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RBC Global Energy and Power Conference – Cms Oil and Gas Company

Cms Oil and Gas Company · Jun 2, 2014 · 30 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 1
    RBC Global Energy and Power Conference June 2, 2014 Cross Winds Energy Park Consumers Smart Energy Program Jackson Gas Plant
  2. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 2
    Mindset . . . . 10-Year Actual 7% CAGR 1.78 5% - 7% Peers 4% 1.66 1.74 1.55 1.45 1.36 b 1.26 6% 1.21 1.08 5% - 7% 6% 1.08 14% 1.02 0.96 96 0.90 27% 84 0.84 32% 0.81 Intl Sale 66 39% 50 80% 36 20 2003 2004 2005…
  3. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 3
    CMS Energy MODEL . . . . RESULTS Consistent Predictable Investment Self-Imposed Limits Ten year - 15 billion Small, bite size projects Sustainable base rates < 2% inflation None Bet The Company Investment Needed Not Wanted…
  4. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 4
    A. Visible Investment: Ten-Year Plan . . . . 2013-2022 Opportunity Level 10-Year Plan Amount (bils) Generation capacity PPA replacement 1.7 20+ Billion ROA return 15Billion 15 Billion Higher renewables Gas conversions &…
  5. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 5
    Visible Investment: Catch-Up . . . . Amount (billions) 1.8 1.5 Peers CMS 2013 Pct of Market Cap Cap Inv OCF Liquidity CMS 21% 21% 20% 20% 24% Peers 18 16 20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013…
  6. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 6
    Gas Investment Growing. . . . Amount Rate Base (bils) 20 Gas 19 Capital Investment Checklist Electric 6 15 Add Customer Value 15 4 32% Reduce O&M Costs 11 30% Reduce Fuel Costs 10 3 25% Mandated by State or 13 Federal…
  7. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 7
    Visible Investment: Gas Distribution . . . . New Customers Includes Inspection Storage switching 50,000 New customers 1,700 Miles 23 Wells 200 Million 100 Million 100 Million Transmission Compression Main Replacement…
  8. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 8
    Propane to Gas Switching . . . . Opportunity Gas Customer Growth 36% 11,216 20% 8,249 1.7 Million gas 32% 6,864 customers 5,209284 250,0000 propane users 2011 2012 2013 2014 New business Switching . . . . adds to…
  9. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 9
    B. PPAs Expire . . . . MW Ten-year Capacity Growth 10,000 780 MW 8,600 MW 8,600 MW 1,240 MW PPA 580 PPA 2,600 7,500 capacity 30% 780 MW Owned (8,020) 410 MW Owned Shortfall (6,000) 540 MW 5,000 Today Jackson Plant…
  10. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 10
    New Capacity Opportunities . . . . Full Year Impact Replace PPA With New Build Customer Bill Investor (EPS) (mils) Upside: 1,000 MW of Capacity Options PPAs expire - 325 0 Add 1,000 MW + 325 +5 Build - Thetford owned capacity Expand…
  11. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 11
    C. Sales Growth . . . . Economic Indicators Annual Electric Salesa Grand Rapids Michigan U.S 1.7% Growth 1.7% Upside Building Permits* + 39% +25% +16% 1.3% 1.0% GDP (real) 2010 thru 2012 14 11 7 0.7% Population 2010 Census 3 0 2…
  12. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 12
    D. Capacity Price Market Increases . . . . Today Future Scenarios (mils) (mils) +50 55 Upside: Conditions improving +30 35 5 Capacity price < 0.50 4.50 7.50 ( kW per month) . . . . could add value to the 700 MW DIG…
  13. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 13
    E. Michigan Energy Law Revisit . . . . Adaptability Upside Reliability Affordability Environmental More renewables protection Better process 10% renewables by 2015 Energy efficiency standards File-and-implement Historical test…
  14. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 14
    Michigan Governors Race . . . . Rick Snyder Republican, Incumbent 37% 48% Mark Schauer Democrat, Challenger On Energy... Campaign Issues On ROA Education As Senate Democratic Leader, Jobs Choice creates a lot of Mark played…
