Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - CMS ENERGY CORP | d589970d8k.htm |
Exhibit 99.1
Investor Meetings
August 29, 2013
Cross WindsREnergy Park Consumers Smart Energy Program
Gas Combined Cycle Plant
This presentation is made as of the date hereof and contains “forward-looking statements” as defined in Rule 3b-6 of the Securities Exchange Act of 1934, Rule 175 of the Securities Act of 1933, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. All forward-looking statements should be considered in the context of the risk and other factors detailed from time to time in CMS Energy’s and Consumers Energy’s Securities and Exchange Commission filings . Forward-looking statements should be read in conjunction with “FORWARD-LOOKING STATEMENTS AND INFORMATION” and “ RISK FACTORS ” sections of CMS Energy’s and Consumers Energy’s Form 10-K for the year ended December 31, 2012 and as updated in subsequent 10-Qs. CMS Energy’s and Consumers Energy’s “FORWARD-LOOKING STATEMENTS AND INFORMATION” and “RISK FACTORS” sections are incorporated herein by reference and discuss important factors that could CMS Energy’s and Consumers Energy’s results to differ materially from those anticipated in such statements. CMS Energy and Consumers Energy undertake no obligation to update any of the information presented herein to reflect facts, events or circumstances after the date hereof.
The presentation also includes non-GAAP measures when describing CMS Energy’s s results of operations and financial performance. A reconciliation of each of these measures to the most directly comparable GAAP measure is included in the appendix and posted on our website at www.cmsenergy.com.
CMS Energy provides historical financial results on both a reported (Generally Accepted Accounting Principles) and adjusted (non-GAAP) basis and provides forward-looking guidance on an adjusted basis. Management views adjusted earnings as a key measure of the company’s present operating financial performance, unaffected by discontinued operations, asset sales, impairments, regulatory items from prior years, or other items. These items have the potential to impact, favorably or unfavorably, the company’s reported earnings in future periods. Because the company is not able to estimate the impact of these matters, the company is not providing a reconciliation to the comparable future period reported earnings .
2
CMS Business Model . . . .
EPSa Results
11th year of top performance
7%
$1.55 5% Needed investment:
Consistent financial $1.45 Customer driven performance $1.36
Ten- year visibility
$1.26
Constructive regulation
$1.21 Fair and timely
regulation Self-funded
$1.08
$0.96 Utility Customer Consistent high growth:
$0.90 investment value EPS & dividend
Operating cash flow
$0.84 $0.81 Safe, excellent operations
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E Future
a
Adjusted EPS (non-GAAP) excluding MTM in 2004-2006
b
$1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock
. . . . . has allowed CMS to execute its strategy and deliver “Best in Class” results.
3
CMS Manages its Work . . . .
2012 2013
Adjusted EPS Adjusted EPS Reinvestment (non-GAAP ) (non-GAAP )
First Half Second Half Reliability complete 6¢
Gas case deferred 3 +13¢ +14¢ 9Reliability & other 5 Total Reinvestment 14¢
+7¢ Hot
Electric Weather
Summer
Guidance Gas Weather
$1.52 to $1.55 $1.55 Warm
Winter Better Than Plan
Sales 4¢
Health care 2
Financing & other 1 Net Benefits 7¢
-13¢
. . . . delivering the high side of performance for customers and owners.
4
Michigan’s Constructive Regulation . . . .
New Commissioner Commission
Previous Experience
Public Sector Consultants
Provided support for 2008 energy law
Provided research for Appendix A
Michigan Public Service Commission
Michigan Department p of
Environmental Quality John Quackenbush (R), Chairman
Public Utility Commission of Texas Term Ends: July 2, 2017
Education
BS - Michigan State University
MPA - University of Texas-Austin
Sally Talberg (I) Greg White (I) Term Ends: July 2, 2019 Term Ends: July 2, 2015
. . . . strong law on the books supported by a quality commission.
