are up service

coworkers, support throughout field, scenes people in the and the In to the many addition our including volunteered behind customers there who of our restoration. crews hundreds communities, to are our to our of crews serve

power customers XX% our up days. heart, our each of to working say from within you every of and with were call. want earnings together three other. I Because customers each our my you showing I thank for And one for join of for and coworkers know team, my many of to serve, our to

frequency critical investment peers. undergrounding. a our area system. significant more of is most of resiliency the We storms and to last where electric severity In an distribution seeing and amplify on and need the of reliability XX we're behind This the Midwest some occurred our have point. storms of the we efforts XXX-year our are significantly That's destructive highlights our history, years. enhance in The need eight data

transfer pending We reliability looping to more resiliency infrastructure distribution need and plan. critical are customers X-year important electric our our case, be hardening. for also do rate and outlined will These sectionalizing, system to reclosures in automated and investments improve updated in overall and investment and our electric

mechanism trimming improvements, well case our in and our recovery doubling customer but to contributed that rate to done to also work certainty supportive to in there of be has more to efforts needed around our as add reliability our XXXX. the I'm tree pleased include plan We other This more an our reliability investment investment. in XXXX, commission upcoming improvement has investment. investments since as XX% is been

the We will electric weather. our for productively of so resiliency distribution prepare continue reliability to and and increasingly severe work with commission the we system,

work the we as a goal investments customers. upcoming improving the all and distribution needed for We storm expect collaboration of further in alignment on system our common and audit

has these I'm because attract regulatory with and all the investments confident Michigan ability work framework to and see. the needed all capital in to changes in drive to place legislative the want stakeholders to our we to enable

forward-looking regulatory this a provides have Michigan past to decade. is top-tier the We for energy incentives. which jurisdiction productive years, a earned supportive environment, law constructive test It and has as rank that ROEs

many the I in to which Q&A., happy forth of Now arenas, the of and are regulatory remember, know want both details but to in process. will it's part the of do we legislative and you into all back the dive

all It's record we XXXX. cases of three in we you, have settled why drive stakeholders to Let outcomes. successful me track with working remind a

We want unseasonably and clear stand with to in weather I January February saw ice where warm be cost both Now today. well significant as as storm. we the

toward early objectives. high of reaffirming you confidence are full financial importantly, continued the per that counteract our to $X.XX share As with expect, $X.XX actions our Therefore, year impact. would taken all we've Most end. we guidance to

annual reaffirming earnings growth earnings committed the of of We're quarter, dividend reported of end In share growth also to to long-term X% high adjusted to X% per for confidence continued adjusted year we with first X%. and $X.XX. per our per share X% remain the

our for and first year. experienced was deliver we our countermeasures CE isn't early we rodeo, have team both and underway, while other to will for confidence through in offset XXXX for pandemic This Way it customers in and At Energy, we in plan the the delivering managed our I and unplanned industry-leading CMS long-standing performance. given the growth. already or deliver work the investors our weather-related, headwinds consistently beyond, customers and the whether commitment

details provide hand I'll and insights. Now it to to additional over Rejji some

Rejji Hayes

and everyone. good Garrick, morning, you, Thank

restoration quarter net share, a or the of unfavorable XXXX, largely adjusted delivered of related first activity $XXX the we costs by storm For significant million that of to noted service driven income and result earlier. Garrick $X.XX as weather per

XXXX, experienced number the To sales, warm X. The coupled Midwest, quarter the variance in elaborate on with normal per days approximately XX% on winter heating weather in pattern. warm the period were the XXXX territory negative the the in comp resulted given well-publicized a in weather, quarter first below on strong degree our service of impact versus of weather noted during comparable atypically the $X.XX Slide share as in of

were $X.XX quarter year's benefits of as realized gas of relief, settlement case variance offset expenses, with by per the in resulted first negative associated of net tax as and roll-off the last electric rate expected. Rate primarily investment-related in constructive case gas share XXXX of the settlements prior rate

the negative to expenses our From and attributable conservative versus cost first a XXXX. variance financial first maintenance cost the $X.XX It year in assumptions is perspective, O&M of last for operating this mentioned, have quarter by higher was or the category which elevated our in given over in we've costs, quarter full storm fairly worth noting, as performance resulted the costs however, seen significantly we forecast. share impacted incorporated per storm years, restoration few of that

normal than per period weather XXXX. anticipate relief by costs, we ahead, strong versus equates driven will to always, that which Looking be at negative of at comparable electric in summer. more share sales investment-related warm the we variance year's period negative for in share absence of XXXX the the to attributable $X.XX which per of by the quantified variance have plan rate estimated versus $X.XX to the due comparable utility as offset last weather, We net

to Our underlying year's driven are path constructive glide noted overall last Way. QX the assumed the have by pending we year, in successful and for settlements, the case driven during fueled largely gas the as by utility rate call, for a the Closing anticipate by our remainder assumptions rate our usual out performance we gas expense cost relief case. and O&M CE of lower outcome electric rate the

cost limiting by activities. other quarter, first our and the other longer-term of the contractors, headwinds initiatives supplemented among And year use hiring, spending for in the of planned and weather-related reduction reducing eliminating light accelerating IT we consultants productivity have our in discretionary

cost performance electric be share These actions gas And that in impact will the the comparable remiss XXXX. didn't support I'd if of and and $X.XX period safety of of positive I none variance will these versus measures per mention reliability our the business.

