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INVESTOR MEETINGS – Cms Energy

Cms Energy · Mar 16, 2015 · 62 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. INVESTOR MEETINGS – Cms Energy – slide 1
    Quick Overview Why invest Whats in the Plan; Whats not How do we do it What makes us different Investor Meetings -- Europe March 16 - 19, 2015 Ludington Pumped Storage Cross Winds Energy Park Fourth largest in the world…
  2. INVESTOR MEETINGS – Cms Energy – slide 2
    Whats Changed Since Last Year DELIVERED ON 2014 COMMITMENTS . . . . Commitment Results Delivered a a A. Exceed industry EPS and dividend growth A. +7% EPS ; +7.4% dividend B. Exceed industry ORGANIC CAPITAL B. 1.7 bil -- 16% of market…
  3. INVESTOR MEETINGS – Cms Energy – slide 3
    Why Invest in CMS Energy UNMATCHED EPS PERFORMANCE . . . . Premier, Real EPS Growth a Upsides Future = 5% to 7% / yr 20 bil (vs 15.5 bil) capex growth, CMS = 7% / yr O&M reductions; 6% 14 & 15; 4% 16 18 -- more to go, % sales…
  4. INVESTOR MEETINGS – Cms Energy – slide 4
    Why Invest in CMS Energy Our Growth Engine Supported By (2015-2024 Capex) UPSIDES create headroom (Investment, Sales, Cost, & DIG) PARTNERS in progress 15.5 Billion (Customers, Regulators, & Policy Makers) a 5% - 7% EPS growth…
  5. INVESTOR MEETINGS – Cms Energy – slide 5
    Whats in the Plan INVESTMENT CATCH-UP . . . . Amount (billions) 1.8 1.5 per year Peers Peer Performance a Consumers Energy Peer Average CMS Capex Liquidity Cash Flow (oper) 20% 16% 15% 14% 15% 12% 2003 2004 2005…
  6. INVESTOR MEETINGS – Cms Energy – slide 6
    Whats in the Plan VISIBLE CAPEX . . . . 2005-2014 2015-2024 10.7B 15.5B Up +94% Gas Infrastructure Electric Gas Maintenance Infrastructure Electric Maintenance Electric Reliability New New & Distribution Generation…
  7. INVESTOR MEETINGS – Cms Energy – slide 7
    Whats NOT in the Plan UPSIDE INVESTMENT OPPORTUNITIES . . . . 2015-2024 Opportunity Level 10-Year Plan Amount (bils) Generation capacity 3 Gas conversions & expansion 1 Grid modernization 1 20+ Billion 15.5 Billion Total…
  8. INVESTOR MEETINGS – Cms Energy – slide 8
    Whats NOT in the Plan UPSIDE CAPACITY OPPORTUNITIES . . . . Capacity Growth Over Next Ten Years MW 11,000 10,000 PPAs Expire 9,400 MW PPA 8,600 MW 1,240 MW 580 PPA 2,600 780 MW 7,500 capacity Owned 30% 8,820 800 MW 410…
  9. INVESTOR MEETINGS – Cms Energy – slide 9
    Whats NOT in the Plan UPSIDE CAPACITY PRICE INCREASES . . . . Was Now Future Scenarios (mils) (mils) (mils) +40 55 +20 35 15 5 Capacity price < 0.50 2.00 4.50 7.50 ( kW per (Market) (Market) (CONE) month) . . . .…
  10. INVESTOR MEETINGS – Cms Energy – slide 10
    How Do We Do It O&M COST SAVINGS . . . . O&M Trend vs Peers O&M Cost Savings 2014 2014 0 50% & 2015 2018 (mils) (mils) 6% per year 0 Peers Attrition - 35 - 75 0 2% per year Productivity (Coal Gas) - 35 - 50 0 Pole Top…
  11. INVESTOR MEETINGS – Cms Energy – slide 11
    How Do We Do It REINVESTMENT HELPS CUSTOMERS . . . . a Annual EPS Growth Adjusted EPS 2012 2013 2014 (non-GAAP) 14% CMS EPS Growth Before Reinvestment CMS 2014 CMS 7% CMS 7% 7% 3% 2015 1.45 Peers _____ a Adjusted EPS…
  12. INVESTOR MEETINGS – Cms Energy – slide 12
    How Do We Do It EXPERIENCED POLICY MAKERS . . . . Governor Rick Snyder Commission Powering Michigans John Quackenbush (R), Comeback Chairman Term Ends: July 2, 2017 Consistent Sally Talberg (I) Term Ends: Energy Committee…
