Q1 2026 CMS Energy Corp Earnings Call

April 28, 2026

Speaker #1: Good morning, everyone, and welcome to the CMS ENERGY 2026 First Quarter Results. The earnings news release issued earlier today and the presentation used in this webcast are available on CMS ENERGY's website in the Investor Relations section.

Operator: Good morning, everyone, and welcome to the CMS Energy 2026 Q1 results. The earnings news release issued earlier today and the presentation used in this webcast are available on CMS Energy's website in the investor relations section. This call is being recorded. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. Just a reminder, there will be a rebroadcast of this conference call today beginning at 12:00 PM Eastern Time running through 5 May. This presentation is also being webcast and is available on CMS Energy's website in the investor relations section. At this time, I would like to turn the call over to Mr. Jason Shore, Treasurer and Vice President of Investor Relations.

Speaker #1: This call is being reminded, there will be a rebroadcast of this conference call today beginning at 12:00 PM Eastern Time, running through May 5th.

Speaker #1: This presentation is also being webcast and is available on CMS ENERGY's website in the Investor Relations section. At this time, I would like to turn the call over to Mr. Jason Shore, Treasurer and Vice President of Investor Relations.

Speaker #2: Thank you, Rob. Good morning, everyone, and thank you for joining us today. With me are Garrick Rochow, President and Chief Executive Officer and Rejji Hayes, Executive Vice President and Chief Financial Officer.

Jason Shore: Thank you, Rob. Good morning, everyone, thank you for joining us today. With me are Garrick Rochow, President and Chief Executive Officer, and Rejji Hayes, Executive Vice President and Chief Financial Officer. This presentation contains forward-looking statements which are subject to risks and uncertainties. Please refer to our SEC filings for more information regarding the risks and other factors that could cause our actual results to defer materially. This presentation also includes non-GAAP measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in the appendix and posted on our website. Now I'll turn the call over to Garrick.

Speaker #2: This presentation contains forward-looking statements, which are subject to risks and uncertainties. Please refer to our SEC filings for more information regarding the risks and other factors that could cause our actual results to defer materially.

Speaker #2: also includes non-GAAP measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in the appendix and posted on our website.

Speaker #2: And now I'll turn the call over to This presentation Thank

Speaker #2: Garrick.

Garrick Rochow: Thank you, Jason, thank you everyone for joining us today. Our investment thesis, which you see on slide 3, continues to stand the test of time. Whether it's our long capital runway, Michigan's top-tier regulatory jurisdiction, our ability to keep bills affordable for customers, or the strong economic growth across the state, this model works, and it works consistently. It drives a premium total shareholder return, 6% to 8% adjusted EPS growth with annual compounding, paired with approximately 3% dividend yield. It's a simple, durable formula. It's why CMS Energy continues to be a smart, long-term investment, delivering for more than 2 decades with consistent industry-leading performance. Turning to slide 4, you'll see the outcome of our most recent electric rate case. The commission approved over 65% of our ask and maintained our 9.9% ROE in the electric business.

Speaker #3: you, Jason, and thank you, everyone, for joining us today. Our investment thesis, which you see on slide three, continues to stand the test of time.

Speaker #3: Whether it's our long capital runway, Michigan's top-tier regulatory jurisdiction, our ability to keep bills affordable for customers, or the strong economic growth across the state, this model works, and it works consistently.

Speaker #3: It drives a premium, total shareholder return, 6 to 8 percent adjusted EPS growth with annual compounding, paired with approximately 3 percent dividend yield. It's a simple durable formula, and it's why CMS ENERGY continues to be a smart, long-term investment.

Speaker #3: Delivering for more than two decades with consistent industry-leading performance. Turning to slide four, you'll see the outcome of our most recent electric grade case.

Speaker #3: The Commission approved over $65 percent of our ask and maintained our 9.9 percent ROE in the electric business. I continue to be pleased with our regulatory outcomes, and most importantly, the support for our customer investments.

Garrick Rochow: I continue to be pleased with our regulatory outcomes and, most importantly, the support for our customer investments. On the graph to the left, what stands out is the consistent record of support, constructive outcomes we've seen across our electric rate case filings over the last several years. These outcomes reflect deliberate, customer-focused investments designed to deliver on Michigan's energy law and materially improve the reliability and resiliency of the electric grid. It's the investments approved in this rate case and previous cases that directly support better service. That includes everything from critical capital investments across the grid to advanced tree trimming on a five-year cycle. Work that meaningfully reduces outages, restoration time, and customer costs. The Commission's support reinforces that reliability and affordability can and should go hand in hand. That's good for our customers.

Speaker #3: On the graph to the left, what stands out is that consistent record of support, constructive outcomes we've seen across our electric rate case filings over the last several years.

Speaker #3: These outcomes reflect deliberate, customer-focused investments designed to deliver on Michigan's energy law. They've materially improved the reliability and resiliency of the electric grid. It's the investments approved in this rate case and previous cases that directly support better service.

Speaker #3: That includes everything from critical capital investments across the grid to advanced tree trimming on a five-year cycle. Work that meaningfully reduces outages, restoration time, and customer costs.

Speaker #3: The Commission's support reinforces that reliability and affordability can and should go hand in hand. That's good for our customers. Our track record of consistent and constructive rate case outcomes is strong.

Garrick Rochow: Our track record of consistent and constructive rate case outcomes is strong. That is possible through a deliberate process, a constructive environment, and focused work by the team. These strong outcomes aren't a one-off or by chance. They're the result of a very deliberate and disciplined regulatory strategy that starts with Michigan's energy law and enabling legislation. From there, we build alignment, support, and pre-approvals through a coordinated set of filings, our integrated resource plan, renewable energy plan, and 5-year electric distribution plan. We also utilize proven regulatory mechanisms, like the investment recovery mechanism, that streamline proceedings, ensuring certainty of recovery and drive accountability. When you combine that framework with strong testimony and clear business cases, the result is exactly what you see here, constructive outcomes and that support needed customer investments while maintaining affordability. Looking forward to our upcoming regulatory agenda.

Speaker #3: And that is possible through a deliberate process, a constructive environment, and focused work by the team. These strong outcomes are on a one-off or by chance.

Speaker #3: They're the result of a very deliberate and disciplined regulatory strategy. It starts with Michigan's energy law and enabling legislation. From there, we build alignment, support, and pre-approvals through a coordinated set of filings.

Speaker #3: Our integrated resource plan, renewable energy plan, and five-year electric distribution plan. We also utilize proven regulatory mechanisms like the Investment Recovery Mechanism that streamlined proceedings, ensuring certainty of recovery and drive accountability.

Speaker #3: When you combine that framework with strong testimony and clear business cases, the result is exactly what you see here. Constructive outcomes, and support needed that support needed customer investments.

Speaker #3: While maintaining affordability. Looking forward to our upcoming regulatory agenda. In April, we saw the MPSE staff position in our current gas rate case, recommending over 75 percent of our $240 million ask.

Garrick Rochow: In April, we saw the MPSC staff position in our current gas rate case, recommending over 75% of our $240 million ask. Staff also supported nearly 95% of our gas infrastructure investments. These investments continue to ensure a safe and reliable natural gas system while balancing affordability for our customers. Much like electric, we continue to receive constructive outcomes that benefit our customers. We've settled four of the last five cases and continue to see support for our filings. In our electric business, we plan to file our 20-year integrated resource plan or IRP in June. Our IRP will include 1.5 GW of new gas capacity to replace existing retiring capacity. Ensuring we have the supply to meet our customer load well into the future.

Speaker #3: Staff also supported nearly 95 percent of our gas infrastructure investments. These investments continue to ensure a safe and reliable natural gas system while balancing affordability for our customers.

Speaker #3: Much like Electric, we've continued to receive constructive outcomes that benefit our customers. We've settled for over the last five cases, and continue to see support for our filings.

Speaker #3: In our electric business, we plan to file our 20-year integrated resource plan, or IRP, in June. Our IRP will include $1.5 gigawatts of new gas capacity to replace existing retiring capacity.

Speaker #3: Ensure we have ensuring we have the supply to meet our customer load well into the future. We'll include 13 gigawatts of renewable and clean energy.

Garrick Rochow: We'll include 13 GW of renewable and clean energy, much of which was already approved in our 20-year renewable energy plan. Our filing will also include a growth scenario, highlighting the need for additional capacity to ensure we are prepared for the growing customer base in Michigan as we see data center and manufacturing interests in our service territory. A portion of these renewables and the additional gas capacity are in our current 5-year plan, with more upside opportunity given additional storage and renewables to meet Michigan's energy law and customer load beyond the 5-year plan. We've identified that for every 1 GW of new large load, we could see capital opportunity of $2 to 5 billion. Again, those investments would be incremental to our current capital plan. Very proud of the team and the thoughtful work on these plans.

Speaker #3: Much of which was already approved in our 20-year renewable energy plan. Our filing will also include a growth scenario, highlighting the need for additional capacity to ensure we are prepared for the growing customer base in Michigan.

Speaker #3: As we see data center and manufacturing interests in our service territory. A portion of these renewables and the additional gas capacity are in our current five-year plan.

Speaker #3: With more upside opportunity given additional storage and renewables to meet Michigan's energy law and customer load beyond the five-year plan. We've identified that for every one gigawatt of new large load, we could see capital opportunity of two to five billion dollars.

Speaker #3: Again, those investments would be incremental to our current capital plan. I'm very proud of the team, and the thoughtful work on these plans. The comprehensive analysis and modeling takes months, and is done with a deep commitment to building a plan that is best for our customers.

Garrick Rochow: The comprehensive analysis and modeling takes months and is done with a deep commitment to building a plan that is best for our customers and our state. At CMS Energy, our customers are at the center of all we do, a promise to deliver safe, reliable, and affordable energy. While we are committed to the important and necessary investments in our electric and gas systems, we remain laser-focused on customer affordability. Our track record is strong. Customer savings driven through the CE Way and further optimized with digital automation. Episodic cost savings, load growth, and energy waste reduction as further examples. Our efforts here are meaningful and impactful. As a result, Michigan electric bills are the fourteenth lowest in the nation, well below the national average and also below the Midwest average.

Speaker #3: And our state. At CMS ENERGY, our customers are at the center of all we do. A promise. To deliver safe, reliable, and affordable energy.

Speaker #3: And while we are committed to the important and necessary investments in our electric and gas systems, we remain laser-focused on customer affordability. Our track record is strong.

Speaker #3: Customer savings, driven through the CE way, and further optimized with digital automation. Episodic cost savings, low growth, and energy waste reduction as further examples.

Speaker #3: Our efforts here are meaningful and impactful. As a result, Michigan Electric bills are the 14th lowest in the nation. Well below the national average and also below the Midwest average.

Speaker #3: And our bill growth—you see on the left side of the slide—among the lowest in the country. On the right side of the slide, looking forward, customer bills, electric and gas, below the energy CPI.

Garrick Rochow: In our bill growth, you see on the left side of the slide, among the lowest in the country. On the right side of the slide, looking forward, customer bills, electric and gas below the energy CPI, while investing over $24 billion over our five-year plan period. I am pleased with our progress, but we're not done yet. We're sharply focused on continuing to bring down costs for our customers while delivering for those most in need. Additionally, affordability is supported by growth, and Michigan continues to make headlines and top rankings nationwide as we see new or expanding load materialize in the state and supporting 2% to 3% annual sales growth. This growth allows us to spread fixed costs over a larger customer base and improve affordability for all customers.

Speaker #3: While investing over 24 billion dollars. Over our five-year plan period. I am pleased with our progress, but we're not done. Yet. We're sharply focused on continuing to bring down costs for our customers while delivering for those most in need.