per associated discussed growth the fourth $X.XX during guidance. we share call, of our of achieved as XXXX and fourth per quarter modest the roughly as NorthStar pull-aheads original the Lastly, with in at benefits our quarter assuming we're

parent anticipated variance it, provide per XXXX. financings comparable the mitigation we share in the And largely and to quarter further $X.XX financial we the will of opportunities period should headwinds with we risk to supplemented savings opportunistic cost aggregate, estimate drive at and need tax versus encountered the $X.XX in of which form in planning, these have first offer the contingency in positive additional

remain financial the weeks do that I'll on, we perpetually worryings, so speaks we record on More over itself, last of moving delivering for Before you paranoid planning to. decades don't two have process. our bluntly, always our in -- two though the just note financial track our objectives

report already end, to the that that I'm numerous implemented to the countermeasures begun in the benefits quarter. see pleased to of And first we've

we that the confident highly the balance will I'm savings such, over As expected course of of year. the realize

which X of specificity to at the has months. in debt a on the been portion the already to Moving planned issuances Slide largely financing over good priced of past offers limited on and/or our more utility, several needs funding which the balance plan. funded XXXX, are

contract. with in associated funding the Covert million equity the and of issued forward noted dilution of parent's acquisition we in our the As facility equity contribution year past, of in of acquisition we the the This connection be place EPS have $XXX needs have full is the with will in guidance. roughly assumed the

While evaluate future we financings further continue will don't opportunistic parent funding to accommodative. this year, we are needs to needs financing required if any market conditions have the derisk at our

run and they plan We opportunities business. the similar our of rest conservatively arise. financing Our approach as to plan is on the how to we capitalize

and out irrespective year year This been approach and tried and operational true and our customers our different. enabled deliver financial has circumstances, us of objectives, of no and to to has the and in this year on benefit the is investors,

Garrick And I'll before session. that, his hand it back to for the final Q&A with remarks

Garrick Rochow

you, Thank Rejji.

two X, changing despite you results industry-leading here As activity, Slide the you at storm commissioners, legislatures weather a recessions, track I'll for again, long decades severe look haul. pandemic. and of consistent our or governors, We're record remind spans and

we We as ahead, the growth And we have help critical infrastructure powered Michigan's to state's support opportunities century. see through progress Michigan through for power the we great next nearly as century-and-a-half. a look

With please for Q&A. Bailey, the that, lines open

Operator

question line ahead, Jeremy, Jeremy open. today Tonet Our first line is now Instructions] Please from go from the your JPMorgan. of [Operator comes

Jeremy Tonet

think key wanted to targeting point, focus, first at high headwinds that you're just still Hi, back less or the you expected and that come you see to contingency I anything guess, I shapes year, this against anything the moves you, adverse up end about weather I storm think, weather with as have that wondering, good of market more that this just quarter. And if in the to could is in else plan? else Great do if contingency flex And against just there guide the there. the moves offset than morning.

Garrick Rochow

to Jeremy. remaining. know our And a deliver. first year in lot the point, of we have there's I ability That's confidence

look to the we And contingency year. in out throughout all so build really efforts, our

me because is this popular let know our break about five And areas. a little playbook. really specifics. so today question offer it just I'd maybe talk step if but I more back a alluded I Rejji into take to and And a just it,

reasons we plan you And year this our know what consistent That's Jeremy. financial to done we one about we year after also, And The first consistency, year. is talked leads the after of had We've this, this QX. in one conservatively. performance.

storms storms, Rejji's we budget year. we for because we and derisk conservatively throughout just in the the And What did buy it XXXX year. then for adding occur to know points, we to they

story. is so weather And in cases, many a this just

piece So we just conservatively. plan the is first

is plan the of Way. piece the CE second The

And everybody, to It's deliver is strong different it's great is it's for you right year. And and the continue a example industrial I'll is us. And now. Scheduling this engineering, science, for system. lean many suit another I throughout it on see -- years opportunity after we year one operating companies. optimization underway a remind that proven

get reducing IT customer costs. other We're efficiency It satisfaction to investments improves while making capital improvements.

has rate year, a run and lot been you Our typically $XX million more there. muscle a around know, have there's we as

The third what the you We labor some expect. piece around is released is piece. that really would consultants. And

hiring. on We flexible, a Our down we are hold contractors on and pinched back bit. so we dialed that overtime then

well. help those things so as And

but some of it big small, it's training. The the across fourth discretionary company. spending. you apply you really that's limiting entire It's actually and area travel when think the And and is conferences

hit then and good opportunistic was, just and planning it tax And financing. the piece Rejji on fifth

And said, And so as isn't our rodeo. the this recipe. that's I first

we're If right we had find other to you very the it came CE back to what now. similar doing actions, go to XX% $XXX XX% through pandemic, Way, through the million. of

And we're throughout contingency bar, this some so going add we're the year. to to chin and going

So and Mother the confident at to I year. in throws deliver feel very weather throughout our ability us to Nature whatever

Jeremy Tonet

maybe maybe pivoting the Got And gas it. very case. -- pivoting That's helpful. to

this what at know about much far you the doesn't talk of speaking. across thoughts stakeholders if wondering maybe little for case Just gas that. could focus as get key as chances bit ahead without your gas settlement case just a And to trying for electric a generally the sense more But I point? a in getting points focus on come the too yourself. are