  13. INVESTOR MEETINGS – Cms Energy – slide 13
    What Makes Us Different SINCE WE MET . . . . 2014 A Year Ago Actual a EPS Growth 5% to 7% 7% Dividend Growth 5% to 7% 7.4% O&M Cost Savings Down 2% Down 3% Capital Investment (bils) 1.6 1.7 Electric Sales - Industrial Up…
  14. INVESTOR MEETINGS – Cms Energy – slide 14
    What Makes Us Different OPERATING CASH FLOW GROWTH . . . . Amount Up 0.5 Billion (bils) Gross operating cash flowa 2.5 up 0.1 billion per year 2.4 2.2 2.1 2.0 2.0 1.9 Interest, working 1.8 capital and taxes 1.55 1.5 Pct of…
  15. INVESTOR MEETINGS – Cms Energy – slide 15
    What Makes Us Different A Passion for Customers AND Investors . . . . Future Shines Bright Sustainable Future Growth 3.50 EPS a Past Next 5 Dividend +5% to +7% Performance Years Investment (bils) 6.4 7.6 (2010-2014) Capacity Op…
  16. INVESTOR MEETINGS – Cms Energy – slide 16
    Detailed Overview Why invest Whats in the Plan; Whats not How do we do it What makes us different Investor Meetings -- Europe March 16 - 19, 2015 Ludington Pumped Storage Cross Winds Energy Park Fourth largest in the world…
  17. INVESTOR MEETINGS – Cms Energy – slide 17
    Consumers Energy . . . . Our Territory Electric Utility 1.8 million electric customers 8,600 MW of capacity Gas Utility 1.7 million gas customers 312 Tbtu gas storage (3rd biggest in US) Combination Utility 4th largest in the…
  18. INVESTOR MEETINGS – Cms Energy – slide 18
    CMS Energy . . . . What makes us different Whats in the Plan Customers AND Capex 15.5 bil investors O&M down 2% per year Sustainable energy Sales up 0.5% per year No big bets Reinvestment Capex additional 5 bil Cost…
  19. INVESTOR MEETINGS – Cms Energy – slide 19
    Why Invest in CMS Energy Our Growth Engine Supported By (2015-2024 Capex) UPSIDES create headroom (Investment, Sales, Cost, & DIG) PARTNERS in progress 15.5 Billion (Customers, Regulators, & Policy Makers) a 5% - 7% EPS growth…
  20. INVESTOR MEETINGS – Cms Energy – slide 20
    Whats in the Plan . . . . Investment Catch-up than 1.5 billion per year Visible capex with no big bets More clean generation Electric distribution -- investing 2 billion over next 5 years Gas infrastructure -- investing 1 billion…
  21. INVESTOR MEETINGS – Cms Energy – slide 21
    Whats in the Plan INVESTMENT CATCH-UP . . . . Amount (billions) 1.8 1.5 per year Peers Peer Performance a Consumers Energy Peer Average CMS Capex Liquidity Cash Flow (oper) 20% 16% 15% 14% 15% 12% 2003 2004 2005…
  22. INVESTOR MEETINGS – Cms Energy – slide 22
    Whats in the Plan VISIBLE CAPEX . . . . 2005-2014 2015-2024 10.7B 15.5B Up +94% Gas Infrastructure Electric Gas Maintenance Infrastructure Electric Maintenance Electric Reliability New New & Distribution Generation…
  23. INVESTOR MEETINGS – Cms Energy – slide 23
    Whats in the Plan GAS INFRASTRUCTURE . . . . New Customers Inspection Storage Includes conversions 50,000 New customers 1,700 Miles 23 Wells 250 Million 100 Million 100 Million Transmission Compression Main Replacement…
  24. INVESTOR MEETINGS – Cms Energy – slide 24
    Whats in the Plan ELECTRIC RELIABILITY AND DISTRIUBTION . . . . Demand 1.0 Billion Circuits In service 2,253 Upgrade 437 Reliability 0.7 Billion Transformers In service 663,044 Capacity Replace 39,000 0.3 Billion Total…
