The paragraph is from a CMS Energy conference call discussing their 2024 third-quarter results. The operator begins by noting the availability of the earnings release and presentation on the CMS Energy website. The call will include a presentation followed by a Q&A session, and it's being recorded for rebroadcast. Jason Shore, Treasurer and Vice President of Investor Relations, introduces key executives Garrick Rochow and Rejji Hayes, mentioning that forward-looking statements and non-GAAP measures are included in the presentation, with additional details available in their SEC filings. Garrick Rochow then emphasizes CMS Energy's consistent financial performance driven by a clear investment strategy and disciplined execution.

The paragraph highlights the benefits of Michigan's clean energy law for CMS Energy, emphasizing its role in supporting a 6% to 8% EPS growth. The law facilitates the transition from coal to renewable energy, providing investment certainty and flexibility for owning assets or using power purchase agreements. A unique feature allows financial compensation on these agreements, alongside incentives for battery storage and energy efficiency. While much of this law isn't in the current investment plan, it offers a significant advantage. The law helps replace outdated agreements with cost-effective renewable options and supports filing a 20-year renewable energy plan detailing future investments. Overall, the law benefits customers, the planet, and investors by enabling cost-effective clean energy solutions.

The paragraph discusses a $7 billion, five-year plan by a utility company to enhance electric reliability and resiliency. By transitioning to second quartile reliability performance or SAIDI, the plan aims to address frequent storms and high wind speeds in Michigan proactively. It includes undergrounding distribution wires, upgrading poles, and investing in grid technology for automation and machine learning. The plan also features a comprehensive wildfire mitigation strategy and aligns with Electric Power Research Institute best practices. Supported by the Michigan Public Service Commission, these proactive investments are cost-effective compared to reactive measures and will boost distribution system performance to meet customer expectations as electrification increases.

The paragraph highlights the positive economic development in Michigan, driven by a manufacturing renaissance supported by onshoring and favorable legislation like the CHIPS and Science Act. This growth is characterized by increased job opportunities, new businesses, and substantial investments, such as Corning's $900 million expansion bringing 1,100 jobs. The state is seeing diversified manufacturing growth and a promising economic development pipeline, with significant energy demand expected from expansions or relocations. The company's renewable energy plans will align with this growth, as they continue to attract business investments to the state and maintain a strong customer focus. The paragraph concludes by referencing the regulatory calendar for the year.

The company is in a strong financial position following positive regulatory outcomes, including a constructive March electric rate order and a gas rate case settlement. Gas rates became effective on October 1, and a new gas rate case filing is planned for December. The current electric rate case supports further infrastructure investments, and while a fully adjudicated order might be necessary for optimal storm recovery outcomes, the company is confident in its filings and investment plans. For the first nine months, adjusted earnings per share increased by $0.41 to $2.47 compared to the same period in 2023. The company reaffirms its 2024 financial guidance of $3.29 to $3.35 per share, aiming towards the high end, and provides a 2025 guidance range of $3.52 to $3.58 per share, indicating 6% to 8% growth. The guidance will be rebased on actual results during the Q4 call.

The paragraph discusses the company's financial performance for the first nine months of 2024, highlighting a favorable comparison to 2023 due to higher rate relief and strong performance at Northstar. Adjusted net income was $736 million or $2.47 per share, with positive contributions from favorable weather in the third quarter and constructive electric rate orders. Cost efficiencies in storm response efforts also benefited the company's financial results, despite some adverse weather in August. Overall, the company's strategic rate management and operational efficiencies have driven improved earnings.

The paragraph outlines that despite a 10% increase in outages in 2024 compared to the previous year, the company has reduced restoration costs per interruption by over 10% and restored services more quickly. This success is attributed to the CE Way, a lean operating system enhancing daily productivity, benefiting customers and providing a $0.02 per share positive variance over 2023. The first nine months showed a $0.16 per share positive variance from solid operations and tax benefits. Predictions for the year's final quarter include a $0.14 per share positive variance from mild weather and $0.09 from favorable regulatory outcomes, including an electric rate order and gas rate settlement. However, there is an expected $0.15 per share negative variance due to higher-than-budgeted costs, particularly in insurance and IT.

The paragraph discusses the company's financial outlook and plans. It notes a significant negative variance due to the absence of one-time measures and conservative assumptions, impacting share values by $0.25 to $0.31 negatively. Despite this, the company is confident in achieving its 2024 financial goals and reaffirms its full-year guidance, leaning towards the higher end. Additionally, it highlights maintaining a strong balance sheet with reaffirmed S&P credit ratings and plans to manage finances to preserve an investment-grade rating. The company has completed its planned financings for the year favorably and has increased its 2024 financings slightly in response to regulatory outcomes, remaining open to early addressing of 2025 financing needs if advantageous.