Garrick Rochow

you, First is far was a a positions. staff as dissect was this AG for things saw from to in what previous AG little point. constructive as bit just we and I it and first, better good than the starting staff ROE If

for an some of so financial the bodes And metrics. well that ROE and

QX The build piece we that other case is year. -- built last and QX important we remember, that over

gas And prices so were rising.

pension to those We fast forward also have perspective, changed. saw when expense but today, from some you OPEB

gas prices the We at expense. the the year line of OPEB end on lower. And are snapped so and pension

And saw so is here that case. fact got $XXX talking sales what big forecast. pulls when is we the And $XX but there's million, a difference built the is we ask, about that about then that than down And effectively are we pattern the the $XX piece million because million different people there.

through And so that. let me walk

a this have It's used method model. XX-year type We project since regression to XXXX sales.

bit. changed And commission let in repeat, method. point. ordered use and haven't We the XXXX, a and tried this ordered true Back the It's me to us, here's the important it's commission accurate. us

That was in UXXXXX. case

And to so we're what doing us commission exactly told do. the

good about So there. like really we where feel positioned we're

And good but it's so take there's cats a point. dogs, a lot this away, and constructive of bottom line, starting

again, for constructive very other sit for The we'll opportunity we look settlement, but jurisdiction. settlement, you thing about always the asked a in

forward the very to commission. comfortable it the it taking getting from I'm and end So

Operator

today Partners. ahead. line Shar The question Guggenheim Please of from the go from next Pourreza comes

is line now Your open.

on We move question. our will to next

Dumoulin-Smith from ahead. Our of line next question America. comes Please from Bank go today the of Julien

Your now open. line is

Julien Dumoulin-Smith

Good morning, team.

up Let other. question me usage, just the on the here uptick nonutility follow and tax around first in

elaborated guys on You it.

there You're from right? materialize. levers $X.XX the So in want to they but the understand the pressed which that, not to now, I to earlier. extent change positive got some see levers sure the of to just of addition talking to range, quarter-over-quarter have comment 'XX to $X.XX those in go you've and I you might further only in make about offsets

Rejji Hayes

a to thing think, cost we cost The we I comments to is Rejji. Yes, it the right. comes across approach when that wonderful exactly opportunities. look add Julien, reduction it would We reduction, offered entire got you've only how I dissertation on structure. discriminate. don't And this Garrick, is cost his

of that is as a When you income tax. billion of as $X billion state interest tax of property exclude tax depreciation, federal, and well it's and related expense spend, $X combination about about combination annually

that you're across anticipate seeing And waterfall bar to look that prefunding. all cost are opportunities opportunities. in around identify in categories we so what potential pronouncement And we those of that

if the prematurely. know, bonds to at aggressively bonds and you out we opportunities maturity see As look there our of take are profile

then at reduce the looking otherwise. to tax, So opportunities those. for planning look tax costs, side, And we'll that's on or always for state again, tax we're whether property

cost Garrick's And so that add would on again, that's approach to that's how what's good last we incorporated into I item. all And reduction. comments

Julien Dumoulin-Smith

And up enough. just regulatory Fair Excellent. then on on the of following some mechanisms. conversation

your including that in an mechanism what You looks you regulatory about talked like? about talk upcoming Can case. investment

about this And on context ring-fencing talk mean talk the how that specific management of ring to about related? some on you this might isolate of parallel I reincenting efforts. maybe And IRM sounds do be in could perhaps subject fencing Also, It areas? then here? you like with think conversation veg spending about in

Garrick Rochow

Absolutely, investments. the ring And you've listened used some word fencing Julien. of Chair the capital around Scripps, the he's obviously to

the put it it way about buckets. in we really, So think is I three

And really to nature just order reliability to more It's an and resiliency in investment. so severe aging weather. customers, our is the that's of more for systems take we with bucket that the capital know first deliver going

And on focused Commission, a we're that. we're certainly all focused company. so The on

broader Consumers every one here so Energy. within CMS and of as And coworkers our Energy the

So focused first we're squarely that bucket. on

wants at when large The able and a be the second up can that ramp ring-fence have resources work, we we looking for asked is the accountability. do And prudency, and want we've to that to And bucket it. brought up. typically, to know the really they what Commission they're you increases, to

to IRM, Commission allows is see. provide this this that And piece. to and us the tracking looking accountability And the so that's well, an do that important mechanism

piece, for is helpful third is the lead And so recovery ultimately, should investors. the that which which bucket, to

so see Back And mains did replacing similar And and looking three services. an working you a those on fact, in engaged amount to to XXXX, was in we I in business. on I XXXX, all spent want we together. I We're gas example. and increase give the our

Commission are We and And the to resources. started you're staff do going construction -- gas had group. the questions going were how ramp important and a up how new about that to about at questions you time

that similar customers, accountability creating And safety tracking improved the for did and with type fence that a mechanism our we and then, associated so ring replacing mechanism. mains delivering services,

And started it's in million now a $XXX $XX at we and out very on program were million annual back XXXX, It successful. an basis.