Speaker #3: Additionally, affordability is supported by growth. And Michigan continues to make headlines and top rankings nationwide as we see new or expanding low materializing in the state.

Speaker #3: And supporting two to three percent annual sales growth. This growth allows us to spread fixed costs over a larger customer base and improve affordability for all customers.

Speaker #3: We have significant interest in our service territory with contracts for roughly 100 megawatts of new load signed last year and we've exceeded that in just Q1 of this year.

Garrick Rochow: We have significant interest in our service territory, with contracts for roughly 100 MW of new load signed last year, and we've exceeded that in just Q1 of this year. Approximately 110 MW of signed contracts year to date. This is all on top of the approximately 450 MW connected last year. As I've shared in many investor meetings, Michigan has more engineers per capita than any other state. We are the second most diverse state in agriculture. We have many aerospace and defense businesses and a rich automotive heritage. Our service territory is growing with manufacturing and industrial processing, bringing with it large investments, jobs, supply chains, and commercial and residential growth.

Speaker #3: Approximately 110 megawatts of signed contracts year to date. This is all on top of the approximately 450 megawatts connected last year. As I've shared in many investor meetings, Michigan has more engineers per capita than any other state.

Speaker #3: We are the second most diverse state in agriculture. We have many aerospace and defense businesses and a rich automotive heritage. Our service territory is growing with manufacturing and industrial processing.

Speaker #3: Bringing with it large investments, jobs, supply chains, and commercial and residential growth. One of our larger recently signed contracts is with Michigan Potash and Salt Company.

Garrick Rochow: One of our larger recently signed contracts is with Michigan Potash & Salt Company. A strategic and critical mineral manufacturer and the only established and sustainable potash reserve in the US, expanding in our service territory, bringing with it roughly 130 jobs and over $1.3 billion of investment in Michigan. I love seeing growth like this and the value that it brings to Michigan, our customers, communities, and investors. There is also a diversity in this growth, which is important in the context of data centers, which I'll cover on the next slide. Moving on to our growth pipeline. You see that win here on slide 8 with Michigan Potash move through the funnel to a signed contract. There were also several other smaller customer expansions not shown on the slide that make up roughly 110 MW year to date.

Speaker #3: A strategic and critical mineral manufacturer in the only established and sustainable potash reserve in the US. Expanding in our service territory. Bringing with it roughly 130 jobs and over 1.3 billion dollars of investment in Michigan.

Speaker #3: I love seeing growth like this and the value that it brings to Michigan, our customers, communities, and investors. There has also a diversity in this growth, which is important in the context of data centers.

Speaker #3: Which I'll cover on the next slide. Moving on to our growth pipeline, you see that win here on slide eight with Michigan Potash move through the funnel to a signed contract.

Speaker #3: There were also several other smaller customer expansions, not shown on the slide, that make up roughly 110 megawatts year to date. In addition to strong manufacturing and industrial processing, Michigan continues to attract data center interest.

Garrick Rochow: In addition to strong manufacturing industrial processing, Michigan continues to attract data center interest, and I'm pleased with the progress we have made over the last quarter. Our announced data center continues to close in on final contract after reaching commercial terms on the Extraordinary Facilities Agreement and now commercial terms on the rate contract. As I mentioned in our year-end call, another data center has continued to progress in advanced contract negotiations. I'm also pleased with the community engagement and the forward progress experienced at a local zoning level. Keep in mind, these data centers are not yet reflected in our 5-year customer investment plan, and associated additional investments will not be subsidized by existing customers. In fact, each GW of new data center load that materializes in our service territory will reduce our average customer rate by 2% annually over a 5-year period.

Speaker #3: And I'm pleased with the progress we have made over the last quarter. Our announced data center continues to close in on final contract after reaching commercial terms on the extraordinary facilities agreement and now commercial terms on the rate contract.

Speaker #3: And as I mentioned in our year-end call, another data center has continued to progress in advanced contract negotiations. I'm also pleased with the community engagement and the forward progress experienced at a local zoning level.

Speaker #3: Keep in mind these data centers are not yet reflected in our five-year customer investment plan. And associated additional investments will not be subsidized by existing customers.

Speaker #3: In fact, each gigawatt of new data center load that materializes in our service territory will reduce our average customer rate by 2% annually over a five-year period.

Speaker #3: Now, on to the financials for the quarter. In the first quarter, we reported adjusted earnings per share of $1 in '13. We remain confident in this year's guidance and long-term outlook and are reaffirming all our financial objectives.

Garrick Rochow: Now on to the financials for the quarter. In Q1, we reported adjusted earnings per share of $1.13. We remain confident in this year's guidance and long-term outlook and are reaffirming all our financial objectives. Our full year guidance remains at $3.83 to $3.90 per share with continued confidence toward the high end. Longer term, we continue to guide toward the high end of our adjusted EPS growth range of 6% to 8%. With that, I'll hand the call over to Rejji.

Speaker #3: Our full-year guidance remains at $3.83 to $3.90 per share. With continued confidence toward the high end. Longer term, we continue to guide toward the high end of our adjusted EPS growth range of 6 to 8%.

Speaker #3: With that, I'll hand the call over to Reggie.

Speaker #2: Thank you, Garrick. And good morning, everyone. On slide 10, you'll see our standard waterfall chart, which illustrates the key drivers impacting our financial performance for the quarter and our year-to-go expectations.

Rejji Hayes: Thank you, Garrick. Good morning, everyone. On slide 10, you'll see our standard waterfall chart, which illustrates the key drivers impacting our financial performance for the quarter and our year to go expectations. For clarification purposes, all of the variance analyses herein are in comparison to 2025, both on a Q1 and a 9 months to go basis. In summary, through Q1 of 2026, we delivered adjusted net income of $346 million or $1.13 per share, which compares favorably to the comparable period in 2025, largely due to NorthStar outperforming a relatively soft comp in Q1 of last year, coupled with higher rate relief net investments at the utility. These sources of positive variance were partially offset by a significant ice storm in our electric service territory in March.

Speaker #2: For clarification purposes all of the variance analyses herein are in comparison to 2025, both on a first quarter and a nine months to go basis.

Speaker #2: In summary, through the first quarter of 2026, we delivered adjusted net income of $346 million or $1.13 per share which compares favorably to the comparable period in 2025, largely due to Northstar outperforming a relatively soft comp in the first quarter of last year coupled with higher rate relief net investments at the utility.

Speaker #2: These sources of positive variance were partially offset by a significant ice storm in our electric service territory in March. From a top-line perspective at the utility, heating degree days in Michigan ended up at relatively normal volumes for the quarter, as a relatively warm March and February offset an atypically cold January.

Rejji Hayes: From a top-line perspective at the utility, heating degree days in Michigan ended up at relatively normal volumes for the quarter as a relatively warm March and February offset an atypically cold January. The impact of normal weather drove $0.01 per share of favorable variance versus Q1 2025. Rate relief, net of investment-related expenses, resulted in $0.11 per share of positive variance due to the residual benefits of last year's constructive electric and gas rate orders, as well as earnings associated with ongoing renewable projects at the utility. Moving on to cost trends, as noted, we experienced an uptick in storm activity during the quarter, including a sizable ice storm in March, which was bigger than last year's storm.

Speaker #2: The impact of normal weather drove $0.01 per share of favorable variance versus the first quarter of 2025. Rate relief net of investment-related expenses resulted in $0.11 per share of positive variance, due to the residual benefits of last year's constructive electric and gas rate orders, as well as earnings associated with ongoing renewable projects at the utility.

Speaker #2: Moving on to cost trends as noted, we experienced an uptick in storm activity during the quarter, including a sizable ice storm in March, which was bigger than last year's storm.

Speaker #2: As such, we saw a $0.05 per share negative variance for this cost category, which includes some positive offsets associated with our electric supply business.

Rejji Hayes: As such, we saw $0.05 per share of negative variance for this cost category, which includes some positive offsets associated with our electric supply business. In our catchall category represented by the final bucket in the actual section of the chart, you'll note a positive variance of $0.04 per share, largely driven by the impact of achieving key milestones for ongoing renewable projects at NorthStar and a reversal of last year's outage at DIG, partially offset by higher parent financing costs, namely a higher average share count. Looking ahead, we plan for normal weather as always, which equates to $0.23 per share of negative variance for the remaining 9 months of the year, driven by the absence of favorable temperatures experienced in 2025, primarily in our electric business.

Speaker #2: In our catch-all category represented by the final bucket in the actual section of the chart, you'll note a positive variance of 4 cents per share, largely driven by the impact of achieving key milestones for ongoing renewable projects at Northstar and a reversal of last year's outage at Digg, partially offset by higher parent financing costs namely a higher average share count.

Speaker #2: Looking ahead, we plan for normal weather as always, which equates to 23 cents per share of negative variance for the remaining nine months of the year, driven by the absence of favorable temperatures experienced in 2025, primarily in our electric business.

Speaker #2: From a regulatory perspective, we're assuming 24 cents per share of positive variance, which is largely driven by the constructive electric rate order received from the commission in March, ongoing benefits of renewable projects at the utility, and the assumption of a constructive outcome in our pending gas rate case.

Rejji Hayes: From a regulatory perspective, we're assuming +$0.24 per share of variance, which is largely driven by the constructive electric rate order received from the commission in March, ongoing benefits of renewable projects at the utility, and the assumption of a constructive outcome in our pending gas rate case. On the cost side, we anticipate lower overall O&M expense equating to +$0.04 per share of variance at the utility for the remainder of the year, largely driven by expected cost performance through the CE Way and other cost reduction initiatives underway.

Speaker #2: On the cost side, we anticipate lower overall O&M expense equating to $0.04 per share of positive variance at the utility for the remainder of the year, largely driven by expected cost performance through the CE Way and other cost reduction initiatives underway.

Speaker #2: Lastly, in the penultimate bar on the right-hand side, you'll see an estimated range of $0.06 to $0.13 per share of positive variance, which incorporates continued solid performance at NorthStar, partially offset by planned parent financing costs, including the effects of equity dilution.

Rejji Hayes: Lastly, in the penultimate bar on the right-hand side, you'll see an estimated range of +$0.06 to $0.13 per share of variance, which incorporates continued solid performance at NorthStar, partially offset by planned parent financing costs, including the effects of equity dilution. Before moving on, I'll just note that our track record of delivering on our financial objectives over the last two decades, irrespective of the circumstances, speaks for itself. That said, we'll always do the worrying so you don't have to, and remain confident in our ability to deliver on our financial and operational objectives this year to the benefit of all stakeholders. Slide 11 offers an update to our funding needs in 2026 of the utility and the parent.

Speaker #2: Before moving on, I'll just note that our track record of delivering on our financial objectives over the last two decades irrespective of the circumstances speaks for itself.

Speaker #2: That said, we'll always do the worrying so you don't have to. And remain confident in our ability to deliver on our financial and operational objectives this year to the benefit of all stakeholders.

Speaker #2: Slide 11 offers an update to our funding needs in 2026 at the utility and the parent. As a reminder, the convertible debt that was opportunistically issued last November addressed a good portion of our financing needs at the parent for the year.

Rejji Hayes: As a reminder, the convertible debt that was opportunistically issued last November addressed a good portion of our financing needs at the parent for the year, while offering significant financial flexibility on our remaining needs. From an equity needs perspective, given the trading performance of our stock during Q1 versus our plan assumptions, we executed equity forward contracts totaling approximately $495 million, significantly de-risking our plan needs for the year. As per our guidance, we'll plan to issue an aggregate amount of approximately $700 million over the course of the year. Finally, we'll look to complete the balance of our financing plan at the utility over the remainder of the year.