5
2008 Law . . . .
Progress Ahead of Plan
Energy Efficiency 2008 2015
Goal Electric 4.1% 5.5%
Gas 3.3% 3.85%
Renewable Energy 8% 10%
. . . . . established Michigan’s energy priorities.
6
2008 Law . . . .
Regulatory Lag Authorized ROE
Months (Months to Order) (CMS vs. Peers)
12 10.8%
10 Peers Consumers
10.6 Energy
Small Michigan Premium Electric
8
10.4
Michigan
6
File-and-implement 6 months 10.2
4
10 2
Peers
2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013
Source: SNL RRA, 2013 YTD, Electric lag and ROE
. . . . provided fair and timely regulation.
7
Trend of O&M Cost Savings . . . .
Percent Change 25%
0
Inflation
-21% Cost
Reductions
Prior Plan
-9%
Accelerated Cost Reductions -6%
New Plan
-15%
-25%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Lines smoothed for illustrative purposes
. . . . . accelerated; funding investment and reducing risk.
8
Strong Customer Focus – Cost Control . . . .
Average O&M Annual Change Examples of Cost Reductions
7% Amount Avg. Past (annual average) (mils)
Utilities
Western coal $250
2% Inflation 2% Workforce restructuring 70 Avg. -8% -3% and benefit plans
Utilities
SAP 40 Consumers Productivity 50
-2% -1% 0.5%
Reinvested
Future (est. annual average)
-6%
Classic 7 mothballed $20
Productivity 10
Benefit plans 30
Consumers Smart Energy 10
2006-2012 2012 2013E 2013-2017E
Annual Average 2012 Base Total Future Savings $70
. . . . holds down rates and helps fund better system reliability .
9
Strong Customer Focus – Cost Control . . . .
Average O&M Annual Change Examples of Cost Reductions
7% Annual Avg. Future (mils) Utilities Classic 7 mothballed $20 Inflation 2% Productivity 10
2% Benefit plans 30
Avg . -10% -4%
Utilities Consumers Smart Energy 10
Consumers
-2% 0.5%
-2% Additional cost controls
Reinvested
Retiree health care $50
-6%
Tax benefits (COR) 70
Cross Winds® (PTC) 10 -8% Low cost financing 8
2006-2012 2012 2013E 2013-2017E Annual Reductions $208 Annual Average 2012 Base
. . . . has been enhanced and accelerated.
10
New Cost Savings . . . .
Gas Rate Case Avoided a Electric Rate Case Avoided a
$100 Benefits
$49 Tax
Benefits
Tax/Other
Cross WindsR
$0
2013 2014 2014
a Until 2015 test year
. . . . fund elimination of next gas and electric cases!
11
Rate Case Elimination . . . .
2013 2014 2015 2016 ELECTRIC Avoid
File rate annual case On Track
Gas Plant New Michigan
CON filed July 12 Energy Policy Securitization Air Permit approved July 26
Tax CON
Case Tax Accounting Request filed August 2 GAS Securitization filing
File annual Avoid September rate case
Base Ratesa No Increase < Inflation ROE 10.3% 10.3% 10.3%
EPS 5% - 7% 5% - 7% 5% - 7% 5% -5% 7%- 7% 2013 2014 2015 2016
a Includes surcharges
. . . . underway .
12
Enhanced Near-Term Strategy . . . .
Prior New
Rate case filings Annual Avoid until 2015 (test year)
Lowers
ROE Subject to review 10.3% into 2015 Risk Customer base rate increases < 2% 0% thru 2014, < 2% after
Helps
Investment (2013-17 ) $7 billion $7 billion Customers
(“Free” 700 MW GCC)
O&M costs (2013-17 ) -1% -2%
Sustains
EPS, OCF & dividend growth 5% - 7% 5% - 7% Growth . . . . . allows CMS to deliver even more benefits to customers and shareowners.
13
Michigan Economy Performance . . . .