And that taking so approach go that case. we helpful, Julien? we're as same through this Is

Julien Dumoulin-Smith

absolutely. Yes,

So shift perhaps perhaps address sure accounting and right just spent to let just lag I'm and make me This help principally timing cases? back the you Or the some hearing would commission to of future right. are accountability make sure cents dollars this considerations, is the related bucket? in about that getting

Garrick Rochow

then And The Chair I fencing and is it there's right main in to the the focus. has of accountability the now But referenced latter -- -- just out rate that piece some all some is sure extend making mean time, the ring that could cases. the public focus comments. lead our his

Julien Dumoulin-Smith

it. obviously, a front. And with on quickly, to respect then the the been equation, on lot of Got of side veg focus just management, just Excellent. that that

this helpful. need do allocating even time? that for you've desire or regard? saying think direction efforts it more from further commentary And you obviously, Your that. there How seems an in at Any acute that that about be to increased in XXXX,

Garrick Rochow

Yes.

look you give with to cases, we reliability, of we're on it annual more components aspect $XX that. real Commission opportunities just was more And support requested through around on of to a an of so And some invest different in other up on there's we numbers address about million the basis. annual at And important in to continuing it. million this basis. of this, So to were $XXX couple an around XXXX,

this analytics to we're predict where dollars. looking technology intelligence to is But at able where that so and we're better the area and be also efficiency and utilize of using artificial to those an

per trim well. time trees, the our mile over actually period -- we've has so improved And as

look have with other for in the and And I during conversations areas we'll opportunities improve look to and around Rejji I like helpful reliability, said it to wants the so then know capital the well. to as we investments. Commission, continue that's my to at much add to comments invest

Rejji Hayes

years I and bit add thing the last planning little have contingency, had of or we Yes, first bit one that on upside Julien, the little the and list. year, And Flex of we that comes items is about -- fact, upside management think was which that only vegetation in up usually a is when driven. weather of we were in a would year particularly the

We did million related of to management. about $X or flex so vegetation

over million I million. though even we've as to last $XXX year, actuals for around budgeted actuals, Garrick million, $XXX were our our noted So closer think $XXX certainly

And to which is And opportunity mechanism, through vehicle management. operating a have we we Flex incremental which voluntary additional so an expenses. then refund is that remember, vegetation do us for also can do

the And as voluntary pulled get we about lever of assuming that we QX $XX will a last million you year for year allocated obviously we we've know, have outstanding, approval. allocated management in. that And that $XX Commission in management, towards be towards refund of we all vegetation electric so portion additional of And the out vegetation the million $X again, that targeted business. to current million this mechanism

as So have we that's the well. mechanism other

Operator

from follow-up Shar Next today ahead. question from go Guggenheim Partners. a Please question is Pourreza

Your line now open. is

Shahriar Pourreza

your the Would items. overall, of but offsets going do kind I -- guess X-year storm if to increase that change CapEx? kind CapEx? going things the these you I see do do just any to storms to plan? this, I will to -- Sorry out of Is similar missed I already some sort they you of discussion. new treatment? just thoughts how in are kind wanted around spend? get more lead Are do of the resiliency guess, it resiliency round seek mechanisms? rider-like I mean, they to storms Or maybe just

Garrick Rochow

IRM an going in investment offered capital on rate investment be and to be system I of investments. in reliability my case, this, and show share needed so we're that with We aging remarks, severe this to there's that's reflection a to but capital just And proposing more greater certainty or as it's mechanism to really prepared weather. crystal a of tracker our some around resiliency, -- recovery next electric improve and more clear

the And have we We a more. that. know to intent. of to invest so that's ways There's number do

is One that on alignment and the it on our and focusing with get commission.

distribution other rate then is the The plan. five-year electric the and one investment case is other the

And better electric those so investments. different and all filings, support our alignment of all those distribution to better different conversations lead for

the term will And to greater lead about ring-fencing long in with IRM investments. those Scripps create the we and yes commission. this so Shar? And then has of mechanism, that is more ultimately talked Is should believe, capital that. helpful, recovery accountability Chair

Shahriar Pourreza

should question be extending investments growth as or these the guess accretive I And the of at we runway is, your looking your growth? Yes. incremental to

Garrick Rochow

system. billion X-year plan model Well, year. up. about plan. in of is our There's continue opportunity investments at But we long of to to And across That that system. given a recent we the invest there's the investments, additional we as at up this plan to -- look electric we more our in we'll distribution $X just there. we'll have most continue system invest includes opportunities and update a runway as nature long every That of the runway, was look

Shahriar Pourreza

a come and been Got embedded versus how headwind, year-to-date. have guess then cost the some moderated rates to -- of financing. And but and interest it. is versus bit original trending versus Got a shifting I for tough maybe expectations? of it. have in seem just interest cushion even it's to Financing you opportunities maybe down rates are 'XX since 'XX plan terms your

Rejji Hayes

Yes, sure. Great This Rejji. question. is

had of about the we case count or in Xx we here. think remarks, our I that about talked word where always, And prepared been has Xx conservatively. as So a planning

date in at pretty at done year. we've issuances so we've what below the the issuances those our we and company, of for been issue are to this levels we conservative had majority levels planned. operating -- vast haven't And interest And that's where the assumptions fortunate to plan, rate the

and paper. our that 'XX obviously, that's long-dated So beyond from and we'll a we're And because we're seeing through upside, flowing 'XX already in benefit issuing numbers.

with on over of and what months, at the markets opportunities, capital that's capitalize certainly, moderating so months now. mindful obviously, if the we're as interest be we And creates look we'll we that six, year that accommodative seven last sort and seeing of the rates the of seeing additional right several final can the

Operator

comes question line ahead. go Chopra today Next of from the Please Durgesh from Evercore.

Your line open. now is

Durgesh Chopra

Good morning, guys.

were for maybe continuing the us the the by is third-party understanding discussion that was -- the on can Just My you commission? that on storms, update just started investigation along they looking a consultant.