Speaker #2: We're offering significant financial flexibility on our remaining needs. From an equity needs perspective, given the trading performance of our stock during the first quarter versus our planned assumptions, we executed equity-forward contracts totaling approximately $495 million, significantly de-risking our planned needs for the year.

Speaker #2: As you can see in the table on the slide, we settled approximately $142 million of said equity contracts during the quarter, and as per our guidance, we'll plan to issue an aggregate amount of approximately $700 million over the course of the year.

Speaker #2: Finally, we'll look to complete the balance of our financing plan at the utility over the remainder of the year, and as always, we'll be opportunistic and look to capitalize on strong market conditions.

Rejji Hayes: As always, we'll be opportunistic and look to capitalize on strong market conditions. Moving on to credit quality, I'm pleased to report that both Moody's and Fitch reaffirmed our credit ratings in March, as indicated at the bottom of the table on slide 12. That said, it is worth noting that Moody's did move the utility to a negative outlook, largely due to the size of our 5-year capital investment plan relative to the timing of cost recovery, particularly for large projects with protracted construction cycles. Needless to say, we are evaluating a variety of countermeasures to address Moody's concerns. As always, we'll continue to target solid investment-grade credit ratings, and we'll manage our key credit metrics accordingly as we balance the needs of the business. With that, I'll hand it back to Garrick for his final remarks before the Q&A session.

Speaker #2: Moving on to credit quality, I'm pleased to report that both Moody's and Fitch reaffirmed our credit ratings in March, as indicated at the bottom of the table on slide 12.

Speaker #2: That said, it is worth noting that Moody's did move the utility to a negative outlook largely due to the size of our five-year capital investment plan relative to the timing of cost recovery, particularly for large projects with protracted construction cycles.

Speaker #2: Needless to say, we are evaluating a variety of countermeasures to address Moody's concerns. As always, we'll continue to target solid investment-grade credit ratings and we'll manage our key credit metrics accordingly, as we balance the needs of the business.

Speaker #2: And with that, I'll hand it back to Garrick for his final remarks before the Q&A session.

Speaker #1: Thanks, Rejji. At CMS Energy, we deliver. Twenty-three years now of consistent, industry-leading performance, regardless of circumstances—year in and year out. You can count on CMS Energy to deliver for all of its stakeholders.

Garrick Rochow: Thanks, Rejji. At CMS Energy, we deliver. 23 years now of consistent industry-leading performance, regardless of circumstances, year in and year out. You can count on CMS Energy to deliver for all of its stakeholders. With that, Rob, please open the lines for Q&A.

Speaker #1: With that, Rob, please open the lines for Q&A.

Speaker #3: Thank you very much, Garrick. The question-and-answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key, followed by the digit 1, on your touch-tone telephone.

Operator: Thank you very much, Garrick. The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key followed by the digit one on your touch-tone telephone. If you're using a speaker function, please make sure you pick up your headset. We'll proceed in the order you signal us, and we'll take as many questions as time permits. If you do find that your question has been answered, you may remove yourself by pressing the star key followed by the digit one on your touch-tone telephone. We'll pause for just a second. Our first question comes from the line of Richard Sunderland from Truist. Your line is open.

Speaker #3: If you're using a speaker function, please make sure you pick up your headset. We'll proceed in the order you signal us, and we'll take as many questions as time permits.

Speaker #3: If you do find that your question has been answered, you may remove yourself by pressing the star key followed by the digit 1 on your touchstone telephone.

Speaker #3: We'll pause for just a second. And our first question comes from the line of Richard Sutherland from Truist, your line is open.

Richard Sunderland: Hey, good morning.

Speaker #4: Hey, good morning.

Speaker #1: Hey, welcome.

Garrick Rochow: Hey, welcome.

Speaker #4: Thank you. Thank you. There's been a lot of attention on data centers, and I guess there's a lot to dig into here, but you talked about confidence in what you're seeing.

Richard Sunderland: Thank you. Thank you. You know, there's been a lot of attention on data centers, and I guess there's a lot to dig into here, but you talked about confidence in what you're seeing. I'm curious about the opportunities as it stands now relative to last quarter, and in particular, if you see both of these data centers come through, you know, what is the potential to defer, delay your electric rate case filing cadence on the back of that? Anything you can speak to there versus load ramp would be helpful. Thank you.

Speaker #4: I'm curious about the opportunities as it stands now relative to last quarter and in particular, if you see both of these data centers come through, what is the potential to defer delay your electric rate case filing cadence on the back of that?

Speaker #4: Anything you can speak to there versus load ramp would be helpful. Thank you.

Speaker #1: I am very pleased with the progress. And let me even take a step back. If I start with a pipeline, as we've shared historically, it's roughly about nine gigawatts that are customers that are falling out of the pipeline and going through, like we saw with Michigan potash, and having a successful contract, there's new companies coming in.

Garrick Rochow: I am very pleased with the progress. Let me even take a step back. Let's start with the pipeline. As we've shared historically, it's roughly about 9 GW. There are customers that are falling out of the pipeline and going through, like we saw with Michigan Potash, and having successful contracts. There's new companies coming in. The pipeline is strong and actually much larger than 9 GW. Those are the ones that are more qualified, you might say, in the process. As I shared in the Q4 call, I just continue to be pleased with the progress of the data centers, the hyperscalers that are in our service territory, and looking at different locations, multiple locations to locate those data centers.

Speaker #1: And so the pipeline is strong, and actually much larger than nine gigawatts. Those are the ones that are more qualified, you might say, in the process.

Speaker #1: And so as I shared in the Q4 call and just continue to be pleased with the progress of the data centers, the hyperscalers that are in our service territory, and looking at different locations, multiple locations to locate those data centers.

Speaker #1: And as I shared, we've made great progress with the contractual piece with those companies. Pleased with that, pleased with the work the teams doing, and we're working through the zoning process.

Garrick Rochow: As I shared, like, we've made great progress with the contractual piece with those companies. Pleased with that, pleased with the work the team's doing, and we're working through the zoning process here in Michigan. Again, I've seen those data center companies, they're out, they're meeting with the local planning commissions, they're meeting with the communities. We're standing side by side with them to be able to address those issues. A lot of positive, a lot of positive progress. In the context of, you know, I hear you're referring to this kind of stay out here and referring to the DTE approach to this. I haven't seen their filing yet, so I can't speak to the specifics of that and what they propose, just what's been in the media.

Speaker #1: Here in Michigan, and again, I've seen those data center companies that are out, they're meeting with the local planning commissions, they're meeting with the communities, we're standing side by side with them, to be able to address those issues.

Speaker #1: So a lot of positive a lot of positive progress. In the context of I hear you're referring to this kind of stay out here and referring to the DTE approach to this.

Speaker #1: I haven't seen their filing yet, so I can't speak to the specifics of that and what they propose, just what's been in the just what's been in the media.

Speaker #1: I will say this. In November, we put a tariff in place. A really great tariff. It's been able to set the standard really one of the best in the country.

Garrick Rochow: I will say this: we, in November, we put a tariff in place, a really great tariff that's been able to set the standard, really one of the best in the country. It's been able to these hyperscalers have quickly adapted to it, so they know what the hurdle rate looks like or the hurdle mark looks like. I'm very pleased with it. It speaks to how we protect existing customers, how we protect the business. It really provides a path for benefits to flow back to customers, which is, I think, critically important. It's also important to put this into context. We are investing in a significant capital runway. Like, there's a lot of opportunities to invest in this business. We've talked about it. Those weren't just Excel exercises.

Speaker #1: It's been able to these hyperscalers have quickly adapted to it, so they know what the hurdle rate looks like or the hurdle mark looks like.

Speaker #1: I'm very pleased with it. It speaks to how we protect existing customers, how we protect the business. It really provides a path for benefits to flow back to customers, which is, I think, critically important.

Speaker #1: But it's also important to put this in the context. We are investing there's a significant capital runway. There's a lot of opportunities to invest in this business.

Speaker #1: We've talked about that. Those weren't just Excel exercises. This is real stuff that's underway. We're investing heavily in the electric grid to improve reliability and resiliency, so it's better for our customers.

Garrick Rochow: Those, this is like real stuff that's underway. We're investing heavily in the electric grid to improve reliability and resiliency so it's better for our customers, 'cause I hate when a customer's without power and the cost and the impact of that. I appreciate the commissioner's comments on how affordability and reliability can go hand in hand. They're not opposed. We have this IRP, 20-year IRP for the supply needs of the state. We have to meet the Michigan's energy law in the renewables, but we also have to think about those times when the sun is not shining or the wind's not blowing. Batteries make up a part of that, but we've got to introduce natural gas to replace some of our existing peaking. That's an important piece in investment right now. There's importance of the safety of the gas system.

Speaker #1: Because I hate when a customer is without power and the cost and the impact of that. And I appreciate the commissioner's comments on how affordability and reliability can go hand in hand.

Speaker #1: They're not opposed. We have this IRP, 20-year IRP for the supply needs of the state. We have to meet the Michigan's energy law and the renewables, but we also have to think about those times when the sun is not shining, or the wind's not blowing, batteries make up a part of that, but we've got to introduce natural gas to replace some of our existing peaking.

Speaker #1: That's an important piece in investment right now. And then there's the importance of the safety of the gas system. And so I can go on for hours about this and I know you don't want me to do that, but that's why we're in on annual rate cases.

Garrick Rochow: You know, I can go on for hours about this, and I know you don't want me to do that, but, like, that's why we're in on annual rate cases. The biggest thing and the most important thing is affordability for our customers right now. We've talked about through that through the CE Way, we've talked about that through episodic cost savings. A big piece of this is growth, and that's how I tie it back to data centers. Whether that's internal focus or what we're doing externally, know this, that we're focused on the root cause. We got these important investments. We believe we can go in for annual rate cases and keep them close to the rate of inflation for our customers.

Speaker #1: But the biggest thing, and the most important thing, is affordability for our customers right now. And we've talked about that through the CE Way.

Speaker #1: We've talked about that through episodic cost savings. But a big piece of this is growth. And that's how I tie it back to data centers.

Speaker #1: And so whether that's internal focus or what we're doing externally. Know this, that we're focused on the root cause. We've got these important investments.

Speaker #1: We believe we can go in for annual rate cases and keep them close to the rate of inflation for our customers. But one thing that's important about annual rate cases is we pass along savings to our customers every single time.

Garrick Rochow: One thing that's important about annual rate cases is we pass along savings to our customers every single time, and that's what we're focused on. You know, the stats are we're the 14th lowest electric bill out there. That's still not good enough because affordability is defined by our customers, and there are some customers that are out there that are struggling, and we need to help them. That's what we're focused on, affordability for our customers. Thanks for your question. Long answer, but there's a lot there.

Speaker #1: And that's what we're focused on. The stats are, we're the 14th lowest electric bill out there. That's still not good enough. Because affordability is defined by our customers.

Speaker #1: And there are some customers that are out there, they're struggling. We need to help them. And that's what we're focused on. Affordability for our customers.

Speaker #1: Thanks for your question. Long answer, but there's a lot there.

Speaker #3: Now, certainly, there's a lot there, and I appreciate the comprehensive response. I also wanted to switch gears. There have been some media reports out there around NorthStar.

Richard Sunderland: Yeah. Certainly is a lot there and appreciate the comprehensive response. You know, also wanted to switch gears. You know, there have been some media reports out there around North Star. Maybe just to zoom out broadly across your portfolio, if you were to consider any transactions around the portfolio, do you have any, sort of guiding lights around how you think about the qualitative versus quantitative aspects of a deal, any particular, you know, accretion dilution, the prospects of, say, near-term dilution versus breakeven over the long term? Anything there would be helpful. Thank you.