The paragraph is from a conference call involving CMS Energy, where Garrick Rochow and Shar Pourreza from Guggenheim Partners discuss CMS Energy's financial strategy and potential growth in data center demand. Garrick emphasizes the company's conservative, opportunistic financing approach, and their dedication to maintaining financial and operational objectives, benefitting customers and investors. Shar Pourreza then asks about Michigan's growing data center environment and CMS Energy's capacity to handle new customer demand, particularly in Grand Rapids, given the interest from major companies.

In the paragraph, Garrick Rochow discusses the advantages of Michigan, particularly Grand Rapids, for data centers and manufacturing investments due to its temperate climate, robust fiber and electric infrastructure, and supportive clean energy laws. He highlights the region's growth in manufacturing and the efforts to accommodate the energy needs of data centers by adjusting tariff structures. Rochow mentions an existing ex-parte filing to transition data centers to a GPD rate, reflecting the cost to serve better and ensuring residential customers aren't subsidizing data centers. He emphasizes ongoing collaboration with the commission and progress in this area.

In the conversation, Garrick Rochow discusses the approval of an ex-parte filing and anticipates collaboration with the commission over the next six months to a year. Shar Pourreza then asks about the company's response to storm and resiliency audits and whether their current distribution plan supports their commitment to reducing outages. Garrick Rochow mentions that the Liberty audit, which assessed their storm response, suggests balanced support for necessary work and capital investments. He highlights the benefits of proactive over reactive measures, referencing their comprehensive five-year, $7 billion capital plan. Of this plan, $5.5 billion is already incorporated, providing opportunities for further integration of audit recommendations. They also briefly mention music bands Guns N' Roses and AC/DC before moving to the next questioner, Jeremy Tonet of JPMorgan.

In the paragraph, Garrick Rochow and Rejji Hayes discuss the performance and future outlook of Dearborn Industrial Generation (DIG) and the NorthStar business. Rochow highlights that DIG is vital to their earnings mix, with strength in both capacity and energy markets, exceeding expectations and supporting a projected EPS growth of 6% to 8%. Hayes adds a financial perspective, noting a historically high open margin and a robust market for capacity contracts, with prices now exceeding previous levels. The positive outlook is driven by reduced supply in Zone 7 due to retirements and increased demand.

In the paragraph, Garrick Rochow addresses Jeremy Tonet's inquiry about growth expectations, specifically regarding EPS (Earnings Per Share) growth. Rochow emphasizes the company's confidence in sustaining a 6% to 8% EPS growth due to various tailwinds and differentiators that provide visibility and assurance to investors. He highlights the company's consistent industry-leading financial performance over 21 years and the focus on quality earnings, meeting investor expectations by delivering reliable growth annually. Rochow also signals that Rejji may share additional commentary on the topic.

In the paragraph, Rejji Hayes discusses the long-term growth potential driven by capital investments and earning opportunities related to new energy laws, focusing on improving electric distribution infrastructure and gas business investments. These efforts aim to enhance reliability, resiliency, and safety, while also reducing methane emissions in light of upcoming regulations. Hayes expresses optimism about achieving a sustained growth rate of 6% to 8% for many years, mentioning the anticipation of updating their five-year plan in the fourth quarter. This information is followed by a brief exchange between Jeremy Tonet and Ross Fowler, who congratulates CMS on their strong quarterly performance.

The paragraph discusses the approach to meeting renewable energy and storage targets in the state. Garrick Rochow outlines two mechanisms to consider supply-type assets: the renewable energy plan to be filed in November, which will build on the 2021 integrated resource plan to meet renewable energy standards for 2030 and 2035, and the 2026 integrated resource plan that will focus on capacity mix and reliability, including more storage capacity. The need for storage may exceed legal references, influenced by potential tax incentives. Rejji Hayes and Ross Fowler then affirm the information provided.

The paragraph features a conversation between Rejji Hayes and Ross Fowler about the potential repeal of the Inflation Reduction Act (IRA) and its impact on tax credits. Rejji expresses skepticism about the likelihood of the IRA being repealed, citing the benefits it has provided to red states, making such a move economically questionable. He mentions a statistic that 75% of the benefits have gone to red states, suggesting that even with a Republican majority, repealing it would face significant discussions due to these benefits. Ross agrees with Rejji's analysis, and the conversation ends with a light-hearted note about Rejji needing more coffee.

The paragraph involves a discussion during a conference call where Ross Fowler questions Garrick Rochow about the strategy regarding capacity auctions, particularly in relation to MISO and PJM's changes. Rochow explains that their approach involves gradually incorporating positions over time as a de-risking strategy, aiming for predictable earnings through bilateral contracts. The conversation then shifts to Julien Dumoulin-Smith from Jefferies, who inquires about a notable swing in cost figures on a financial slide. Rochow had mentioned this in his prepared remarks, relating it to insurance and IT expenses, and Dumoulin-Smith seeks clarification on whether this involves any timing adjustments within the year.