So just maybe what's there? the latest

Garrick Rochow

or audit Yes, CMS process that That Energy I'll and selecting is broadly, now firm Commission fall. vendor last in picture the on perspective the both aligned. started being that, the perspective, and that But that need we big so to storm remind the aligned we're they frame. right the right from audit And in the of now, reliability. September the storm time you improve we anticipate to start the

alignment investments in an And our the to needed so I view get really to able system. be further opportunity on this as

more We're peers, Midwest if a they're give And want XX%, goes undergrounding. example around at our undergrounding. do at Shar's We you look of back question. great to to I'll XX%. XX% we underground. It

for a them. There's lot opportunities there Is of investment?

we see so that important. And as

Institute undergrounding three phase to it's Power depending Research at by they'll can XX%. if single or improves say XX% and EPRI, Electric phase the You on reliability, look

investments. again, can model, alignment alignment, Durgesh? forward system. those investments to this Does in need where move -- and this have the better then And example can around we we is get so get we the storm that certainty a with on immediate And utilize greater that great help, once we

Durgesh Chopra

a does. as said guess punitive is, point things through the this know as and absolutely I audits your coming of don't of go But fast out -- those before, It other you result you kind see anything processes they I don't you've and practices?

Garrick Rochow

I don't see No. anything punitive.

Durgesh Chopra

Got it.

believe just there And voluntary on decision briefly? Can got that mechanism but small, and a earlier is to in refund I follow-up. were And you then Okay. know quick I the the this discuss that one you've disallowances. talk some month.

Garrick Rochow

Yes. I'll with Rejji. team tag

not and These get did context are in bottom importance it's the XXXX, the cake walk, And things dollars. this. a customers And that, we mechanism. have pretty some out customers. the to that other have this really approval, helping to right? forestry it's going Just And a in that and are they refund assured small XXXX, in in dollars booked a option the those incremental but staff voluntary terms like file say you're with around low-income not of we telegraph line, our of commissioners the

And another that XX and so comments. April we here reflect at us bat, they've really staff the given the opportunity and to commissioners on filed

And feel to the good process, forth the Durgesh. kind about a just navigating I that of and back positive of and on so getting it's outcome

Rejji Hayes

Yes. That's it, of essence Durgesh. the

give you on to numbers. some Just the specifics

VRM million side $X gas when the That in XXXX was to was the late of So million, we filed $XX of customers in support which business. our it vulnerable for was there balance to $XX I'd approved on commission and fully electric business. the of allocated the guidance by counseling million was was the that say, some, the by the commission where we the

see they benefits. comments, direct to Garrick's to And wanted customer

well forestry as as recently, vulnerable support last sorry, -- And customers. or so for of we management as have additional additional Friday, why service requested that's vegetation

So that's cut. how it's

subject is the finish $XX approval we'll we're that over this million get Just and that request to recent line. further confident

Operator

of David Morgan question Arcaro comes today from ahead. go from Please Stanley. Next the line

Your line is now open.

David Arcaro

questions. much so taking you Thank for morning. my Good

net thinking some wondering some targets. was been state bills any impact you that the there's with if in see, address zero around I legislative might your drafted aggressive more the time IRP? next the of Let's

Garrick Rochow

question. Great

often and about and is of you Let there's back in air bill. Lansing, a kind clear lot really then from of part me -- and perspective perspective. the a big forth, I think and because to media got picture of releases just There's here important just it talk

And was in so stakeholders I'll climate that one the first the remind language fact, she it. a that kind direct one and around And was in my in members the introduced our healthy listeners review of plan. and on the involved in of staff governor's of here the term, process

process. CEOs a in And participated governor eight then and about the XX I of with review group the to

called perspective, governor's well lines headed with the our a up plan also but with IRP the current -- well really climate that like. the up where so we're and lines state from And

has forth introduced this is little builds aggressive, more some remind back want a but of specifically, are has legislature -- Lansing. the the to new Now the bit and Senate everybody, that I

first that's the valley point. And say. starting That's might you first the

going to that it's really and, that to end capital and so again, And manage something well something we're do us move continue to -- with that sooner. at with headed. to investment the day, process. that of already it requires everyone navigate sooner, Ultimately, opportunities. if want mean the that But forward for do we'll we're manageable know And will where aligned I let more and

David Arcaro

what terms on Got also And lining that's sales you're in your volumes touch far? just seeing how and volumes weather -- up you. with could helpful. so That's you of normal expectations

Rejji Hayes

of customer. would benefit, everyone's X.X over saw. admit over was just excluding And trends -- last Commercial, little David, were versus little heads of the And this trends, about our Appreciate versus versus early will is down the we Rejji. Yes, I days. really QX year. then X.X% flat I little QX question. one X.X% low-margin for saw that at And little XXXX. of weather off scratching off about large X.X% we XXXX. say normalized we total a Industrial it's a QX residential bit a a was over

say, dramatic winter weather was of earlier, warm year. in as like this it we and QX and saw team when noted art cold I science. math as year, And still the a would We pretty by start QX of a are into you combination I'd normalized then hard saying, weather is last as digging works, our extremely sales of see, data. just we forecasting where

of see those imprecision a can good calculations. in You degree

to say, And we're say a strong that I is so looking reality territory. of service the in a the seeing with we're economic all indicators eye very because skeptical still at bit it little

good built in at every really point days into the in residential not X.X% for customer customer we're four, over still five electric And we that gas seeing businesses still are commercial, across guidance, a count Our almost the company office. to one up. level specifically continued up our point while we're counts return work, Michigan has almost -- of this have and X.X% to

mix get the past. favorable think the we so see some we've seen still we that into of And we summer months, in as may