  25. INVESTOR MEETINGS – Cms Energy – slide 25
    Whats in the Plan CLEANER GENERATION . . . . Diverse Capacity Balanced Portfolio Renewables Clean Coal 2005 Capacity % Gas 8% Renewables 6% 31% Karn Generating Coal Lake Winds Energy Park Plant, 508 MW a 11% Pumped Storage 100…
  26. INVESTOR MEETINGS – Cms Energy – slide 26
    Whats in the Plan CUSTOMER DRIVEN INVESTMENT . . . . Clean Power Capacity Reliability Infrastructure Opportunity 1.5 Billion 2.2 Billion 2.4 Billion 4.1 Billion 5 Billion Environmental Jackson gas plant Consumers Smart Energy Gas…
  27. INVESTOR MEETINGS – Cms Energy – slide 27
    Whats NOT in the Plan . . . . 5 billion more of solid growth Potential for 3,000 MW of owned capacity Capacity price increases Sales growth up more than % per year . . . . opportunity for additional organic growth. 27
  28. INVESTOR MEETINGS – Cms Energy – slide 28
    Whats NOT in the Plan UPSIDE INVESTMENT OPPORTUNITIES . . . . 2015-2024 Opportunity Level 10-Year Plan Amount (bils) Generation capacity 3 Gas conversions & expansion 1 Grid modernization 1 20+ Billion 15.5 Billion Total…
  29. INVESTOR MEETINGS – Cms Energy – slide 29
    Whats NOT in the Plan UPSIDE CAPACITY OPPORTUNITIES . . . . Capacity Growth Over Next Ten Years MW 11,000 10,000 PPAs Expire 9,400 MW PPA 8,600 MW 1,240 MW 580 PPA 2,600 780 MW 7,500 capacity Owned 30% 8,820 800 MW 410…
  30. INVESTOR MEETINGS – Cms Energy – slide 30
    Whats NOT in the Plan NEW CAPACITY OPPORTUNITIES . . . . Full Year Impact Replace PPA With New Build Customer Bill Investor (mils) (EPS) Upside: 1,000 MW of Capacity Options PPAs expire - 325 0 Add 1,000 MW + 325 +5 Build -…
  31. INVESTOR MEETINGS – Cms Energy – slide 31
    Whats NOT in the Plan UPSIDE CAPACITY PRICE INCREASES . . . . Was Now Future Scenarios (mils) (mils) (mils) +40 55 +20 35 15 5 Capacity price < 0.50 2.00 4.50 7.50 ( kW per (Market) (Market) (CONE) month) . . . .…
  32. INVESTOR MEETINGS – Cms Energy – slide 32
    Whats NOT in the Plan MICHIGANS RECOVERY . . . . Gross Domestic Product 2010 through 2013 Grand Rapids 15.3% WA ND Top 10% of All Cities MT 8.8 54.9 11.6 MN 11.5 Michigan ME SD OR ID 11.3 WI Top 10 VT 1.7 17.3 5.5 WY 7.4…
  33. INVESTOR MEETINGS – Cms Energy – slide 33
    Whats NOT in the Plan SALES GROWTH . . . . In the News Annual Electric Salesa Industrial Total Kent County [Grand Rapids] leads nations 8.7% largest counties in post-recession employment gains -- Grand Rapids Press 5.0%…
  34. INVESTOR MEETINGS – Cms Energy – slide 34
    Whats NOT in the Plan ECONOMIC GROWTH . . . . Examples of New Business Industries Electric Gas Combination MW Announcement Announcement Auto 50 Plasan Carbon Composites Dicastal North America, Inc. Food 7 High performance auto Worlds…
  35. INVESTOR MEETINGS – Cms Energy – slide 35
    How Do We Do It . . . . Capital investment catch-up No big bets Organic growth Self-funded Premier cost reductions and reinvestment Strong Energy Law; Constructive rate making Conservative planning Customer passion . . . .…
  36. INVESTOR MEETINGS – Cms Energy – slide 36
    How Do We Do It O&M COST CONTROL . . . . Average Annual O&M Change +6% Peers PeersActual/Plan Actual/Plan +2% +2% Peers Peers Peers CMS +1% CMS CMS CMS Excluding CMS CMS Catastrophic December -1% Storm -2% -3% -3% -3%…