Gross Domestic Product – 2010 through 2012
WA 5th
MT ND
8.1 31.0 Best 6.7 MN
8.2 ME
SD 11%
OR WI 2.7 ID 4.7
13.8 VT NH
2.1 WY 5.9
MI NY 8.2 IA 6.1
(3.5) NE 6.6 MA
11.0 6.6
7.4 7.9 IL PA
NV RI 5.9 IN OH CT
UT CO 5.9 NJ
2.9 KS 2.4
12.3 7.3 1.0 8.7 6.2 MO MD 3.1 7.3 WV
4.3 KY VA DE 8.7 6.1 7.5 CA 8.6 1.4 OK TN
5.0 8.4 NC DC 4.7 AR 5.7 AZ NM 5.6 4.6 4.2 SC
0.7 MS
GA 7.6 3.2 AL
TX LA 5.0 5.7 3. 0 4.6
FL
HI AK 3.6 Highest quintile 6.9 1.2 Fourth quintile Third quintile
U.S. Total = 6.7% Second quintile
Lowest quintile Source: Sou ce U.S. Department epa t e t o of Commerce Co e ce – bea.go gov,, real ea GDP 2005 chained dollars, 2012 advance and d 2009 – 2011 revised, 6/6/13
. . . . among the best in the nation .
14
Central West Michigan . . . .
Employment New or Expanding p g Businesses
2013 Announcements
Thousands Statewide Numbers
980 Up 7% since Projects 216
Investment $3.3B
Sep -09 229 Projects Jobs 21,608
$3 Billion 22K Jobs
955
50,000 , jobs
930
JR Automation
Alticor Magna Undercar 905 Challenge Center Pulverdryer
Dieomatic Dart Container Denso Getman Mol-Son 880 Martinre Summit Polymers
2003 2005 2007 2009 2011 2013
Source: http://www.michiganadvantage.org/Projects/ & http://milmi.org/
. . . . economy growing faster than many.
15
Ten-Year Capital Investment Plan . . . .
Clean Power Capacity Reliability Infrastructure
$3 Billion $2 Billion $3.5 Billion $4 Billion
Environmental New gas generation Consumers Smart Energy gy Gas distribution
Renewable energy Ludington Pumped Storage Main replacements Propane switching
Gas conversions Pipeline replacements Electric reliability Electric distribution
. . . . in customer projects (none “bet the Company”) represents 80% of $15 billion plan.
16
Capital Investment Plan . . . .
2013 – 2017 Plan Opportunity Level
Faster Smart Energy $10
< $7 Billion Pipe replacements
Pole replacements Billion More gas generation
Customer base rates <2% >4%
. . . . at sustainable and affordable pace, in low-risk, “bite size size” projects.
17
Capacity Needed . . . .
Installed Capacity Excl Classic 7 Classic 7
MW New Gas Plant Peak Demand with Reserve Marging 10,500,
9,500
8,500 Market Purchases
7,500 6,500 5,500
4,500
2013 2014 2015 2016 2017 2018
. . . . to meet reserve requirements .
18
New Gas Plant CON Filed . . . .
CON filed July 12th
Expected decision 2012 2013 2014 2015 2016 2017
within nine months
Reliability to be Air Permit Approved maintained for Submitted
July 25
customers
Capacity Certificate
needed to of
Filed 7/12 Approval
support future Necessity energy needs
Investment in Project
Award Major Full Notice Commercial Michigan to provide Contracts to Proceed Operation
jobs and economic
benefits Investment (mils) $6 $106 $345 $253 $40
. . . . progress continues as spending ramps -up post approvals .
19
Near-Term Catalysts . . . .
Catalysts Progress
1. Constructive regulation New commissioner appointed, Sally Talberg
2. Rate cases Avoided electric and gas rate cases to 2015 test year 3. Cost of removal Tax order anticipated by October 1st 4. Securitization To be filed this fall 5. Gas plant CON CON filed 7/12, order by early April 2014 6. Capital investment 10-year visibility, $15 billion investment plan 7. Self-funded growth NOLs and tax credits avoid need for block equity
. . . . progress continues, more opportunities ahead.