And XX in that's say legislation over again but out little the And were side, so the noise data. borne a year, I where the been a bit industrial probably there's would last flat say we just were more of lot of constructive months. pipeline early the I'll days, passed we on of federal have a couldn't versus we economic robust development

were energy pre-pandemic, trends we well, take account you across at than pre-pandemic load to programs, and customer doing by we're our And year-over-year when as not our if our better, effectively we what reduced class doing X%. which look into particularly every continue efficiency versus

then again, in indicative economic in I Michigan. think the seeing is conditions don't so data and you're the of QX And what

versus it's think weather-normalized just else. I more a anything math

Operator

Next Research. Wolfe question go of Michael Sullivan from today line SPX the Come Please from ahead.

open. now is line Your

Michael Sullivan

I a already answered couple discussed. what's guys You been follow-ups just of had a here. lot small on

on on long-term the give How there? what a looking target time like of over are undergrounding, there? period you'd much and you the just of to just So can is sense us underground you the maybe get what system

Garrick Rochow

it's a know I've you're Great to we're a to used trying it's utilities, single selective not across question. really again, about sometimes underground XX% a And phase. it's strategic important and or or entire improvement, EPRI phase undergrounding. number the to recognize system, we XX% from three And research of word the whether in

can we're get then do so a XXX trying where that year. a And up. of over XX-year And increment miles really period, we point to ideally, to kind a

miles a to occur to system we're range around is and a standpoint. does provide nice resilience and to say It's would opportunity capital our a reliability what overall. that the trying get enhance nice the not XX,XXX I overnight, provide investment going of really to So but from of opportunity

Michael Sullivan

kind Okay. a following the And up Very just similar on question of IRM. helpful. then

side on I you case Can know think gotten to. could next and maybe frame you the it where on ultimately gas where kind context that where terms but of I in of haven't the that was started it's go? helpful just start gave officially And filed the and the you yet, electric side?

Garrick Rochow

our IRM about the we first to and very there. But grow grow we're from as be will starting million it an our see thoughtful valley from and then $XXX there. opportunity point, in it So an range for we'll being

Operator

line The today of comes the next Weisel from question Andrew from Scotiabank. Please ahead. go

Your now line is open.

Andrew Weisel

not say selling Let that. we're congratulations again for the EnerBank. very call me I'm talking about of spending X/X first glad

Garrick Rochow

you. too. glad I'm Thank

Andrew Weisel

Yes.

undergrounding. question, on First follow-up a just

give XX% Do from a cost breakeven the sense difference you rule estimate is like? to thumb, improvement above operational about rough of might the EPRI. look So traditional talked streaming a you XX% ground versus what

Garrick Rochow

a I So It's we've undergrounding done approaching what of right a are overhead. lot undergrounding, yet, for And lot, shouldn't doing phase, of but our we're with there but single lot the some -- say quite is crews things -- particularly close. now. that price work doing price a not -- on of the we're a

of for in things, homes we're $XXX,XXX it range maybe other the or directional number. so the single the phase soil like the And undergrounding. conditions and And take, give but roughly depends on it's a that's mile and bore. Again, on

so in And point. price quite comparable terms of they're that comparable growing really or

fertile so got And soils. pretty again, we've

soils. soft pretty have We

things, perspective. a so which rock and not cost those of some helps from in And we're

Rejji Hayes

when vegetation and restoration, would million comments, to cost per Andrew, you last the few only potential about categories. is I Eric's add about -- comments, thing cost Garrick's spending those only plus year Yes, two thing average add would on think years our you opportunity, the you to Garrick's at think the when look the I management we're on the across $XXX-plus if based our service actual of benefit

opportunity over to those with underground reduce time the in overall would bucket. And so investments potentially and be that cost

of to addition raised think Garrick about points the that's would And how earlier. we the so cost benefit some in

Andrew Weisel

Great. Okay.

cost tell at able the year-end? are what's versus now one, deferred fuel balances Next to you

Rejji Hayes

Yes, I'll with the million the the our precision well, on just costs of the and had follow at gas up gas supply ended we $XXX needed. on we we electric take the off-line, a over Where on XXXX, -- side side business. Andrew, if inventories more that, stab can goodness across in year, into

very $XXX we $XXX started of it the call recovery have a mechanisms and $XXX-ish tried about million million. that. million, Obviously, to to So since cost chip which at in kind strong away been have split, true mid-'XXs. Michigan, We

gas elegance And on power do majority year. And fiscal bit electric, process so that we of a we cost. did recovery this over for of the the side to the then vast course recover to of a expect for apply supply

with a we over commission recover coming that had to January, plan X-year we million span. in $XXX due the of so And filed the a

right current effectively we thought And And our that So thing thought burden alleviate the the balance per environment, million year for to through just $XXX that, given do was sheet it well. could customers. as we cost to XXXX. accommodate the also

just And Moody's through that their the those longer we're it's on structured it's to also recovering FFO. how based a capital these the we've way calculates credit -- it, no accretive asset, now actually working costs fact through be going regulatory

first quarter. reasons, a for so we've opportunity, a it And in of was nice the it exercised and variety

Andrew Weisel

One is new likely of the year. state of to versus can lot the your good. an updates announce, updated give whole not just I thought IRP, for timing believe Very you the follow-up, there's I there quick next if potential which next come you I may. on but a Holtec, to know timing with