In the paragraph, Rejji Hayes explains to Julien Dumoulin-Smith that some cost-related line items, such as insurance and IT-related expenses, have exceeded their budgeted levels for the year. To address this, the company uses cost reduction initiatives and countermeasures, and sometimes funds these expenses directly if countermeasures are insufficient. Hayes notes that factors like favorable Q3 weather have provided some contingency to cover these costs. Additionally, there are regulatory assets and liabilities related to EV programs causing budget overruns. Julien clarifies that instead of deferring these costs to 2025, the company is choosing to address them this year, which Rejji agrees with but clarifies it's not a pull-ahead strategy.

The paragraph discusses current costs being incurred that exceed budgeted amounts for the year, rather than anticipated costs for 2025. The company is using accumulated contingency funds to cover these excess expenses and update their 2024 forecast based on the current economic situation. Julien Dumoulin-Smith appreciates their efforts, and after transitioning to a new question, Travis Miller inquires about the Renewable Energy Plan (REP). Garrick Rochow explains that the REP will incorporate data center sales growth and manufacturing needs, building on the foundation of the 2021 Integrated Resource Plan (IRP) which aims for 8 gigawatts of solar energy. The 2021 IRP does not meet the desired renewable targets of 50% by 2030 and 60% by 2035.

The paragraph discusses the need for renewable energy development, divided into two tranches. The first tranche involves building renewables or agreeing on purchase power agreements (PPAs) with a financial compensation mechanism (FCM) to meet current commitments. The second tranche anticipates additional energy requirements due to economic development over the next 20 years, requiring more renewable assets. The mix is expected to include solar and wind energy. The paragraph also mentions integration into the renewable energy plan and the integrated resource plan (IRP), which address energy, capacity, and reliability. Rejji Hayes points out that only two projects, Goshen and Ford, are included in their current five-year plan out of several economic opportunities presented.

The paragraph discusses future opportunities and updates to a company's plans, emphasizing that some high-probability opportunities are not yet included in their current planning but are expected to materialize in the coming months. Discussions are underway about a Liberty audit and its implications on regulatory practices. The findings of the audit are expected to be integrated into a five-year reliability plan, enhancing the plan with opportunities for additional capital investments focused on improving reliability and service for customers. Additionally, performance-based ratemaking tied to reliability is anticipated, ensuring that these investments won't be delayed.

In the paragraph, Rejji Hayes addresses Michael Sullivan's question about future load growth and energy efficiency. The current five-year plan anticipates a 0.5% compound annual growth rate for electric load, factoring in energy waste reduction. Grossed-up, this could be viewed as 2.5% growth, but net of energy efficiency, it's 0.5%. Hayes mentions that the upcoming Renewable Energy Plan (REP) will indicate higher growth expectations, and further details will be provided in next year's Integrated Resource Plan (IRP) filing. While the company plans conservatively, they aim to realistically reflect market conditions in their rate proceedings.

The paragraph discusses the upward pressure on load growth assumptions due to the inclusion of data centers and industrial companies, while maintaining a conservative approach by not speculating without concrete developments. Michael Sullivan acknowledges the significant yet conservative growth forecast. The conversation then shifts to an electric case, focusing on storm mechanisms and distribution investments aimed at improving service reliability at lower costs. Garrick Rochow highlights the importance of proactive investment in distribution for better customer service, as supported by the Liberty audit, and indicates ongoing advocacy efforts for these initiatives.

The paragraph discusses the proposed storm restoration tracker in a pending rate case, which aims to balance service restoration costs between investors and customers. It suggests using a five-year average of restoration expenses with a true-up mechanism, where any cost above or below expectations would be shared 50/50. For example, if actual expenses exceed the rates by $20 million, shareholders and customers would each cover $10 million. This approach aims to align investor and customer incentives, reduce P&L volatility, and address previous discrepancies between estimated and actual costs. Garrick Rochow adds that the staff estimates $170 million at a 9.5% return on equity and 49.9% equity ratio.

The paragraph discusses a financial scenario involving a $277 million rebuttal position at a 10.25% return on equity and a 50.75% equity ratio, with some differences in the cost of capital. Michael Sullivan seeks clarity on the company's revised position, specifically regarding staff opposition to a storm-related structure. Garrick Rochow acknowledges the lack of staff support but anticipates needing commission approval, possibly requiring a full order. Michael Sullivan thanks Garrick, and the conversation shifts to Andrew Weisel of Scotiabank, who inquires about a settlement window. Garrick confirms they are within that window and open to settlements, though some issues may necessitate a full order, emphasizing the importance of accommodating customers and stakeholders. Weisel also references CapEx updates in his questions.