  15. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 15
    F. Continuous O&M Cost Reductions . . . . Amount -3%a (mils) 1,050 -3%a 1,030 +5% 1,010 990 +5% 970 950 -8% 930 -8% 910 890 870 2012 Cost Reduction Reinvestment 2013 Cost Reduction Reinvestment 2014 _____ a O&M…
  16. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 16
    Self-Initiated Cost Control . . . . Average Annual O&M Change +6% Peers Actual/Plan (exc 2013 major storms) +2% Peers CMS Flat -2% -2% -3%a -3%a Upside _____ a -8% Before reinvestment Average -3% Plan Conservatively…
  17. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 17
    Gas Customer Bills . . . . 2012 2013 2014 2015 Investment O&M -- 49M Settled 16M 0 0 . . . . down 10% over the last three years 17
  18. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 18
    Electric Residential Bills Competitive . . . . Industrial Electric Rate Electric Rate Case Avoided (vs Midwest Average) Consumers higher than Midwest peer avg 30% 100 O&M 20% Self-initiated Rate design, regulatory Tax…
  19. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 19
    Key Takeaways . . . . EPS a Real Growth (No Resets) 2.00 7% Core Fundamentals 7% 5% +7% +7% 5% 10-Year Visible Investment +7% +8% Among Best In Cost Control +12% +12% +4% Target 5% - 7% Conservative Planning +7% Actual =…
  20. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 20
    Appendix
  21. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 21
    Continuous Cost Reduction . . . . Past Progress Future Examples Headcount Fuel Mix MW Employees 7,600 2016 Retire Coal - 900 - 300 100k 2016 Add GCC + 540 + 20 Each 7,200 Total -360 - 280 600 Future Savings (mils) 25 1,000 60k…
  22. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 22
    Capacity Diversity . . . . MW Employees 2006 Sold Palisades - 800 - 650 2009 Purchased Zeeland GCC + 930 + 22 2013-14 Build Wind Farms + 205 +4 2016 Suspend Operation of Coal Units - 900 - 300 2016 Add Gas Combined Cycle + 542 +…
  23. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 23
    Liquidity (as of 3/31/14) . . . . Availability 2014 Plan 2.2 Billion Financing Timing CMS Energy Parent Debt February 5-year revolver - 2018 548 mils Continuous Equity March 2016 Term Loan Spring Consumers Energy Refinancing…
  24. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 24
    Operating Cash Flow Growth . . . . Amount (bils) Up 0.5 Gross operating cash flowa Billion 2.5 up 0.1 billion per year 2.2 2.1 2.0 1.9 2.0 1.7 1.8 1.6 1.5 1.5 Interest 1.4 1.45 Working capital and taxes Investment 1.0…
  25. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 25
    Credit Ratings . . . . Scale S&P / S&P Moodys Fitch Reflects Fitch Moodys (March) (January) (February) A+ A1 Consistent A A2 Consumers Performance A- A3 Secured BBB+ BBB Baa1 Baa2 Less Risk BBB- BB+ Baa3 Ba1 Customer…
  26. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 26
    Capital Expenditures 2014-2018 Plan 2013 2014 2015 2016 2017 2018 Total (mils) (mils) (mils) (mils) (mils) (mils) (mils) Electric Distribution 199 190 197 202 211 208 1,008 Generation 89 96 93 88 60 155 492 New Customers 48 47 38 39 38…
  27. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 27
    Opportunity to Reinvest Helps Customers . . . . Natural offsets: Adjusted EPS (2) (non-GAAP) Gas O&M (3) Higher UAs (1) Reinvestment: 2014 +18 O&M choices Parent debt prefunding (7) (3) (10) +14 October- Parent…
  28. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 28
    GAAP Reconciliation
  29. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 29
    Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Reported earnings (loss) per share - GAAP (0.30) 0.64 (0.44) (0.41) (1.02) 1.20 0.91 1.28 1.58 1.42 1.66 After-tax…
  30. RBC Global Energy and Power Conference – Cms Oil and Gas Company – slide 30
    CMS Energy Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities (unaudited) (mils) 2012 2013 2014 2015 2016 2017 2018 Consumers Operating Income + Depreciation & Amortization 1,635 (a) 1,740 1,820 1,876 1,952…

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