Garrick Rochow

the -- requested know funding budget. requested public that do operating now, They've information I has is we this mean, budget, who being has is So funding. there it's facility, responsible also worked in the and facility federal decommissioning Holtec, within rights which for right state the state

this public information. be June, Again, in May, They've budget. in $XXX that state the figured So asked million is will time this frame. out July

had that lower flow should PPA lower all Palisades, to What I would this power. to there. a for We've from into it expect when it's power the tax that expect Michigan. we And expensive cost applied given be is been are see dollars

it. So those are components important of

as soon shape that but at got I've compensation consider it's mechanism, shape place. we're power, upcoming and with financial a comes the open to IRP. historically, we've tell said it would good low-cost IRPs. to And point, to But expect this IRP we So if our a how in fruition, will on next it really PPA too

Andrew Weisel

timing of IRP be by resolution? the would Palisades was, question of your the specific more the potentially influenced timing guess I Okay.

Garrick Rochow

-- to done. That's too tell. plant hard been a this my And nuclear bringing knowledge, to has frankly, not as back

happen, just a it I'm there. there's unknowns a lot a saying but lot hurdles of of so there's lot And can't of and not unknowns.

IRP. our And not or on so an will say whether it's to next impact have difficult it

Operator

ahead. Next question from Mizuho. today go Mortimer from of line comes the Please Alex

Your is line now open.

Alex Mortimer

Thank you very much.

the they've customer of So industry given provide tone something of any to you're something tightrope or the to of unprompted? walking and thoughts sort bringing of everyone this bill with in that the on the impact, that Is been is that them reliability suggested what regards kind then can undergrounding? always you between the has sort commission

Garrick Rochow

and storm lot a work we'll more But with undergrounding. too, the within improving opportunities there that of really conversations our going here, aligned been on rate resiliency. be conversations and that. at are case, and staff alignment and the the Commission, context ensuring investments we're this look to on piloting will the continue on model, of of coworkers then to There's all some and important the this proposed get be would suggest the need to made continue be additional other to back our really both that that resiliency. important We'll this reliability is opportunity well to improve on to doing reliability and build And I electric further out to company Commission

affordability expense, Way, the efficiency. Part and as You clearly capital to that top piece we maintenance is of of mind. leverage CE improve it our we that's well. not about but talked utilize to improve the And only operations

goes dollar that further. So

to bring like down I opportunities of cost to work. earlier, at all our undergrounding look Just frankly, and continue of shared we the capital

Alex Mortimer

kind extending Xs currently? of X of towards Understood. and high getting of And we at plan? it on the you like this Or sort look beyond amount of look line this as time then would potentially this the X% sort long-term is or what is what a just And into the of of bit then guidance? of upside of the your dollar this color more little to would the should more think CapEx where then out

Garrick Rochow

$X.X look plan. capital billion distribution introduced we related our when electric $XX.X billion spend more was was in of an we So We're introduced which electric QX and that increase. And investment plan changing not in call, that, like that because had here runway we a plan our as it capital change the capital that there. at point long of just every this in time call. over last plan there's because may year. increased I've we at shared, opportunity That And

investments, as that we the so opportunity certainty look X-year that these electric out get as at to an we build be around piece. And distribution plan, capital longer-term will

growth piece. consistency there of year the high the that we and again, are X% it to X% say range back no in after I'll Historically, puts that going X%, Now this, it to and highs, said we toward to end, confidence said X%. year. go for sugar I've

aim And that's value. we we our so because year will continue repeat that's year, we earnings compound to we investors of access. quality after and know what that for of That's the

Alex Mortimer

great a on quarter. Congrats

Operator

the from comes of Ross go Fowler today question next from ahead. Please line The UBS.

Your now is open. line

Ross Fowler

numbers. contingency to for commentary first is here, couple on you've those knew $XXX of things, Now million up were offset the around you sort to priced that about going $XX normalization you have weather cost with? of five is million about you as through went replacement my And to Garrick, just deal resignation the year to me beat and horse not the on One, the dead but any here. cost line math and time a into part commissioner replacement. then for quick you just came So to

is And thought bucket more sort So what's coming there's and million of another in. wanting or about that clearly, onetime permanent. so you $XXX

around have to permitting because conversation Maybe reduction? clearly, that look there the cost can how some And what improvement past? conversations us as the can look you of with how future contextualize those to in Commission be the what's improvement, you onetime cost kind at around as gone negotiations go the for

Garrick Rochow

it One, in we was left electric it and He legacy -- start with and Germain. And put respect areas. I vehicles he Commission, Let at me he state. really Germain I'd constructive for the outcomes. Phillips. three great the was And a great the saw into commissioner, moved have

out and piece, commission. addition that, was position have is and helped really the over there of of that course within progressive was that on and was work income grid the about And work. forward-thinking optimization it and nicely played pandemic he customers. this And lot the And the he the vulnerable monetization grid a -- then and to third in of is laser-focused low

well And for the I Commission work. him give the as credit as

We have the the industry. lowest bad debt across levels

taken toughest And of care our pandemic. low-income so customers the times of some this we've during during