Speaker #3: Maybe just to zoom out broadly across your portfolio—if you were to consider any transactions around the portfolio, do you have any sort of guiding lights around how you think about the qualitative versus quantitative aspects of a deal?

Speaker #3: Any particular accretion, dilution, the prospects of, say, near-term dilution versus break even over the long term, anything there would be helpful. Thank you.

Speaker #1: Well, just to be clear about this, we have a longstanding company, policy. We don't comment on M&A. Period. What I've shared about NorthStar in the past, just consistent with other investor meetings or earnings calls, look at the thermal assets, right?

Garrick Rochow: Well, just to be clear about this, we have a long-standing company policy. We don't comment on M&A, period. What I've shared about NorthStar in the past, just consistent with, you know, other investor meetings or earnings calls. Look at the thermal assets, right? Dearborn Industrial Generation. Energy and capacity prices are increasing. We strike bilateral contracts. We layer them over time. They've been better than planned, and we've shown that in some of the slides before on some of that opportunity. In terms of the renewables, we've used this baseball analogy. We hit singles and doubles. We're not aiming for home runs, and so these are solid projects. We do one or two of them a year. Maybe in a busy year, we might do three. Utility-like returns are better with a contracted offtaker, long-term contracts.

Speaker #1: Dearborn Industrial Generation. Energy and capacity prices are increasing. We strike bilateral contracts. We layer them over time. They've been better than planned. And we've shown that in some of the slides before on some of that opportunity.

Speaker #1: In terms of the renewables, we've used this baseball analogy. We hit singles and doubles. We're not aiming for home runs. And so these are solid projects.

Speaker #1: We do one or two of them a year, maybe in a busy year, we might do three. Utility-like returns are better. With a contracted off-taker, long-term contracts, we've safe harbored the assets out in the 28, 29 timeframe.

Garrick Rochow: We safe harbor the assets out in the 2028, 2029 timeframe. We look to recycle the capital. That whole NorthStar mix is about 5% of our earnings mix. The rest of it's utility.

Speaker #1: We look to recycle the capital. That whole NorthStar mix is about 5% of our earnings mix. The rest of it's utility.

Richard Sunderland: Understood. Thank you for the time.

Speaker #3: Understood. Thanks for the time.

Speaker #1: Yeah. Thank you.

Garrick Rochow: Yeah. Thank you.

Speaker #4: Your next question comes from Alina of Sharp Horizon from Wells Fargo. Your line is open.

Operator: Your next question comes from the line of Shar Pourreza from Wells Fargo. Your line is open.

Speaker #5: Hey, good morning. This is Marcella on for Sharp. Thanks for taking the question.

[Analyst] (Wells Fargo): Hey, good morning.

Marcella Fernandez: Hey, good morning.

Garrick Rochow: Morning, Shar.

[Analyst] (Wells Fargo): This is Marcella on for Shar. Thanks for taking our question.

Marcella Fernandez: This is Marcella on for Shar. Thanks for taking our question.

Garrick Rochow: Oh, I'm sorry. Marcella, welcome.

Speaker #1: Oh, I'm sorry. Marcella, welcome.

Speaker #5: Thanks. Maybe building on the data center topic, what kind of specific color can you give us on what's going on with Gaines Township and the Microsoft data center?

[Analyst] (Wells Fargo): Thanks. Maybe building on the data center topic, what kind of specific color can you give us on what's going on with Gaines Township and the Microsoft data center? Anything on, like, the status there and how we should be thinking about public pushback?

Marcella Fernandez: Thanks. Maybe building on the data center topic, what kind of specific color can you give us on what's going on with Gaines Township and the Microsoft data center? Anything on, like, the status there and how we should be thinking about public pushback?

Speaker #5: Anything on the status there and how we should be thinking about public pushback?

Speaker #1: My mom used to say good things come to those that wait. And my mom was right. And I've talked about the contract and my prepared remarks, talked about the contract pieces, and I share with you I'm pleased with the zoning piece.

Garrick Rochow: My mom used to say good things come to those that wait, and my mom was right. I, you know, I've talked about the contract in my prepared remarks, talked about the contract pieces, I share with you I'm pleased with the zoning piece. I think it's important for the investment community to understand Michigan's, like, units of government, local units of government. There are 2,800 forms of local units of government in Michigan. About 96% of the state is covered by some kind of township. In those townships, and we know this because we work with them all the time, there are planning commissions or planning boards, and they work through zoning, but they also work in looking at the site layout and other plans. Then there's a township board.

Speaker #1: I think it's important for the investment community to understand Michigan's units of government, local units of government. There are 2,800 forms of local units of government in Michigan.

Speaker #1: About 96% of the state is covered by some kind of township. And in those townships, and we know this because we work with them all the time, there are planning commissions, or planning boards, and they work through zoning, but they also work and look at the site layout and other plans.

Speaker #1: And then there's a township board. And so there are several steps in that approval process. And I've been pleased because not only are the data centers in meeting with the township officials and the planning officials, we've been meeting with them, and we've seen good progress.

Garrick Rochow: There are several steps in that approval process. I've been pleased because not only the data centers have been meeting with the township officials and the planning officials, we've been meeting with them and we've seen good progress. Also know that they have to. They're doing good due diligence, right? They're elected officials, and they're doing the right things, and they have to dig into what is the impact from a property tax perspective? How does this meet the zoning requirements? What does this mean for agriculture or industrial land? What does it mean for water? They're going through and making sure they're doing good due diligence. I appreciate the process. I'm familiar with the process because we go through it when we're doing big projects, whether it's a gas pipeline or there's a solar project.

Speaker #1: But also, know that they have to they're doing good due diligence, right? They're elected officials, and they're doing the right things. And they have to dig into what's the impact from a property tax perspective?

Speaker #1: How does this meet the zoning requirements? What does this mean for agriculture or industrial land? What does it mean for water? So they're going through and making sure they're doing good due diligence.

Speaker #1: And so I appreciate the process. I'm familiar with the process because we go through it when we're doing big projects, whether it's a gas pipeline or whether it's a solar project.

Speaker #1: And so again, I feel good about where we're headed. My mom was right. Good things come to those that wait. And we're working through that process.

Garrick Rochow: Again, I feel good about where we're headed. My mom was right. Good things come to those that wait, and we're working through that process, and pleased with where it's headed.

Speaker #1: And pleased with where it's headed.

Speaker #5: Thanks. That's super helpful. And then maybe following up on Richard's question on case cadence, are there any specific triggers that you'd point to or are working towards that would increase the time between cases?

[Analyst] (Wells Fargo): Thanks. That's super helpful. Maybe following up on Richard's question on case cadence, are there any specific triggers that you'd point to or are working towards that would increase the time between cases?

Marcella Fernandez: Thanks. That's super helpful. Maybe following up on Richard's question on case cadence, are there any specific triggers that you'd point to or are working towards that would increase the time between cases?

Speaker #1: We've in terms of settlement, we've stayed out of cases before. That's not abnormal for us or unusual for us. It certainly would consider that as something in the future.

Garrick Rochow: We've, in terms of settlement, we've stayed out of cases before. That's not abnormal for us or unusual for us. I certainly would consider that as something, you know, in the future. I'd go back to my comments, like large capital runway and the ability to pass, you know, savings back to our customers. At the heart of it, this isn't about skipping cases and pushing a bow wave, it's about bringing affordability to our customers. That's where we're focused on.

Speaker #1: But I'd go back to my comments. Large capital runway, and the ability to pass savings back to our customers. And at the heart of it, this isn't about skipping cases and pushing a bow wave.

Speaker #1: It's about bringing affordability to our customers. That's where we're focused on.

Speaker #5: Awesome. Thanks.

[Analyst] (Wells Fargo): Awesome. Thanks.

Marcella Fernandez: Awesome. Thanks.

Speaker #4: Your next question comes from Alina of James Ward from Jefferies. Your line is open.

Operator: Your next question comes from the line of James Ward from Jefferies. Your line is open.

Speaker #6: Hi. Thank you. Garrick, given the Gaines Township tabling on April 15th, can you reaffirm the as early as 2028 online date for your final stages prospect, or has that timeline maybe softened a bit?

James Ward: Hi. Thank you. Garrick, given the Gaines Township tabling on 15 April, can you reaffirm the as early as 2028 online date for your final stages prospect, or has that timeline maybe softened a bit?

Garrick Rochow: The product timelines are the same. 2028 is the timeline within the contracts. They'll ramp up early electrons, you might say, and then they ramp up over 2029, 2030. Those time frames are the same.

Speaker #1: The project timelines are the same. 2028 is the timeline within the contracts. They'll ramp up early. Electrons you might say, and then they ramp up over 2029, '30.

Speaker #1: Those timeframes are the same.

Speaker #6: Terrific. Thank you for clarifying that. Second, just without naming the customer, is the prospect you've reached commercial agreement with the same one tied to the Gaines process, or a different site in your territory?

James Ward: Terrific. Thank you for clarifying that. Second, just without naming the customer, is the prospect you've reached commercial agreement with, the same one tied to the gains process or a different site in your territory?

Speaker #1: There are two. There are two at least two hyperscalers that we are in advanced negotiation with. And I've shared that one we're finalizing the contract with.

Garrick Rochow: At least two hyperscalers that we're in advanced negotiation with, and I've shared that one, we're finalizing the contract with, and there are many more in the pipeline. I really cannot disclose that at this time.

Speaker #1: And there are many more in the pipeline. And so I really cannot disclose that at this time.

Speaker #6: All good. Thanks. And last question for me. Just off of feedback we've gotten, last week, given some of the news out there, and keeping in mind your comments earlier about company policy and so on, ask something broader and higher level.

James Ward: All good. Thanks. Last question for me. Just off of feedback we've gotten, last week, given some of the news out there and keeping in mind your comments earlier about company policy and so on, ask something broader and higher level. With where IPP multiples are trading and the DIG recontracting, like out to past 2030, has anything shifted in how you're thinking about NorthStar strategically, or is DIG, still something that you see being a part of CMS, well into the next decade?

Speaker #6: With where IPP multiples are trading and the dig re-contracting, out past 2 past 2030, has anything shifted in how you're thinking about NorthStar strategically, or is dig still something that you see being a part of CMS well into the next decade?

Speaker #1: I share that in my response to Rich, consistent with how we've talked about it in previous investor meetings and earnings calls. I walked through the thermal units.

Garrick Rochow: I shared that in my response to Rich. Consistent with how we've talked about in previous investor meetings and earnings call, I walked through the thermal units. There's really no change in how I talked about that, and same with the renewables.

Speaker #1: And there's really no change in how I talked about that, and same with the renewables.

Speaker #6: Terrific. Thank you very much. Appreciate it.

James Ward: Terrific. Thank you very much. Appreciate it.

Speaker #1: Yeah. Thank you.

Garrick Rochow: Yeah, thank you.

Speaker #4: Your next question comes from Alina of Nick Campanella from Barclays. Your line is open.

Operator: Your next question comes from a line of Nick Campanella from Barclays. Your line is open.

Speaker #1: Morning, Nick.

Garrick Rochow: Morning, Nick.

Speaker #7: Yeah. Hey, thanks for taking my questions and thanks for the time. Hi, how are you? So look, there's two opportunities. We don't know who the commercial agreement specifically with.

Nick Campanella: Yeah. Hey, thanks for taking my questions, and thanks for the time. Hi, how are you? So look, there's two opportunities. We don't know who the commercial agreement specifically with. I understand from the prepareds and responding to Rich's question, you're still working through the permit there. I'm just trying to understand at like more granularity on what is needed for the permit, and then just your expectation to have that done by summer or is this gonna go through the entire year-end to the end of this year? Thanks.

