What CMS Energy (CMS) Said on Its Q3 Earnings Call

Key Points

• CMS Energy reaffirmed its earnings outlook, targeting 2026 adjusted EPS of $3.83–$3.90 and 2027 EPS of $4.08–$4.17, while remaining confident it can reach the high end of the 2026 range.
• NorthStar Clean Energy’s restructuring is advancing: more than 35% of assets are under signed agreements or have closed, and CMS expects completion by year-end 2026. The move is expected to reduce parent funding needs by more than $500 million and shift growth toward regulated utility investments.
• CMS outlined a potential $27 billion investment opportunity through 2040, including clean energy, battery storage and natural-gas generation, while reporting 745 megawatts of contracted new load driven mainly by manufacturing and semiconductor customers.

CMS Energy NYSE: CMS reaffirmed its 2026 and 2027 earnings outlook, citing utility execution, regulatory progress and an ongoing restructuring of NorthStar Clean Energy that the company expects to complete by year-end.

For the first nine months of 2026, CMS reported adjusted net income of $915 million, or $2.95 per share, excluding NorthStar restructuring activities. The result was $0.29 per share above the prior-year period, according to Executive Vice President and Chief Financial Officer Sri Maddipati.

The company reaffirmed 2026 adjusted earnings-per-share guidance of $3.83 to $3.90 and said it remains confident in delivering toward the high end of that range. CMS also reaffirmed 2027 guidance of $4.08 to $4.17 per share. Long term, management continues to target adjusted EPS growth of 6% to 8%, toward the upper end of the range.

NorthStar Restructuring Advances

President and Chief Executive Officer Garrick Rochow said more than 35% of NorthStar Clean Energy assets are under signed agreements or have closed, while the majority of the remaining assets are in exclusivity with prospective buyers. CMS expects to finish the restructuring by the end of 2026.

The company plans to retain Dearborn Industrial Generation, several small gas peaking facilities and four commercial solar projects. Rochow said those assets generate strong cash flow and support CMS's long-term growth strategy.

CMS expects the restructuring to reduce parent funding needs by more than $500 million within its current five-year plan, directing funds toward regulated utility investments. The company has said the move will result in nearly 100% regulated utility earnings growth after 2027.

Maddipati said NorthStar has outperformed its earlier guidance as some projects reached commercial operation. However, he noted that part of the benefit reflects tax timing and is expected to reverse in the fourth quarter. The expected effects of asset sales and tax-equity rolloffs have already been incorporated into CMS's 2027 guidance, he said.

Resource Plan Outlines $27 Billion Opportunity

In September, CMS filed an Integrated Resource Plan outlining its strategy to meet Michigan clean-energy requirements and maintain electric reliability through 2040. The plan includes 15.8 gigawatts of clean-energy resources, 4.1 gigawatts of battery storage and 1.4 gigawatts of new simple-cycle natural-gas generation intended to replace aging Karn 3 and 4 oil- and gas-fired peaking units.

Rochow said the plan represents roughly $27 billion of potential investment in clean energy, battery storage and gas generation. It also includes energy-waste-reduction and virtual-power-plant options.

The filing assumes a financial compensation mechanism, or FCM, associated with power purchase agreements that would provide approximately $125 million beginning in 2031 and grow to about $195 million by 2040, based on a 50/50 ownership split. CMS said it recently signed a 680-megawatt clean-energy PPA included in the IRP.

Responding to questions about Michigan policy, Rochow said CMS does not expect the FCM to be eliminated. He described recent Michigan Public Service Commission discussion as a potential refinement focused on certain PURPA contracts and fully depreciated assets, rather than a broader removal of the mechanism. Maddipati added that the company's FCM forecast does not include the hydroelectric assets referenced by the commission.

Load Growth and Data-Center Development

CMS said it has signed contracts representing approximately 745 megawatts of new load in its service territory and has energized roughly 450 megawatts. Management said the growth is primarily tied to manufacturing and semiconductor customers and supports its forecast for 2% to 3% annual load growth during the current five-year planning period.

The company said the 745 megawatts does not include a large data-center agreement announced earlier this year. Rochow said that project is progressing through zoning processes at multiple locations and that he expects further movement after Michigan's elections.

Management said its current capital plan does not yet include capital spending related to the large data center, although the signed agreement is included in the IRP as required. Maddipati said the company will consider incorporating related capital spending as conditions precedent, including siting, are satisfied. The customer is not expected to begin energizing until the latter half of the existing plan period, he said.

CMS reiterated that it does not plan to build generation speculatively. However, Maddipati said that if load growth continues to increase, a combined-cycle gas plant currently contemplated around 2040 in the IRP could need to be moved forward.

Regulatory and Financing Updates

CMS highlighted a Michigan commission order in its gas rate case approving a $139 million increase, about 60% of its final request, along with a 9.8% return on equity and a 50% equity ratio.

In October, the company filed an updated electric rate case seeking a $443 million revenue increase, a 10.25% return on equity and a 51.75% equity ratio. Commission staff recommended a $265 million increase, equal to 60% of CMS's revised request, a 9.85% return on equity and a 50% equity ratio. CMS expects a proposal for decision in late January and a final order by early April.

The company also said staff supported recovery of its 2025 storm deferral within the electric case, while the commission approved deferral of first-quarter 2026 storm costs in August.

During the third quarter, CMS raised $900 million in utility first-mortgage bonds, which Maddipati said completed most of the year's planned financing. At the parent level, the company completed $495 million of equity issuance. CMS has approximately $625 million of parent debt maturing next year and may consider refinancing some of that amount early, Maddipati said. Nearly all of the company's debt is fixed rate.

About CMS Energy (NYSE:CMS)

CMS Energy Corporation is an energy company headquartered in Jackson, Michigan. Through its principal subsidiary, Consumers Energy, the company provides electric and natural gas utility services to residential, commercial and industrial customers throughout Michigan.

Consumers Energy operates and maintains electric generation, transmission and distribution infrastructure, as well as natural gas storage and distribution systems. CMS Energy also conducts independent power generation and energy-related activities through its businesses focused on renewable energy, natural gas and other power projects.

Founded in 1987 as a holding company, CMS Energy traces its utility operations to Consumers Power Company, which was established in Michigan in the late 19th century.

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