I'll Philips. there. -- credit also goes he's refer that out to of public much statement Germain But got so you a And to

opportunities, is He's and they many his Germain, career both to has family successful. his new went his thanks, and after wife his wife wife successful, opportunities. pursue and as so And but different congratulations so is

well functioned commissioners. with place. the got has in Commission commissioners two constructive, we've past And two This in experienced

commissioners at interim if and with well know very well-suited is and you And to this so about been historically I'm staff And worried out new is thoughtful Governor as environment, regulatory governor a governor, the governor's experience constructive looking found the look the continue out here, Whitmer the We commissioner. commissioners all. environment not Michigan. about in -- they've the do placement that as of for

your a there continue to That to a don't process But about second have of date but our tradition the question. talk here to is part will the of information jurisdiction bit this or little and that the governor take jurisdiction. confidence again, I'm Rejji financial place. a have deadline in when a I over in out pass long-standing constructive going your call to we underway, to

Rejji Hayes

appreciate I Ross, question. the

you Germain, bit on regulatory an and so terms construct. have obviously commissioners an the because for still the why reason you Paratek part it's mean, seat. we it's basis, when really the on and I leadership your thing for is of staggered continuity and of last a Michigan to have that of advertisement Scripps Commissioner unexpected Chair legislative in have one have just So wonderful and turnover do still

or And policies, are a aligned I policy healthy the should philosophies climate. around are governor's with have they obviously there -- say,

that X. continuity a nice quorum and so And with there's there, have they

the And for right. replacement a is so we'll on, Commissioner time Phillips I'm suitable still when sure carry and find they'll

we I And me let the around a our just year specified for cost cost follow the as normal please plan. of opportunities, assume be numbers very miss get plan at our always, at with question. to you beginning weather. I'll we best I try about clear, if your the feel free on we guidance can. effectively the in to respect of With question level up And But to as you call, our productivity QX think said, the anything, if

to were variance And showing per related so we share savings. positive about of cost $X.XX

mechanism had and specifically we some we the settlement. result context case voluntary some opportunities aheads then the work And weather XXXX of put estimated of of and in pull with as electric exercise in opportunities a the warm we the to in the rate QX refund

equated about to on so or of And opportunity the to original guidance. positive that in $X.XX $X.XX variance

as million over showing waterfall forward so we're of form in productivity And you you hurt seen today, that really around in fast weather of as that's well the we've and what's and parent-related as and the at cost in bucket that or QX now form catch-all to is changed opportunities. we're look offsetting sort $X.XX the for just solving pretax $XX what of

be we go record, and And is our that, $XX million need very about good that of to feel we effectively so modest ability offsets identify at what to saying track that our around trying we're and we look we're when not achieve that. to

during XXXX the out $XXX million. pandemic, took you about when so we And think

one-timers about that's we to And There that's what will sometimes are the sustainable you will form CE customers of savings some XXXX that old of the resurrect of flow through think and have versus And XX% about was when one-timers, what in Way, in plays. rates. those that benefit from. do

and the of execute as call. in $X.XX-plus of probably working incorporated probably rates But to we're trying execute need is earlier sort as opportunities those opportunities portion on get we'll those form you assumption weather the are CE that my Garrick offset in Way on in those so subsequent a well years. $X.XX And or about the of see noted don't because opportunities to into of this good

this consultants, it's type it, of million external it's whether to will as that, opportunities those take savings of we contractors freezes, call hiring weather. $XX-plus decisions all of hiring around offset whether part and So portfolio

don't that's think again, that those So we That's are necessarily the that but helpful? Is onetimers get you how to repeat. on will it. we'll good passed portion how be and it. be And about some should customers, a ones go

Ross Fowler

my the you've Commission say, have Commission. a get of past, risk money that there out the onetime that Yes, sort that's at and would onetime debate around about perspective helpful, in you've can right? well, In able the been the more basis. permanent. what's context look around hiring stuff. in risk what's of from Rejji. stuff As I with CE permanent had any bill not. past bunch what's I guess freeze some discussion to then of some of and Way of some is the guess understanding and that the maybe really onetime relief of that of some and in their permanent, and that, contextualize we you customer But It's you of the that discussions that have

Rejji Hayes

the we are this bake again, midstream. will we is to adjudicated clear, as annual realize of be which, them we cases those on part Because rebuttal, Way, they To or as they're start savings cases sustainable, the the of file pass of some those when savings, we Yes. benefit CE filing in subsequent process. generated when because in

the again, And interveners that's our filer. transparent incorporate other sustainable, pretty with a opportunities staff that's into dialogue an the is annual we the cases. being there and of and think what so benefit about And we commission are

Ross Fowler

Fantastic.

there's call you So and sort kind the category Julien's cost usage then this the to cuts year-end in in on like answer of and other that incremental went between an million I'm $XX question. back in the through million deck with of $XX

Rejji Hayes

I'll is thing to of be mindful you be as there a just mention, Yes. The other have only of to clear, well. geography, bit

of they're the that level. holding is at say case, we savings, because at whether the tax company, into parent-related planning process efficiency, adjudicated wouldn't incorporated financing when which not opco be it an or they're So in some

those So directly some will of go shareholders. to

clear And think of stakeholders also to the case. and other context that's so commission the I very a in rate

Operator

at noted questions additional no time. are this There

like Rochow back I'd pass any to remarks. closing over call Mr. to the Garrick for So

Garrick Rochow

Take like care, you you and on I'd Bailey. joining soon. to see for safe. today. We'll Thanks, road us stay the thank

Operator

This participation. today's We for everyone thank conference. your concludes

CMS Energy Corporation 5.875% J (CMS) 27 Apr 232023 Q1 Earnings call transcript