Speaker #7: I understand from the prepared remarks and responding to Rich's question, you're still working through the permit there. But I'm just trying to understand more granularity on what is needed for the permit, and then just your expectation to have that done by summer, or is this going to go through the entire year—into the end of this year?

Speaker #7: Thanks.

Speaker #1: So it varies depending on the location. And I'm not trying to dodge your question. It's just that there are multiple townships. And these hyperscalers are pursuing investment in multiple properties in multiple areas of the state.

Garrick Rochow: It varies depending on the location. I am not trying to dodge your question. It is just that there are multiple townships, and these hyperscalers are pursuing investment in multiple properties in multiple areas of the state. I cannot say it is like a blanket, here is where we are at in the process. Again, there is steps. The first step is with the planning commission, and they see does it meet the zoning requirements of the state, and does there have to be a change? If there has to be a change. They have got to do a site layout, and that has to be approved by the planning board or planning commission. Eventually it goes to the township. It varies in those places.

Speaker #1: So I can't say it's a blanket, "Here's where we're at in the process." But again, there's steps. The first step is with the planning commission.

Speaker #1: And they see it doesn't meet the zoning requirements of the state. And there doesn't have to be a change. If there has to be a change.

Speaker #1: And then they've got to do a site layout. And that has to be a approved by the planning board or planning commission. And then eventually, it goes to the township.

Speaker #1: And so, it varies in those places. And I would say the hyperscalers are looking at multiple locations and are at multiple places in that process.

Garrick Rochow: I would say the hyperscalers and are looking at multiple locations and are at multiple places in that process and have advanced, frankly, within that process. I would also say they're active in the communities. They're meeting with local officials, they're meeting with communities and doing all the right things, which gives me a lot of optimism about the progress that's underway. Like we've been in this process. Like we know this process. When they pause and they do more due diligence, when they listen to their constituents, that goes back and forth. It wouldn't be appropriate for me to jump ahead of that process and try to predict the date. They need it to work. Let those elected officials do their important work.

Speaker #1: And have advanced, frankly, within that process. I would also say they're active in the communities. They're meeting with local officials, they're meeting with communities, and doing all the right things, which gives me a lot of optimism about the progress that's underway.

Speaker #1: But it would be we've been in this process. We know this process. And And it's and when the pause and they get more do more due diligence, when they listen to the constituents, that goes back and forth.

Speaker #1: It would be appropriate for me to jump ahead of that process and try to predict the date they needed to work, let those elected officials do their important work.

Speaker #1: And you'll be one of the first ones to know, Nick, when we make the announcements.

Garrick Rochow: You'll be the one of the first ones to know, Nick, when we make the announcements.

Speaker #7: Hey, thanks. I appreciate that. And then just maybe because you've executed on a bulk of 2026 equity needs, I know that there's still a little bit outstanding.

Nick Campanella: Hey, thanks. I appreciate that. Just, you know, maybe because you've executed on bulk of 2026 equity needs, I know that there's still a little bit outstanding, but how are you kind of thinking about being proactive to de-risk 2027 and 2028? I just know the shaping of the CapEx, there might be, to my understanding, a little bit more front-end equity in this 5-year plan, if you could talk to that.

Speaker #7: But how are you kind of thinking about being proactive to de-risk 27 and 28? And I just know of the shaking of the CapEx.

Speaker #7: There might be to my understanding, a little bit more front-end equity in this five-year plan. If you could talk to that.

Speaker #1: Yeah, Nick, it's ready. Appreciate the question. Yeah. So just to get everyone re-grounded on the five-year equity needs that we walked through on our fourth quarter call.

Rejji Hayes: Yeah, Nick Campanella, it's Rejji Hayes. Appreciate the question. Just to get everyone regrounded on the 5-year equity needs that we walked through on our Q4 call. We talked about in our prepared remarks the fact that we're planning for $700 million this year. That is still the plan. On average, thereafter for the next 4 years, it'll be $750 million, but it's far from linear. That's just a simple average. As you rightly noted, it is a bit more front-end loaded. We do expect the majority of the equity needs to be issued in the first 3 years of this plan, really commensurate with the capital plan. We have been big proponents of the equity forward product, which we've used to good effect in this Q1.

Speaker #1: So we talked about in our prepared remarks the fact that we're planning for $700 million this year. That is still the plan. And then on average, thereafter for the next four years, it'll be $750 million.

Speaker #1: But it's far from linear. That's just a simple average. And as you rightly noted, it is a bit more front-end loaded. So we do expect the majority of the equity needs to be issued in the first three years of this plan, really commensurate with the capital plan.

Speaker #1: And so, we have been big proponents of the equity forward product, which we've used to good effect in this first quarter, as I noted.

Rejji Hayes: As I noted, we've already priced just under half a billion to take that risk off the table. We did settle a small portion in Q1, and that will be the bias going forward. As I've said on many occasions, I do believe we are undervalued quite a bit. That said, there's valuation and then there's what's in our plan. We did see the stock trading at levels that were above our plan or above the assumptions of our plan over the course of the quarter. We were opportunistic there.

Speaker #1: We've already priced just under half a billion to take that risk off the table. We did settle a small portion in the first quarter.

Speaker #1: And that will be the bias going forward. And so as I've said on many occasions, I do believe we are undervalued quite a bit.

Speaker #1: And but that said, there is valuation. And then there's what's in our plan. And so we did see the stock trading at levels that were south of our plan over the course of the quarter.

Speaker #1: And so we were sorry, we did see the stock trading at levels that were sorry, above our plan or above the assumptions of our plan over the course of the quarter.

Speaker #1: And so we were opportunistic there. And so if we do see the stock continue to trade at levels that are better, not just in our plan assumptions this year, but also in subsequent years, we may look to execute on equity forwards to de-risk 27 and beyond.

Rejji Hayes: If we do see the stock continue to trade at levels that are better, not just in our plan assumptions this year, but also in subsequent years, we may look to, you know, execute on equity forwards to de-risk 2027 and beyond. First and foremost, we're gonna prioritize our needs in 2026, excuse me, address those, and then we'll see where we're at by H2 of the year. Is that helpful?

Speaker #1: But first and foremost, we're going to prioritize our needs in 27, 26, excuse me, and address those. And then we'll see where we're at by the second half of the year.

Speaker #1: Is that helpful?

Speaker #7: Yeah, that's helpful. I appreciate that color. Thank you very much. And then if I could squeeze one more in, I'm just reflecting a little bit on past efforts in this management team on portfolio rotation.

Nick Campanella: Yeah, that's helpful. I appreciate that color. Thank you very much. If I could squeeze one more in. I'm just reflecting a little bit on, you know, past efforts in this management team on portfolio rotation. I know that when you did the EnerBank sale, you were able to overcome the impact of the near term numbers through the last IRP process and, you know, ultimately, you know, still do the high end of that 6 to 8 forecast. Strategically, is there appetite to do something like that again? Or do you guys continue to have just very clear line of sight to the growth rate at the high end, 2026, 2027, and 2028? Thank you.

Speaker #7: I know that when you did the Enterbank sale, you were able to kind of overcome the impact to the near-term numbers through the last IRP process.

Speaker #7: And ultimately, still do the high end of that 6 to 8 forecast. Just strategically, is there appetite to do something like that again? Or do you guys continue to have just very clear line of sight to the growth rate at the high end 26, 27, and 28?

Speaker #7: Thank you.

Speaker #1: Thanks, Nick. No comments. On M&A. And we've provided guidance on the call.

Garrick Rochow: Thanks, Nick. No comments on M&A. We're providing guidance on the call.

Speaker #7: All right. Thank you for the time.

Nick Campanella: All right. Thank you for the time.

Speaker #1: Yep. Thank you.

Garrick Rochow: Yep. Thank you.

Speaker #8: Yeah. Our next question comes from Alina of Jeremy Tonette from JPMorgan. Your line is open, Jeremy.

Operator: Your next question comes from the line of Jeremy Tonet from JPMorgan. Your line is open.

Garrick Rochow: Jeremy.

Aidan Kelly: Hey, good morning. This is actually Aidan Kelly on Jeremy. Thanks for the time today.

Speaker #1: Hey, good morning. This is actually Aiden Kelly on Jeremy. Thanks for the time today.

Aidan Kelly: Hey, good morning. This is actually Aidan Kelly on Jeremy. Thanks for the time today.

Speaker #8: Hey, Aiden.

Garrick Rochow: Hey, Aidan.

Aidan Kelly: Yeah.

Speaker #1: Yeah, just want to hone in on the political backdrop in the state. How are you thinking about affordability going into the elections? And I guess, what is the level of understanding from the candidates over the possibility that utilities could lower rates with new data center load?

Aidan Kelly: Yeah.

Garrick Rochow: Aiden.

Aidan Kelly: Just want to hone in on the political backdrop in the state. How are you thinking about affordability going into the elections? I guess, you know, what is the level of understanding from the candidates over the possibility that utilities could lower rates with new data center load? Just any kind of thoughts there would be great.

Speaker #1: And just any kind of thoughts there would be great.

Speaker #9: There's an important slide in our deck. And it's one of my favorites. It's just this consistent growth over 23 years, multiple different CEOs. Different governors, Republicans, Democrats, different commissions, different legislators, legislators or policymakers.

Garrick Rochow: There's an important slide in our deck, and it's one of my favorite, and just this consistent growth over 23 years, different CEOs, different governors, Republicans, Democrats, different commissions, and different legislators or policy makers, and we've delivered. The sweet spot of that or the secret sauce to that is really being an honest broker and focused on what's best for Michigan and what's best for our customers. Listening to policymakers and politicians to see what do they really wanna get done and how we can be a solution provider. I was with a governor candidate last night, and that's what we were talking about. How can we be a solution provider? What's important to you? How do we work together? That's this honest broker piece. It's hard to stay in that space, right?

Speaker #9: And we've delivered. And the sweet spot of that, or the secret sauce to that, is really being an honest broker. And focused on what's best for Michigan and what's best for our customers.

Speaker #9: And listening to policymakers and politicians to see what are they really wanting to get done. And how we can be a solution provider. I was with a governor candidate last night.

Speaker #9: And that's what we were talking about. How can we be a solution provider? What's important to you? How do we work together? That's this honest broker piece.

Speaker #9: And you stay in that and it's hard to stay in that space, right? You want to think about the business or the financials. But staying grounded in our customers is where you get that honest broker, where they get the trust and respect, to have the conversations.

Garrick Rochow: You wanna think about the business or the financials, but staying grounded in our customers is where we get that honest broker, where they get the trust and respect to have the conversations. You know, there's a lot going on. It's an election year. We're a purple state. That's important to know. It's a purple state. We're used to a lot of back and forth, particularly as people try to jockey for votes. You know what? I sleep well at night. It's not because I'm arrogant or because I know how this is gonna play out. It's because we have a good team, and if you go back to being an honest broker and being focused on the customers, you build trust and you can find solutions in that.

Speaker #9: So there's a lot going on. It's an election year. We're a purple state. That's important to know. It's a purple state. And so we're used to a lot of back and forth, particularly as people try to jockey for votes.

Speaker #9: But you know what? I sleep well at night. And it's not because I'm arrogant. Or because I know how this is going to play out.

Speaker #9: It's because we have a good team. And if you go back to being an honest broker and being focused on the customers, you build trust.

Speaker #9: And you can find solutions in that. And like I shared earlier, my comments and prepared remarks, when you're focused on affordability, even though you're at the 14th lowest state, if you can present the data to the people running for governor or the policymakers, and that's great.