20
Key Takeaways . . . .
EPS a Growth
$1.70
7%
+7% Growth
5% 5% -7% real growth
+7%
+8% Dividend growth in line with earnings
+12%
Gross operating cash flow
+4%4
up $0.1 billion per year
+12%
Actual EPS = 7% Transparent
+7%
+11% Yield ~4% Cost reductions
Low rates
Needed investment
Actual EPS = 8% Ten-year investment plan Yield ~3% 3% Constructive regulatory g y climate
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
a Adjusted EPS (non-GAAP) excluding MTM in 2004-2006
. . . . distinguish CMS favorably with customers and owners.
21
APPENDIX
Ludington Upgrade to 2,200 MW . . . .
Increase capacity by 15%
Increase efficiency by 5%
Operate for 30 years before next major overhaul
$800 million total investment over 10 years
– $200 million upgrade
– $600 million maintenance
Consumers Energy share $400 million
. . . . underway .
23
Michigan Preparing . . . .
Energy Topics “Appendix A” Timeline 2013
Renewable energy Seven public forums, Jan-Apr Company submitted answers
Electric choice
May-Jun Analyze data
Energy efficiency
Draft reports, public
Sep -Nov
feedback
Additional areas
Length of cases, better process Nov Final reports Capacity for future energy needs
Governor makes policy
Future
recommendations
Source: michigan g .gov/energy
. . . . to improve on 2008 Law.
24
GAAP RECONCILIATION
CMS ENERGY CORPORATION
Earnings Per Share By Year GAAP Reconciliation
(Unaudited)
| 2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
|||||||||||||||||||||||||||||||
| Reported earnings (loss) per share - GAAP |
($ | 0.30 | ) | $ | 0.64 | ($ | 0.44 | ) | ($ | 0.41 | ) | ($ | 1.02 | ) | $ | 1.20 | $ | 0.91 | $ | 1.28 | $ | 1.58 | $ | 1.42 | ||||||||||||||||
| After-tax items: |
||||||||||||||||||||||||||||||||||||||||
| Electric and gas utility |
0.21 | (0.39 | ) | — | — | (0.07 | ) | 0.05 | 0.33 | 0.03 | 0.00 | 0.17 | ||||||||||||||||||||||||||||
| Enterprises |
0.74 | 0.62 | 0.04 | (0.02 | ) | 1.25 | (0.02 | ) | 0.09 | (0.03 | ) | (0.11 | ) | (0.01 | ) | |||||||||||||||||||||||||
| Corporate interest and other |
0.16 | (0.03 | ) | 0.04 | 0.27 | (0.32 | ) | (0.02 | ) | 0.01 | * | (0.01 | ) | * | ||||||||||||||||||||||||||
| Discontinued operations (income) loss |
(0.16 | ) | 0.02 | (0.07 | ) | (0.03 | ) | 0.40 | ( | *) | (0.08 | ) | 0.08 | (0.01 | ) | (0.03 | ) | |||||||||||||||||||||||
| Asset impairment charges, net |
— | — | 1.82 | 0.76 | 0.60 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Cumulative accounting changes |
0.16 | 0.01 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Adjusted earnings per share, including MTM - non-GAAP |
$ | 0.81 | $ | 0.87 | $ | 1.39 | $ | 0.57 | $ | 0.84 | $ | 1.21 | (a) | $ | 1.26 | $ | 1.36 | $ | 1.45 | $ | 1.55 | |||||||||||||||||||
| Mark-to-market impacts |
0.03 | (0.43 | ) | 0.51 | ||||||||||||||||||||||||||||||||||||
| Adjusted earnings per share, excluding MTM - non-GAAP |
NA | $ | 0.90 | $ | 0.96 | $ | 1.08 | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||||||
| * | Less than $500 thousand or $0.01 per share. |
| (a) | $1.25 excluding discontinued Exeter operations and accounting changes related to convertible debt and restricted stock. |
2003-12 EPS