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MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy

Cms Energy · Mar 3, 2014 · 36 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. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 1
    Morgan Stanley Utilities Conference March 3, 2014 Cross Winds Energy Park Consumers Smart Energy Program Jackson Gas Plant
  2. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 2
    Mindset . . . . 10-Year Actual 1.66 7% CAGR 1.78 5% - 7% Peers 4% 1.74 1.55 1.45 1.36 a 1.26 6% 1.21 1.08 6% 5% - 7% 1.08 1.02 14% 0.96 96 0.90 27% 84 0.81 Intl Sale 0.84 32% 66 39% 50 80% 36 20 2003 2004 2005…
  3. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – 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. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 4
    Model Delivers . . . . One Three Five Ten Future Annual Year Year Year Year Growth CMS Energy 7% 22% 37% 105% 5%-7% Note: Dividend Growth 6 29 116 na 5-7 Peer Group 3 9 15 45 _____ Source: Bloomberg, periods ending…
  5. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 5
    Consumers Energy . . . . Territory Overview Fourth largest combination utility in the United States 1.8 million electric and 1.7 million gas customers 8,600 MW of owned and purchased generation Lake Winds Energy Park capacity…
  6. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 6
    Purchase of Jackson Gas Plant . . . . The Transaction Connecting The Dots Asset: 540 MW gas plant located in Retire small coal plants Jackson, Michigan Price: 155 million (286/kW) Recover through Technology: Combined cycle…
  7. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 7
    New Gas Plant . . . . Other Needed Investments - 545 Million Customers benefit: Lower rates Better timing Investors benefit: Lower risk Electric Reliability Gas Infrastructure 200 Million 165 Million Investment backfill EPS & OCF…
  8. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 8
    Regulatory Update . . . . Amount (mils) Savings from purchase of Jackson Plant; 545 replacing build Securitize Classic 7 390 MPSC Order complete No appeals Avoid rate cases until 2015 test year 150 New investment…
  9. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 9
    Rate Cases Eliminated . . . . Gas Rate Case Avoided Electric Rate Case Avoided 100 O&M 49 Tax O&M Tax/Other Cross Winds 0 0 2013 2014 2014 . . . . good for customers (prices) and investors (no ROE risk). 9
  10. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 10
    A. Visible, 10-Year INVESTMENT Plan . . . . 2013-2022 Opportunity Level 10-Year Plan Amount (bils) Generation capacity PPA replacement 1.7 ROA return 20 Billion Higher renewables .3 15Billion 15 Billion Gas conversions &…
  11. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 11
    Capital Investment . . . . Amount (bils) 1.8 7.4 Now 8 1.6 +1 1.4Bil 1.2 A.) Was 7 B.) 6.3 w/Thetford w/o Thetford 1.0 Estimated 2019 Depreciation 800 Million 2014 Depreciation 600 Million 0.8 0.6 0 2014 2015 2016…
  12. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 12
    Investment Catch-Up . . . . Amount (bils) 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 2014 2015 2016…
  13. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 13
    B. Expiring PPAS . . . . MW Replace PPA 10,000 contracts with Planned Demand Reductions owned 9,000 generation Capacity Shortfall 8,000 Jackson Plant 7,000 Classic 7 Provides Mothballed (950 MW) Palisades PPA…
  14. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 14
    C. Credit RATINGS . . . . Scale Reflects S&P / Fitch Moodys S&P Moodys Fitch A+ A1 Consistent A A2 Performance Consumers A- BBB+ A3 Baa1 Secured Less Risk BBB Baa2 BBB- Baa3 Customer Focus BB+ Ba1 Constructive BBB Baa2 CMS…
  15. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 15
    D. SALES Growth . . . . Economic Indicators Grand Rapids Michigan U.S Unemployment 5.6% 8.4% 6.7% December 2013 GDP (real) 2010 thru 2012 14 11 7 Population 2010 Census 2 0 2 thru July 2012 . . . . best in Midwest. 15
  16. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 16
    E. CAPACITY Price Market Increases . . . . Today Future Scenarios (mils) (mils) +50 55 +30 35 5 Capacity price < 0.50 4.50 7.50 ( kW per month) . . . . could add value to the 700 MW DIG plant. 16
  17. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 17