  37. INVESTOR MEETINGS – Cms Energy – slide 37
    How Do We Do It O&M COST SAVINGS . . . . O&M Trend vs Peers O&M Cost Savings 2014 2014 0 50% & 2015 2018 (mils) (mils) 6% per year 0 Peers Attrition - 35 - 75 0 2% per year Productivity (Coal Gas) - 35 - 50 0 Pole Top…
  38. INVESTOR MEETINGS – Cms Energy – slide 38
    How Do We Do It O&M COST REDUCTIONS . . . . -3% -3% Amount 1,080 +5% (mils) 1,060 1060 1,040 +9% 1,020 1,000 980 -8% 960 940 920 -12% 900 880 860 840 2013 Cost Reinvestment 2014 Benefits Cost 2015 Reductions…
  39. INVESTOR MEETINGS – Cms Energy – slide 39
    How Do We Do It REINVESTMENT HELPS CUSTOMERS . . . . a Annual EPS Growth Adjusted EPS 2012 2013 2014 (non-GAAP) 14% CMS EPS Growth Before Reinvestment CMS 2014 CMS 7% CMS 7% 7% 3% 2015 1.45 Peers _____ a Adjusted EPS…
  40. INVESTOR MEETINGS – Cms Energy – slide 40
    How Do We Do It 2015 GAS AND ELECTRIC RATE CASES . . . . 2014 2015 2016 Our View GAS Filed 88 M 7/01 Settled 45 M A) Settled 45 million B) 10.3% ROE A) A) Jackson Plant in Jackson Plant Classic 7 Decommissioned rate…
  41. INVESTOR MEETINGS – Cms Energy – slide 41
    How Do We Do It EXPERIENCED POLICY MAKERS . . . . Governor Rick Snyder Commission Powering Michigans John Quackenbush (R), Comeback Chairman Term Ends: July 2, 2017 Consistent Sally Talberg (I) Term Ends: Energy Committee…
  42. INVESTOR MEETINGS – Cms Energy – slide 42
    How Do We Do It 2015 MICHIGAN ENERGY LAW . . . . Adaptability Reliability Upside RPS Expansion Affordability ROA Elimination Environmental protection 10% renewables by 2015 Energy efficiency 2015 Energy Timeline standards…
  43. INVESTOR MEETINGS – Cms Energy – slide 43
    What Makes Us Different . . . . Competitive electric residential bills Improving electric industrial rates Rapidly improving customer satisfaction Clean, reliable energy Carbon emission levels below implied EPA target . . . .…
  44. INVESTOR MEETINGS – Cms Energy – slide 44
    What Makes Us Different ELECTRIC CUSTOMER PRICES . . . . Residential Bills Industrial Rates Worse Worse 20 % 30 % 26% 21% 20 Rates & 10 Fuel 13% Rates & 10 Design 7% 3% National Avg Midwest Avg 0 0 (5)% -10 Policy or…
  45. INVESTOR MEETINGS – Cms Energy – slide 45
    What Makes Us Different CUSTOMER SATISFACTION . . . . Electric Gas 2 1st Quartile 3 1st Quartile 2nd Quartile 2nd Quartile 6 9 3rd Quartile 3rd Quartile 4th Quartile 4th Quartile Present Present 2010 2012 2014 Rank 2016…
  46. INVESTOR MEETINGS – Cms Energy – slide 46
    What Makes Us Different CONSUMERS APPEARS . . . . Carbon Tonnage Reduction Million Tons of CO2 (Preliminary) 25 2005 Baseline 23 21 Clean Power Plan 19 Implied EPA Target 17 Consumers Energy Projected 15 emission level…
  47. INVESTOR MEETINGS – Cms Energy – slide 47
    What Makes Us Different SINCE WE MET . . . . 2014 A Year Ago Actual a EPS Growth 5% to 7% 7% Dividend Growth 5% to 7% 7.4% O&M Cost Savings Down 2% Down 3% Capital Investment (bils) 1.6 1.7 Electric Sales - Industrial Up…
  48. INVESTOR MEETINGS – Cms Energy – slide 48
    What Makes Us Different OPERATING CASH FLOW GROWTH . . . . Amount Up 0.5 Billion (bils) Gross operating cash flowa 2.5 up 0.1 billion per year 2.4 2.2 2.1 2.0 2.0 1.9 Interest, working 1.8 capital and taxes 1.55 1.5 Pct of…