The paragraph addresses expectations regarding financial planning and potential growth in spending due to various initiatives and demand changes. The speaker asks if these factors will lead to a significant increase in financial needs compared to previous years and how financing, particularly equity needs, should be managed. Garrick Rochow responds by explaining that many positive outcomes depend on the approval of plans like the renewable energy plan and the IRP, with results expected to emerge over several years. He indicates that the benefits will materialize in stages from late 2025 through 2027. Rejji Hayes adds that their capital planning factors in affordability, the balance sheet, and operational feasibility to manage these changes over time.

The paragraph discusses the challenges and timing associated with capital investment and project development, specifically in the context of the $17 billion five-year capital expenditure (CapEx) plan. It highlights that while contracts have been signed and opportunities identified, the development of facilities like manufacturing or data centers will dictate the pacing of capital influx and load materialization. The paragraph notes there's upward pressure on the CapEx figure but emphasizes the importance of timing. It also mentions the strategy for equity funding, stating no new equity in 2024, with potential up to $350 million annually thereafter. Typically, around 35-40% of utility CapEx is funded through common equity, although recent years have seen reduced equity needs due to substantial cash flow generated by the business.

The paragraph outlines a financial strategy focused on generating cash flow and enhancing liquidity. It discusses a five-year plan that aims to increase operating cash flow by $1 billion compared to the previous plan. Key drivers of liquidity include monetizing tax credits from the IRA, executing asset dispositions at favorable terms, and conservative planning for debt issuance, potentially using subordinated notes or hybrids to gain equity credit from Moody's. These strategies aim to minimize equity needs while increasing capital in the plan.

The paragraph is part of a discussion on capital expenditure (CapEx) expectations, specifically regarding renewable energy plans and power purchase agreements (PPAs). Rejji Hayes clarifies that the full benefits of the renewable energy plan (REP) won't be seen immediately, with significant opportunities starting in 2026. Meanwhile, there will be incremental CapEx investments in reliability and demand-driven projects, with PPAs for renewables contributing over time. Angie Storozynski asks about the company's current energy supply, particularly the balance between self-generation and grid imports, and the available capacity to offer to industrial customers. Garrick Rochow responds, suggesting a deeper discussion on the subject.

The paragraph discusses the company's capacity planning and energy resource management since their 2021 integrated resource plan. It highlights the acquisition of the Covert Generating facility, which added 1.2 gigawatts of capacity, as well as the development of renewable assets, both owned and through power purchase agreements (PPAs). The company uses mechanisms like the renewable energy plan and integrated resource plan to adjust for sales growth and customer needs, such as those from hyperscalers and manufacturers, who may have staggered energy demands. They leverage MISO for a balanced energy mix, with 46% through PPAs or market purchases and the rest self-generated. The emphasis is on ensuring the supply and demand align to support growth in Michigan.

Garrick Rochow discusses the company's ability to accommodate and support the growth of large data centers and manufacturing facilities in Michigan by ensuring sufficient electric supply and infrastructure. He provides examples of working with companies like Switch and Corning to meet their increasing energy demands. Rochow confirms the company's capability to handle substantial projects and expresses openness to further expansion, indicating a willingness to welcome growth within the state.

The paragraph discusses efforts to create jobs and promote onshoring, particularly highlighting a manufacturing renaissance. It mentions collaboration with companies to develop data centers and manage large power loads across various sites, ensuring a balance between supply and demand. Strategies include using contractual agreements and rate designs to prevent other customers from subsidizing these projects, specifically within the State of Michigan. The goal is to ensure residential customers are not financially burdened by incentives for data centers. Additionally, there is ongoing communication with commissions to explore further safeguards or rate structures.

In the paragraph, Rejji Hayes responds to Anthony Crowdell's questions about the company's load growth and financing needs. Hayes explains that updates on load forecasts will be provided in upcoming filings and during future calls, indicating an iterative process for load disclosure. There is an expectation of upward pressure on the current load growth estimate. In terms of financing, Hayes mentions that up to 30-40% equity is required for every dollar spent and highlights the importance of tax credits for the company's strategy. The company projects over $0.5 billion in tax credit transferability embedded in their five-year plan, with expectations of this number increasing as renewable energy ownership grows.

The paragraph discusses a five-year plan with a budget of $0.5 billion, which is expected to increase, as mentioned during a conference call. Anthony Crowdell expresses satisfaction, and Garrick Rochow acknowledges the conversation before ending the call, expressing anticipation for future meetings at EEI and extending thanks and well-wishes to participants. The operator concludes the conference.

This summary was generated with AI and may contain some inaccuracies.