Garrick Rochow: Like I shared earlier in my comments and prepared remarks, when you're focused on affordability, even though you're the 14th lowest state, you can present the data to the people running for governor or the policymakers, and that's great. The reality, affordability is defined by the end user. My affordability is different than Rejji's. It's different than one of our low to moderate income customers. We gotta keep working on that, right? Some of that's internal. You know, the tools we use there, and some of it's external. I talked about in our last call, I walk around with two pages of ideas for policymakers. Some of them are adopted. Some of them might actually be bills that are being tossed around, right? We meet with all these governors, governor candidates, and gubernatorial candidates.

Speaker #9: But the reality of affordability is defined by the end user. My affordability is different than Reggie's. It's different than one of our low-to-moderate income customers.

Speaker #9: And so we got to keep working on that, right? And some of that's internal. You know the tools we use there. And some of it's external.

Speaker #9: And I talked about in our last call, I walk around with two pages of ideas. For policymakers. Some of them are adopted. Some of them might actually be bills that are being tossed around, right?

Speaker #9: But we meet with all these governors. Governor candidates, gubernatorial candidates. So we know them. And we've provided a slide in the deck on that.

Garrick Rochow: We know them, and they're, you know, we provided a slide in the deck on that. We don't just approach it from energy perspective. Like, we're a business leader. We talk about what's going on in the economy. I will tell you, every one of these candidates is about how to grow Michigan. We talk about data centers. The three leading candidates are supportive of data centers in a thoughtful way, right? In a comprehensive way. We talked about how that can shape affordability for customers. You know, they're concerned about education. We help have those conversations because we're concerned about education. I can go on and on here. We get to energy, right?

Speaker #9: But we don't just approach it from energy perspective. We're a business leader. We talk about what's going on in the economy. And I will tell you, every one of these candidates is about how to grow Michigan.

Speaker #9: We talk about data centers. The three leading candidates are supportive of data centers, in a thoughtful way—right? In a comprehensive way. And we've talked about how that can shape affordability for customers.

Speaker #9: They're concerned about education. We have a we help have those conversations because we're concerned about education. And I can go on and on here.

Speaker #9: We get to energy. Right? And when I look at their platforms, every one of the platforms for the governor, we can work with all three of the leading candidates.

Garrick Rochow: When I look at their platforms, every one of the platforms for the governor, we can work with all three of the leading candidates. Again, be an honest broker, focus on the customer, listen to what they're trying to get done. Their approach looks different. Some want to focus on lower to moderate income, some want to focus on the business environment. We can do both, right? Really provide good solutions for our customers to help from an affordability perspective.

Speaker #9: Again, being an honest broker, focus on the customer, listen to what they're trying to get done. Their approach looks different. Some want to focus on low-to-modern income.

Speaker #9: Some want to focus on the business environment. We can do both. Right? And really provide good solutions for our customers to help from an affordability perspective.

Speaker #9: Yeah. All I would add, Aiden, to Garrick's very good remarks is, well, first and foremost, I aspire to have his point of view on affordability at some point.

Rejji Hayes: Yeah. All I would add, Aidan, to Garrick's very good remarks is, Well, first and foremost, I aspire to have his point of view on affordability at some point, just given the example he offered up, when it comes to just personal finances. That's thing one. Thing two, just to reemphasize and remind you all of the flywheel and the algorithm when it comes to our financial planning process. As we've talked about before, and I think Garrick alluded to this very well, is that affordability remains one of the key governors in our financial planning process.

Speaker #9: Just given the example he offered up when it comes to just personal finances. But that's thing one. Thing two, just to reemphasize and remind you all of the flywheel and the algorithm when it comes to our financial planning process.

Speaker #9: As we've talked about before, and I think Garrick alluded to this very well, affordability remains one of the key governors in our financial planning process.

Speaker #9: And so for 20-plus years now, really almost 25 years, we do not take a plan, financial plan that is, to our board, let alone to the street, unless it passes the laugh test from an affordability perspective, unless it passes our hurdle rates from a balance sheet perspective, and then also can we get the work done.

Rejji Hayes: For 20+ years now, really almost 25 years, we do not take a plan, financial plan that is, to our board, let alone to the street, unless it passes the laugh test from an affordability perspective, unless it passes our hurdle rates from a balance sheet perspective, then also can we get the work done. When it comes to affordability, the dimensions are quite broad. It's first, we certainly look at the compound annual growth of our rates over the planning period, but then we also benchmark it versus the region, versus the country. We also take into account both rates and bills. It's a really broad lens through which we look at affordability, again, to make sure that the plan not just delivers for investors, but also for customers and all stakeholders.

Speaker #9: And when it comes to affordability, the dimensions are quite broad. It's first, we certainly look at the compound annual growth of our rates over the planning period.

Speaker #9: But then we also benchmark it versus the region, versus the country. And then we also take into account both rates and bills. So it's a really broad lens through which we look at affordability.

Speaker #9: Again, to make sure that the plan not just delivers for the investment investors, but also for customers and all stakeholders. And so I do think it's really important to recognize that while we've grown the rate base historically, high single digits, now low double digits based on our forecasts, we are still self-funding two-thirds to three-quarters of that rate base growth with, as Garrick noted, CE way, episodic cost reductions, energy waste reduction, over time, where we hope it'll be sales growth as well, as we continue to execute on this economic development pipeline.

Rejji Hayes: I do think it's really important to recognize that while we've grown the rate base historically high single digits, now low double digits based on our forecast, we are still self-funding two-thirds to three-quarters of that rate base growth with, as Garrick noted, CE Way episodic cost reductions, energy waste reduction, over time, we hope it'll be sales growth as well as we continue to execute on this economic development pipeline. That's how even though you're growing the rate base high single digit, low double digit, you're keeping the bills and rates in at low single digit levels. By doing that year in and year out, and having the discipline of incorporating that into your planning process, that's how you perpetuate this success irrespective of who's running the state. Just wanted to just add an additional financial lens to that.

Speaker #9: And that's how, even though you're growing the rate base, high single digit, low double digit, you're keeping the bills and rates in at low single digit levels.

Speaker #9: And by doing that, year in and year out, and having the discipline of incorporating that into your planning process, that's how you perpetuate this success irrespective of who's running the state.

Speaker #9: So, just wanted to add an additional financial lens to that. And it's not luck. It's not an accident. It's really hard work. And that's why you see the data points we have on slide six.

Rejji Hayes: It's not luck, it's not an accident, it's really hard work, and that's why you see the data points we have on slide six.

Speaker #1: Yeah. Makes sense. Appreciate the insight there. And then I just have one separate question on CapEx upside. Could you just remind us what the underlying assumptions are in the one gigawatt equals two to five billion of CapEx?

Aidan Kelly: Yeah, makes sense. Appreciate the insight there. I just have one separate question on CapEx upside. Could you just remind us what the underlying assumptions are in the, like, 1 gigawatt equals $2 to 5 billion of CapEx? Maybe just anything that drives the low and high end of these ranges.

Speaker #1: Maybe just anything that drives the low and high end of these ranges.

Speaker #9: Yeah. Aiden, happy to do that. So for the low end of that sensitivity, which is around two billion, what you have in there is an assumption of storage resources as well as a current estimates for what a simple cycle, combustion turbine, would cost.

Rejji Hayes: Yeah, Aidan, happy to do that. For the low end of that sensitivity, which is around $2 billion, what you have in there is an assumption of storage resources as well as our current estimates for what a simple cycle combustion turbine would cost. There's also a little bit of infrastructure costs, so substation work, the wires, all that's incorporated into the low end of $2 billion. As you get to the higher end of that range, we'll see a couple of things. First, likely a change in resource, going from simple cycle to, again, if the cup runneth over and we start to see, you know, a highly successful conversion of that economic development backlog, we would potentially look at combined cycle gas.

Speaker #9: There's also a little bit of infrastructure cost—so, substation work, the wires—and so all that's incorporated into the low end of $2 billion.

Speaker #9: As you get to the higher end of that range, we'll see a couple of things. So first, likely a change in resource. And so going from simple cycle to, again, if the cup runneth over and we start to see a highly successful conversion of that economic development backlog, we would potentially look at combined cycle gas.

Rejji Hayes: That's what starts to get you towards that upper range. It probably warrants additional infrastructure in terms of substation work and wires. Again, this is if you start to see additional economic development opportunities come to fruition. It's also important to note that we do have to comply with the clean energy law requirements, which are predicated on sales, and so that's what also adds to the high end of that equation. That's really what drives that range.

Speaker #9: And so that's what starts to get you towards that upper range. You're probably warrants additional infrastructure in terms of substation work and wires. Again, this is if you start to see additional economic development opportunities come to fruition.

Speaker #9: And then it's also important to note that we do have to comply with the Clean Energy Law requirements, which are predicated on sales, and so that's what also adds to the high end of that equation.

Speaker #9: So that's really what drives that range.

Speaker #1: Great. Thanks for running that down. I'll leave it there. Thanks.

Aidan Kelly: Great. Thanks for running down that. I'll leave it there. Thanks.

Speaker #2: Your next question comes from a line of Michael Sullivan from Wolf Research. Your line is open.

Garrick Rochow: Your next question comes from a line of Michael Sullivan from Wolfe Research. Your line is open.

Operator: Your next question comes from a line of Michael Sullivan from Wolfe Research. Your line is open.

Speaker #1: Hey, good morning.

Garrick Rochow: Hey, good morning.

Michael Sullivan: Hey, good morning.

Garrick Rochow: Hey, Michael.

Speaker #9: Hey, Michael. Good morning, Mike.

Rejji Hayes: Morning, Mike.

Rejji Hayes: Hey, Garrick. Hey, hey, Reggie. I wanted to just ask on this DC customer pipeline that you've got. You talked to kind of the incremental CapEx upside that's not in the plan. As we just think about your earnings trajectory, is this something that can contribute in the next 5 years if you're able to bring these over the finish line?

Michael Sullivan: Hey, Garrick. Hey, hey, Reggie. I wanted to just ask on this DC customer pipeline that you've got. You talked to kind of the incremental CapEx upside that's not in the plan. As we just think about your earnings trajectory, is this something that can contribute in the next 5 years if you're able to bring these over the finish line?

Speaker #1: Hey, Garrick. Hey, Reggie. Wanted to just ask on this DC customer pipeline that you've got. You talked to kind of the incremental CapEx upside that's not in the plan.

Speaker #1: But as we just think about your earnings trajectory, is this something that can contribute in the next five years if you're able to bring these over the finish line?

Speaker #9: Yeah, Michael. Appreciate the question. I would say it really is a function of the load ramp. I do believe that the reality is that most of the opportunities in our backlog that we're looking at today, particularly those that are sort of in that advanced to final stages, the load ramps really start to materialize, as Garrick noted for sort of most likely opportunity in the 28 timeframe.

Rejji Hayes: Yeah, Michael, appreciate the question. I would say it really is a function of the load ramp. I do believe that the reality is that most of the opportunities in our backlog that we are looking at today, particularly those that are sort of in that advanced to final stages, the load ramps really start to materialize, as Garrick noted, for sort of most likely opportunity in the 2028 timeframe. Some that are slightly lower in probability of conversion are kind of 2029, 2030, and the material ramp is really in the next decade. The supply needs will increase commensurately with that load ramp.

Speaker #9: And some of the more are some that are slightly lower in probability of conversion are kind of 29, 30. And the material ramp is really in the next decade.

Speaker #9: And so this apply needs will increase commensurately with that load ramp. And so, while we certainly would see additional capital investment opportunities likely in the next five-year plan that we roll out, I think it's a little early to suggest whether or not it would put upward growth in our EPS growth.