  49. INVESTOR MEETINGS – Cms Energy – slide 49
    What Makes Us Different A Passion for Customers AND Investors . . . . Future Shines Bright Sustainable Future Growth 3.50 EPS a Past Next 5 Dividend +5% to +7% Performance Years Investment (bils) 6.4 7.6 (2010-2014) Capacity Op…
  50. INVESTOR MEETINGS – Cms Energy – slide 50
    Appendix
  51. INVESTOR MEETINGS – Cms Energy – slide 51
    Mindset . . . . 10-Year Actual 1.77 1.89 7% CAGR a EPS 1.66 1.86 Dividend Peers 4% 1.55 1.45 1.36 b 1.26 7% 1.21 1.16 6% 1.08 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…
  52. INVESTOR MEETINGS – Cms Energy – slide 52
    Credit Ratings . . . . Scale Reflects S&P / S&P Moodys Fitch Fitch Moodys (Dec. 14) (Jan. 14) (Feb. 15) A+ A1 Consistent A A2 Consumers Performance Secured A- BBB+ A3 Baa1 Less Risk BBB Baa2 BBB- Baa3 Customer Focus BB+…
  53. INVESTOR MEETINGS – Cms Energy – slide 53
    Generation Strategy: New Supply Sources . . . . Levelized cost of new build (/kWh) New Build 25 Consumers Energy Sources 22 20 15 15 12 11 Back 10 10 -up 8 7 6 Back 7 6 -up 6 9 5.5 5 5 5 Cross Winds 6 Big 5…
  54. INVESTOR MEETINGS – Cms Energy – slide 54
    MISO Zone 7 Capacity . . . . As of October 2014 MISO Zones (in GW) 25 3 22 Reserves 3 7 Demand 22 2016 Resources 2016 Resource Expected Shortfall _____ Requirement Source: MISO . . . . shortfall expected to be 3,000 MW…
  55. INVESTOR MEETINGS – Cms Energy – slide 55
    2015 Sensitivities . . . . 2015 Impact Status Sensitivity EPS OCF (mils) Sales a Electric (37,847 GWh) + 1% + 0.05 + 20 Gas (294.1 Bcf) + 5 + 0.07 + 30 Gas prices (NYMEX) + 50 0 55 + + ROE (authorized) Electric (10.3%) + 10…
  56. INVESTOR MEETINGS – Cms Energy – slide 56
    2015 Guidance . . . . Adjusted EPS (non-GAAP) Utility Electric 1.50 - 1.52 Gas 0.59 - 0.60 Total Utility 2.09 - 2.12 Enterprises 0.04 Parent and other (0.27) Total EPS 1.86 - 1.89 +5% to +7% Operating cash flow (GAAP) (mils)…
  57. INVESTOR MEETINGS – Cms Energy – slide 57
    Customer-Focused O&M Reinvestment . . . . Icy Late December Adjusted EPS (non-GAAP) O&M B/(W) Than Forecast (mils) 2013 +13 Storm(total 50 M) Insurance (37) 16 Lower contributions 9 2012 Hot Sales-weather 12 Summer Total 0…
  58. INVESTOR MEETINGS – Cms Energy – slide 58
    Capacity Diversity . . . . Nuclear Oil 8% 6% Renewables 9% Coal 34% Pumped Storage 2014 11% Nuclear Gas Nuclear Oil 6% 32% 8% 8% Oil 6% Renewables Purchases 3% 3% Coal 24% Pumped Coal Renewables Storage 41% 10%…
  59. INVESTOR MEETINGS – Cms Energy – slide 59
    Capital Expenditures 2015-2019 2020-2024 2015-2024 2015 2016 2017 2018 2019 Subtotal Subtotal Total (mils) (mils) (mils) (mils) (mils) (mils) (mils) (mils) New Generation (includes Renewables) 70 224 52 64 134 544 612 1,156…
  60. INVESTOR MEETINGS – Cms Energy – slide 60
    GAAP Reconciliation
  61. INVESTOR MEETINGS – Cms Energy – slide 61
    CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Reported earnings (loss) per share - GAAP (0.30) 0.64 (0.44) (0.41) (1.02) 1.20 0.91 1.28…
  62. INVESTOR MEETINGS – Cms Energy – slide 62
    CMS Energy Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities (unaudited) (mils) 2014 2015 2016 2017 2018 2019 Consumers Operating Income + Depreciation & Amortization 1,813 1,885 1,955 2,081 2,194 2,358…

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