    F. Retail Open Access Policy (ROA) . . . . 0.02% 310 ROA Electric Governor wants affordable Customers residential bills and competitive industrial rates Eliminating ROA could: Lower industrial rates by 10% or all customers by 4%…
  18. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 18
    Michigan's Energy Future . . . . Governors 2025 Energy Goals Regulatory Support Adaptability Eliminate energy waste Reduce coal, replace with renewables and gas Reliability Top quartile performance (SAIFI) Top half performance…
  19. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 19
    The Governor on Retail Open Access. . . . Question: You seem to agree with utilities argument on choice. Does that mean you will eliminate shopping altogether or keep the 10% cap in place Choice creates a lot of challenges and…
  20. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 20
    G. Self-Initiated COST Control . . . . Average Annual O&M Change +6% +2% +1% Peers Major CMS Flat Storms -2% -2% -3% -2% Peers 2013 -6% Reinvestment w/o Storm Changes Major 2013 -8% Storms Actual/Plan -10% 2006-2012…
  21. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 21
    G. 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…
  22. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 22
    CMS Mindset . . . . Icy Late December O&M B/(W) Than Forecast (mils) Storm(total 50 M) (37) Insurance 16 2014 Cold Lower contributions 9 Winter 2012 Hot Sales-weather 12 Summer Total 0 2013 Cold 1.66 Winter & Reinvested +7%…
  23. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 23
    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…
  24. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 24
    Key Takeaways . . . . Growth 5%-7% EPS growth Dividend growth premium (like earnings) Transparent Ten-year, 15 billion investment plan Constructive regulatory climate Continuous cost reductions Predictable On track for 12th…
  25. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 25
    Appendix
  26. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 26
    2014 Adjusted EPS (non-GAAP) . . . . Utility Enterprises and Parent 7- 11 1.74 -1.78 6 1 1.66 14 Weather (15) 27 2013 Sales (3) Full Productivity Year (18) Impact Higher Investment Storms (18) - (22) 2013 Weather…
  27. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 27
    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…
  28. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 28
    2014 Cash Flow Forecast (non-GAAP) CMS Energy Parent Consumers Energy Amount Amount (mils) (mils) Cash at year end 2013 116 Cash at year end 2013 18 Sources Sources Consumers Energy dividend and tax sharing 670 Operating…
  29. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 29
    2014 Sensitivities . . . . Annual Impact Status Sensitivity EPS OCF (mils) Sales a Electric (37,017 Gwh) + 1% + 0.05 + 20 Gas (291.0 Bcf) +5 + 0.07 + 30 0.01 Gas prices (NYMEX) + 1.00 + + 60 ROE (authorized) Electric (10.3%) +…
  30. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 30
    Liquidity (as of 12/31/13) . . . . Availability 2013 Financing Activities 1.5 Billion Consumers Energy FMB CMS Energy 5-year revolver - 2018 548 mils 425 million, 3.95%, 2043 325 million, 3.375%, 2023 Consumers Energy CMS Energy…
  31. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 31
    GAAP Reconciliation
  32. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 32
    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…
  33. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 33
    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 1,800 1,876 1,952…
  34. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 34
    Consumers Energy 2014 Forecasted Cash Flow GAAP Reconciliation (in millions) (unaudited) Reclassifications From Sources and Uses to Statement of Cash Flows Presentation Sources and Uses Tax Interest Other Working Capital…
  35. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 35
    CMS Energy Parent 2014 Forecasted Cash Flow GAAP Reconciliation (in millions) (unaudited) Reclassifications From Sources and Uses to Statement of Cash Flows Presentation Sources and Uses Non Equity Consolidated Statements of Cash…
  36. MORGAN STANLEY UTILITIES CONFERENCE – Cms Energy – slide 36
    Consolidated CMS Energy 2014 Forecasted Consolidation of Consumers Energy and CMS Energy Parent Statements of Cash Flow (in millions) (unaudited) Eliminations/Reclassifications/Consolidation to Arrive at the Consolidated Statement of…

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