Rejji Hayes: While we certainly would see additional capital investment opportunities, come likely in the next five-year plan that we roll out, I think it's a little early to suggest whether or not it would put upward growth on our EPS growth. Now that said, you know, job one is to convert these opportunities, we're focused on that right now. If we start to see some success in converting on this backlog, it should drive or will drive additional capital investment opportunities. Given the load ramp, we'll see what happens over the next five to 10 years. I think it's premature to say whether it would immediately increase the EPS growth at this point.

Speaker #9: Now, that said, job one is to convert these opportunities. And so we're focused on that right now. But if we start to see some success in converting on this backlog, it should drive or will drive additional capital investment opportunities.

Speaker #9: And again, given the load ramp, we'll see what happens over the next 5 to 10 years. But I think it's premature to say whether it would immediately increase the EPS growth at this point.

Speaker #1: Okay, totally fair. And then, looking ahead to the IRP filing that you have coming up here in a couple of weeks, I think you mentioned something about a growth scenario highlighting the need for additional capacity.

Michael Sullivan: Okay. Totally fair. Looking ahead to the IRP filing that you have coming up here in a couple of weeks. I think you mentioned something about a growth scenario, highlighting the need for additional capacity and maybe tying that into kind of all these beating around the bush questions around NorthStar. Is there any world where DIG can be used as a solution? I know it's been tried in the past, but any sense of a change in appetite there to use that asset to meet additional demand growth?

Speaker #1: And maybe tying that into kind of all these feeding around the bush questions around Northstar, is there any world where Dig can be used as a solution?

Speaker #1: I know it's been tried in the past, but any sense of a change in appetite there? To use that asset to meet additional demand growth?

Speaker #9: Well, you captured it, Mike. Going back to our last integrated resource plan, we attempted to bring that into the utility, and it was just, from an affiliate transaction perspective, just too big of a hurdle to go through.

Garrick Rochow: Well, you captured it, Michael Sullivan. Going back to our last integrated resource plan, we attempted to bring that into the utility. From an affiliate transaction perspective, just too big of a hurdle to go through. We don't see proposing that in this next integrated resource plan to bring that into the utility. If I would step back and look broader at this IRP, as I shared, I'm pleased with the team's work there. 15 GW of natural gas to replace existing. Also, when you think about the reliability or resource adequacy of the grid, you got the renewables, the batteries. There are times and periods of the day and of the year where you need natural gas to peak.

Speaker #9: And so we don't see proposing that in this next integrated resource plan to bring that into the utility. If I would step back and look broader at this IRP as I shared, I'm pleased with the team's work there.

Speaker #9: One five gigawatts of natural gas to replace existing and then also when you think about the reliability or resource adequacy of the grid, get the renewables, the batteries that are times and periods of the day.

Speaker #9: And at the end of the year, where do you need natural gas to peak? And current three and four, which is some old oil-fired and gas-fired peaking units, this really works to replace those almost megawatt for megawatt.

Garrick Rochow: and 4, which is some old oil-fired and gas-fired peaking units, this really works to replace those almost, you know, almost megawatt for megawatt from a capacity perspective. You know the renewable story. Much of it's approved in the IRP. Remember this REP, I should say. As part of this IRP, we're looking out 20-plus years. It will give some color and context too for other investments that are beyond the 5-year capital plan, out in the 10-year, 10-year window as well. Remember in this IRP, we have to do multiple scenarios. One of those is a growth scenario. Just given the interest, both manufacturing, industrial processing, data centers, that's an important scenario to develop in this process, which would mean more batteries, more renewables, and potentially other assets.

Speaker #9: From a capacity perspective. And then you know the renewable story. Much of it's approved in the IRP. And then remember, this IREP, I should say.

Speaker #9: And then, as part of this IRP, we're looking out 20-plus years. So it will give some color and context, too, for other investments that are beyond the five-year capital plan, out in the 10-year window as well.

Speaker #9: Remember in this IRP, we have to do multiple scenarios. One of those is a growth scenario. Just given the interest both manufacturing industrial processing, data centers, that's an important scenario to develop.

Speaker #9: In this process, which would mean more batteries, more renewables, and potentially other assets. Those line up well with the contracts that we're working through.

Garrick Rochow: Those line up well with the contracts that we're working through. Those should, you know, come together through that IRP process as we move forward.

Speaker #9: And so, those should come together through that IRP process as we move forward.

Speaker #1: Okay. Very helpful. Thank you.

Michael Sullivan: Okay. Very helpful. Thank you.

Speaker #2: Your next question comes from a line of Travis Miller from Morningstar. Your line is open.

Operator: Your next question comes from the line of Travis Miller from Morningstar. Your line is open.

Speaker #9: Good morning. Thank you. Good morning, Travis. You answered most of my questions, but just one overall one high level. Legislation, state legislation update, what are your thoughts there?

Travis Miller: Good morning. Thank you.

Garrick Rochow: Hey, Travis.

Rejji Hayes: Morning, Travis.

Travis Miller: You answered most of my questions, but just one, overall one high-level legislation, state legislation update. What are your thoughts there? Does anything get done with the election year? Any impact on your cadence of regulatory filings, rate case or other?

Speaker #9: Does anything get done with the election year? Any impact on your cadence of regulatory filings, rate case, or other?

Speaker #1: Most of the focus here, particularly after coming off of the spring break and the recess here, is going to be focused on the state budget.

Garrick Rochow: Most of the focus here, particularly after coming off of the spring break and the recess here, is gonna be focused on the state budget. That's been a bit contentious, just given the nature of a purple state. Was contentious last year. Unfortunately, it'll be probably that way this year as well, and that drug out for most of the year. I don't know if we're gonna see a whole lot of policy movement or policy change. If we do, know that we're engaged with it. Goes back to my earlier comment. Team's fully engaged, focused on finding the right solution for customers. In some cases, there's some great ideas out there in bills that can help from a customer affordability perspective.

Speaker #1: And so that's been a bit contentious just given the nature of our Purple State. It was contentious last year. Unfortunately, it'll be probably that way this year as well.

Speaker #1: And that drug out for most of the year. So I don't know if we're going to see a whole lot of policy movement or policy change.

Speaker #1: But if we do know that we're engaged with it, it goes back to my earlier comment. Team's fully engaged. Focused on finding the right solution for customers.

Speaker #1: In some cases, there's some great ideas out there in bills that can help from a customer affordability perspective. And so we'd like to see some of those progress with the right mechanisms in place.

Garrick Rochow: We'd like to see some of those progress with the right mechanisms in place. We'll see. We'll see what there's enough time and space left in this next session as well as the following session in the fall.

Speaker #1: But we'll see. We'll see what there's enough time and space left in this next session as well as the following session in the fall.

Speaker #9: Okay. And no change in your rate case cadence in terms of electric filing in the spring and gas filing in the fall. Typically.

Travis Miller: Okay. No change in your rate case cadence in terms of electric filing in the spring and gas filing in the fall, typically?

Speaker #1: No. We're going to file. We'll file our electric rate case in June. And so that'll give you a highlight for that. And then the gas case, we had staff position in April.

Garrick Rochow: No. We're going to file, we'll file our electric rate case in June. That'll give you a highlight for that. The gas case, we had staff position in April. The PFD will come out in August timeframe, and then it's September. Yeah, September, October-ish for the final order. There'll be a, you know, that's roughly when you'll see the gas order if we go the full distance.

Speaker #1: The PFD will come out in the August timeframe. And then it's October–October-ish for the final order. And then there'll be a—that's roughly when you'll see the gas order if we go the full distance.

Speaker #9: Sure. Okay. Great. That's all I had. Thanks a lot.

Travis Miller: Sure. Okay, great. That's all I had. Thanks a lot.

Speaker #1: Yep. Thank you.

Garrick Rochow: Yep. Thank you.

Speaker #2: Your next question comes from a line of Andrew Weisel from Scotiabank. Your line is open.

Operator: Your next question comes from a line of Andrew Weisel from Scotiabank. Your line is open.

Speaker #9: Thank you. Good morning, everybody. Hi. First, a question on the demand side. If I heard you right, you signed 110 megawatts of new load this year versus 100 megawatts signed last year and 450 megawatts connected last year.

Andrew Weisel: Thank you.

Garrick Rochow: Hi, Andrew.

Andrew Weisel: Good morning, everybody. Hi. First, a question on the demand side. If I heard you right, you signed 110 MW of new load this year versus 100 MW signed last year and 450 MW connected last year. My question is, of the 110 new, when do you expect that to connect and ramp up? How do you think of that as being supportive of the 2% to 3%, or maybe does that take you to the high end or over it?

Speaker #9: My question is of the 110 new, when do you expect that to connect and ramp up? And do you think of that as being supportive of the 2 to 3 percent or maybe does that take you to the high end or over it?

Speaker #1: It varies. There are different customers in there that make that up. Some of them are expansions that are underway. Some will play out over this five years.

Garrick Rochow: It varies. There are different customers in there that make that up. Some of them are expansions that are underway. Some will play out over this, over this 5 years. In terms of Michigan Potash, we got permission to talk about the jobs and the investment, but we're not talking about the timeline yet on that. That will occur over time when we're able to share more of those, more of those specific details. What we've communicated in our, in our 5-year plan is 2% to 3% load growth. We just keep giving these concrete examples on how that's materializing. It gives us a lot of confidence in the delivering that for our shareholders and for our customers.

Speaker #1: In terms of Michigan Potash, we got permission to talk about the jobs and the investment, but we're not talking about the timeline yet. And so that will occur over time when we're able to share more of those specific details.

Speaker #1: But what we've communicated in our five-year plan is 2 to 3 percent load growth. And we just keep giving these concrete examples on how that's materializing.

Speaker #1: And so, it gives us a lot of confidence in delivering that for our shareholders and for our customers.

Speaker #9: Okay. Sounds like better confidence, better visibility sort of thing.

Andrew Weisel: Okay. Sounds like better confidence, better visibility sort of thing?

Speaker #1: Great. Yep.

Garrick Rochow: Great. Yep.

Speaker #9: Is that right? Okay. Okay. Great.

Andrew Weisel: Is that right? Okay.

Garrick Rochow: Yes.

Andrew Weisel: Okay, great.

Rejji Hayes: It puts us on plan. It keeps us on plan-

Speaker #3: Put this on plan. It keeps us on plan, Andrew, for the avoidance of doubt.

Garrick Rochow: Yep

Garrick Rochow: Andrew, for the avoidance of doubt.

Speaker #9: Great. Next question is you mentioned Moody's has the utility on negative outlook. I think in the prepared to use the word that you're considering countermeasures.

Andrew Weisel: Great. Next question is, you mentioned Moody's has the utility on negative outlook, I think in the prepared you used the word you're considering countermeasures. Can you maybe elaborate what are some options you might be considering, if you're willing to get into that, and how much of a need do you feel to be proactive?

Speaker #9: Can you maybe elaborate? What are some options you might be considering if you're willing to get into that? And how much of a need do you feel to be proactive?

Speaker #3: Andrew, appreciate the question. This is Rejji. And so, yeah, this is something that's a little unique because it's at the opco. If this were a parent company outlook, there are a variety of tools in your toolkit where we could revisit financing strategy.

Rejji Hayes: Andrew, appreciate the question. This is Rejji. Yeah, this is, you know, something that's a little unique because it's at the OpCo. If this were a parent company outlook, you know, there are a variety of tools in your toolkit where we could revisit financing strategy, we could look at opportunities in the working capital side, and again, you just have more arrows in your quiver. Because it's at the OpCo, and you're really constrained in terms of your rate-making capital structure, you know, we're going to have to evaluate a variety of different solutions and likely have to educate the commission and other stakeholders on what we would have to do over the next 12 to 18 months to avoid Moody's taking further action. Not prepared to elaborate at this moment on what those alternatives are.

Speaker #3: We could look at opportunities in the working capital side. And again, you just have more arrows in your quiver. Because it's at the opco, and you're really constrained in terms of your rate-making capital structure, we're going to have to evaluate a variety of different solutions.

Speaker #3: And likely have to educate the commission and other stakeholders on what we would have to do over the next 12 to 18 months to avoid Moody's taking further action.

Speaker #3: And so, not prepared to elaborate at this moment on what those alternatives are. I think they're fairly intuitive when you think about the opportunity at the regulated utility.

Rejji Hayes: I think they're fairly intuitive when you think about the opportunity at the regulated utility. It really has to do with the rate-making capital structure, as well as potentially cost of capital and things of that nature. We're exploring a variety of qualitative and quantitative measures, and again, we'll look to have conversations over time with key stakeholders.

Speaker #3: And it really has to do with the rate-making capital structure. But as well as potentially cost of capital and things of that nature. But we're exploring a variety of qualitative and quantitative measures.

Speaker #3: And again, we'll look to have conversations over time with key stakeholders.

Speaker #9: Okay, that makes sense. One last one, if I may—and I can tell, Garrick, I’m getting the sense you don’t want to talk about it much—so I’ll ask the North Star question in a different way.

Andrew Weisel: Okay, that makes sense. One last one, if I may, and I can tell, Garrick, I'm getting the sense you don't want to talk about it much, so I'll ask the NorthStar question in a different way. Without speculating, or digging too deep, maybe just a little bit of pun intended, would you consider splitting the business into pieces or would you even be able to? Obviously, DIG has a nice growth outlook versus the renewables development businesses may be more finite growth given the tax credits being phased out after the next few years. Could you or would you split that business up?

Speaker #9: Without speculating, or digging too deep, maybe just a little bit of pun intended, would you consider splitting the business into pieces? Or would you even be able to?

Speaker #9: Obviously, Digg has a nice growth outlook, whereas the renewables development business may have more finite growth, given the tax credits being phased out after the next few years.

Speaker #9: Could you, or would you, split that business up?

Speaker #1: Andrew, I love your persistence here. Way to go on that.

Garrick Rochow: Andrew, I love your persistence here. Way to go on that. Like,

Speaker #9: We have to know this.

Andrew Weisel: We have to know.

Garrick Rochow: we know this. Yeah, absolutely. No comment on M&A.

Speaker #1: Yeah. Absolutely. So no comment on M&A.

Speaker #9: Fair enough. All right. We can move on. Thank you.

Andrew Weisel: Fair enough. All right, we can move on. Thank you.

Speaker #2: Your next question comes from a line of Sophie Karp from KeyBank. Your line is open.

Operator: Your next question comes from the line of Sophie Karp from KeyBanc. Your line is open.

Sophie Karp: Hello. Good morning.

Speaker #10: Hello. Good morning.

Sophie Karp: Hello. Good morning.

Garrick Rochow: Hi, Sophie.

Sophie Karp: Thank you for taking my question. Hi.

Speaker #1: Hi, Sophie.

Speaker #10: Thank you for taking my question. Hi. So most of my questions have been answered, but I wanted to ask you this. So you've highlighted increasing diversity within your development pipeline.

Garrick Rochow: Hi.

Sophie Karp: Most of my questions have been answered. I wanted to ask you this. You've highlighted increasing diversity within your development pipeline. Is it fair to think about this as maybe de-emphasizing data centers in that pipeline a little bit here? How should we think about the role of data center customers in that mix? Does it suggest any change in attractiveness of your service territory maybe for hyperscalers? Kinda any comment on that would be helpful.

Speaker #10: And is it fair to think about this as maybe de-emphasizing data centers in that pipeline a little bit here? How should we think about the role of data center customers in that mix?

Speaker #10: Does it suggest any change in attractiveness of your service territory, maybe for hyperscalers? Any comment on that would be helpful.

Speaker #1: Thanks, Sophie. No, it's not a de-emphasis at all. I love Michigan. And what I like to see is that we're growing in a variety of different ways.

Garrick Rochow: Thanks, Sophie. No, it's not a de-emphasis at all. I love Michigan and what I like to see is that we're growing in a variety of different ways. Those stats that I gave in my prepared remarks, more engineers per capita. Literally, we have attracted businesses in Michigan just for that reason alone. If you go back, rich automotive heritage in the World War II timeframe, we became the arsenal of democracy, making planes and stuff, and that defense industry is stuck, right? We had Saab, we announced this a year or two ago, and they're in, they're in the construction process right now, building defense and other means here. There's some onshoring components of it as well. Second most state diverse state in agriculture. We've seen a lot more food processing.

Speaker #1: Those stats that I gave in my prepared marks, more engineers per capita. Literally, we have attracted businesses in Michigan just for that reason alone.

Speaker #1: If you go back, Rich Automotive Heritage, and then the World War II timeframe, we became the arsenal of democracy, making planes and stuff. And that defense industry is stuck.

Speaker #1: Right? We had Saab. We announced this a year or two ago, and they're in the construction process right now. Building defense and other means here.

Speaker #1: And so there's some onshoring components of it as well. Second most state diverse state in agriculture. We've seen a lot more food processing. We're going to have more announcements on food processing coming up because they're just materializing in the state.

Garrick Rochow: We're gonna have more announcements on food processing coming up, 'cause they're just materializing in the state. There's a really diverse growth in the state, and I think that's important to acknowledge, right? Data centers, we're in there. We're making great progress, as I shared. That's one part of our growth story, and I love the diversification of it. I think that's the unique piece that we talk about that you don't hear others speak about as much, which gives me a lot of confidence in our future and the growth profile that we're seeing.

Speaker #1: And so there's a really diverse growth in the state. And I think that's important to acknowledge. Right? Data centers, we're in there. We're making great progress, as I shared.

Speaker #1: That's one part of our growth story. And I love the diversification of it. I think that's the unique piece that we talk about, that you don't hear others speak about as much.

Speaker #1: Which gives me a lot of confidence in our future and the growth profile that we're seeing.

Speaker #9: Sophie, all I would add to Garrick's comments is just the reason why again, we do talk about the full portfolio versus just data centers.

Rejji Hayes: Sophie, all I would add to Garrick's comments is just the reason why, again, we do talk about the full portfolio versus just data centers, and we certainly acknowledge that data centers are the shiny object in this environment. It is important to note that about 15% of that 9 gigawatt backlog is represented by non-data center opportunities. When you do that math, that's over 1 gigawatt, that's quite impactful. We've talked in the past about the positive spillover effects and externalities that non-data center opportunities bring. You get supply chain, you get sustainable job growth, and you get commercial activity once you get that residential or population growth. Those are higher margin customer classes than industrial.

Speaker #9: And we certainly acknowledge that data centers are the shiny object in this environment. But it is important to note that about 15% of that 9-gigawatt backlog is represented by non-data center opportunities.

Speaker #9: So when you do that math, that's over a gigawatt. And so that's quite impactful. And we've talked in the past about the positive spillover effects.

Speaker #9: And externalities that non-data center opportunities bring. And so you get supply chain. You get sustainable job growth. And we've talked about and you get commercial activity once you get that residential or population growth.

Speaker #9: And those are higher-margin customer classes than industrial. And so we're certainly like and love all of our economic development opportunities, but we certainly also want to make it clear that when you get the non-data center opportunities like large manufacturing companies and so on, you just get a lot of externalities.

Rejji Hayes: We certainly like and love all of our economic development opportunities, but we certainly also want to make it clear that when you get the non-data center opportunities like large manufacturing companies and so on, you just get a lot of externalities. We just want to make sure that that's not lost on the investment community. Because again, we recognize the shiny object, but there's just a lot of good momentum in the state of Michigan, and its diverse opportunities as well, to Garrick's comments.

Speaker #9: And so we just want to make sure that that's not lost on the investment community. Because again, we recognize the shiny object, but there's just a lot of good momentum in the state of Michigan.

Speaker #9: And it's diverse opportunities as well, to Garrick's comments.

Speaker #10: Thank you. That's all from me.

Sophie Karp: Thank you. That's all from me.

Speaker #2: Your next question comes from the line of Anthony Cradell from Mizuho. Your line is open.

Operator: Your next question comes from the line of Anthony Crowdell from Mizuho. Your line is open.

Speaker #1: Hey, good morning, Kim. Just thanks for squeezing me in just quickly. I think the equity issue plan steps up from $500 million in '25 to $750 million, I think, on average.

Anthony Crowdell: Hey, good morning, team. Just thanks for squeezing me in just quickly. I think the equity issue plan steps up from $525 to $750 million, I think on average. You said earlier, Rejji, over the 2026 2030 time period. Does the incremental large load conversion above your base case reduce the need for equity? Or does the, you know, increase in large load conversion accelerate the capital intensity and therefore the higher

Speaker #1: You said earlier, Reggie, over the 26, 30 time period. Does the incremental large load conversion above your base case reduce the need for equity, or does the increase in large load conversion accelerate the capital intensity?

Speaker #1: And therefore, the higher?

Rejji Hayes: Anthony, appreciate the question. Yeah, I think the way I would think about it is, as we talked about, because our customer investment plan does not include these large load prospects, you know, it would likely put upward pressure on our capital plan if we converted one or two of these larger opportunities. We talked about the sensitivity. Every gigawatt gets you somewhere between 2 to 5 billion of incremental CapEx, and that would put upward pressure on the CapEx and thus put upward pressure on the financing needs, equity, debt, and all things in between. There would likely be additional equity investment opportunities. I think the good news around that is it would be to fund growth and, you know, capital investment opportunities and rate-based growth as a result of that.

Speaker #9: Yeah, so Anthony, I appreciate the question. I think the way I would think about it is, as we talked about, because our customer investment plan does not include these large load prospects, it would likely put upward pressure on our capital plan if we converted one or two of these larger opportunities.

Speaker #9: And so we talked about the sensitivity. Every gigawatt gets you somewhere between $2 to $5 billion of incremental CapEx, and that would put upward pressure on the CapEx.

Speaker #9: And thus put upward pressure on the financing needs, equity, debt, and all things in between. So there would likely be additional equity investment opportunities.

Speaker #9: And I think the good news around that is it would be to fund growth. And capital investment opportunities and rate-based growth as a result of that.

Speaker #9: And so, yes, there would be upward pressure on equity, but not so much because of the conversion of the large load customers, but because of the capital that goes with those large load customers.

Rejji Hayes: Yes, there would be upward pressure on equity, but not so much because of the conversion of the large load customers, but because of the capital that goes with those large load customers. Is that helpful?

Speaker #9: Is that helpful?

Speaker #1: Perfect, that's all I had. And Garrick, you're right—Mom is always right. Yes.

Anthony Crowdell: Perfect. That's all I had. Garrick, you're right. Mom is always right. Yes.

Speaker #9: Thanks, Anthony.

Garrick Rochow: Thanks, Anthony.

Speaker #2: And we have reached the end of our question and answer session. I will now turn the call back over to Mr. Garrick Rochow for closing remarks.

Operator: We have reached the end of our question and answer session. I will now turn the call back over to Mr. Garrick Rochow for closing remarks.

Speaker #1: Thanks, Rob. I'd like to thank you for joining us today. I look forward to seeing you at the American Gas Association, financial forum, take care, and stay safe.

Garrick Rochow: Thanks, Rob. I'd like to thank you for joining us today. I look forward to seeing you at the American Gas Association Financial Forum. Take care and stay safe.

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

Q1 2026 CMS Energy Corp Earnings Call

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