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CMS Energy(CMS) - 2023 Q2 - Quarterly Report
CMSCMS Energy(CMS)2023-07-26 16:00
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Generation Capacity and Renewable Energy - Consumers acquired a 1,200-MW natural gas-fueled generating unit in May 2023, enhancing its generation capacity[69] - Consumers purchased the Covert Generating Facility, a natural gas-fueled unit with 1,200 MW capacity, in May 2023[110] - Consumers aims to add nearly 8,000 MW of solar generation by 2040[110] - Consumers plans to deploy battery storage beginning in 2024, with 75 MW of energy storage by 2027 and an additional 475 MW by 2040[189] - Consumers will purchase 100 MW of renewable capacity, energy, and RECs from a 149-MW solar generating facility to be constructed in Calhoun County, Michigan, targeted to be operational in 2024[193] - Consumers has completed the purchase and construction of wind generation projects totaling 517 MW, with an additional 201 MW project expected to be operational in Q4 2023[218] - Consumers entered into a build transfer agreement for a 309-MW solar generating facility, targeted to be operational in 2025[219] Emissions Reduction and Environmental Goals - Consumers has reduced sulfur dioxide and particulate matter emissions by over 90% and NOx emissions by over 80% since 2005[108] - Mercury emissions have been reduced by nearly 90% since tracking began in 2007[108] - Consumers plans to end coal-fueled generation by 2025, 15 years earlier than initially planned[110] - Consumers aims to achieve at least 50% combined renewable energy and energy waste reduction by 2030[112] - Consumers plans to reduce methane emissions by 80% by 2030 and achieve net-zero methane emissions from its natural gas delivery system by 2030[113] - Consumers targets net-zero greenhouse gas emissions for the entire business by 2050, with an interim goal of reducing customer emissions by 20% by 2030[115] - Consumers expects to meet 90% of its customers' needs with clean energy sources by 2040[137] - Consumers' Clean Energy Plan aims to achieve net-zero carbon emissions from its electric business by 2040, with ongoing progress in renewable energy and customer programs[212] Financial Performance and Capital Expenditures - Net income available to common stockholders for the three months ended June 30, 2023 increased to 147millionfrom147 million from 140 million in 2022, driven by rate increases and higher renewable capital spending[150] - For the six months ended June 30, 2023, net income available to common stockholders decreased to 217millionfrom217 million from 307 million in 2022, primarily due to unfavorable weather and sales mix[150] - CMS Energy's net income available to common stockholders for the three months ended June 30, 2023 was 195million,upfrom195 million, up from 145 million in 2022, and for the six months ended June 30, 2023, net income was 397million,downfrom397 million, down from 496 million in 2022[169] - Consumers plans to spend 15.5billionincapitalexpendituresfrom2023through2027,including15.5 billion in capital expenditures from 2023 through 2027, including 12.4 billion on gas infrastructure and electric distribution systems[120][121] - Consumers paid 305millionindividendsonitscommonstocktoCMSEnergyduringthesixmonthsendedJune30,2023[184]−CMSEnergyhad305 million in dividends on its common stock to CMS Energy during the six months ended June 30, 2023[184] - CMS Energy had 406 million of consolidated cash and cash equivalents at June 30, 2023, including 17millionofrestrictedcashandcashequivalents[203]−Consumershad17 million of restricted cash and cash equivalents[203] - Consumers had 116 million of consolidated cash and cash equivalents at June 30, 2023, including 17millionofrestrictedcashandcashequivalents[203]RiskManagementandRegulatoryChallenges−CMSEnergyandConsumersmanagerisksrelatedtocommodityprices,includingelectricity,naturalgas,andcoal[82]−ThecompanyistransitioningfromLIBORtoSOFR,whichmayimpactinterestrateexpenses[96]−Thecompanyfacespotentialregulatorychallengesrelatedtoenvironmentalmattersandpermittingdecisions[95]−CMSEnergyandConsumersareimplementingstrategiestohedgerisksrelatedtoenergycommoditypricesandinterestrates[84]−ConsumersfiledanapplicationwiththeMPSCinMay2023seekinga17 million of restricted cash and cash equivalents[203] Risk Management and Regulatory Challenges - CMS Energy and Consumers manage risks related to commodity prices, including electricity, natural gas, and coal[82] - The company is transitioning from LIBOR to SOFR, which may impact interest rate expenses[96] - The company faces potential regulatory challenges related to environmental matters and permitting decisions[95] - CMS Energy and Consumers are implementing strategies to hedge risks related to energy commodity prices and interest rates[84] - Consumers filed an application with the MPSC in May 2023 seeking a 216 million rate increase, including a 207millionannualrateincreasebasedona10.25207 million annual rate increase based on a 10.25% authorized return on equity[167] - Consumers estimates its share of the total liability for known CERCLA sites to be between 3 million and 8million,witharecordedliabilityof8 million, with a recorded liability of 3 million as of June 30, 2023[239] - Consumers has a regulatory asset of 103millionrelatedtoMGPsiteremediationcosts,withcostsdeferredandrecoveredoveraten−yearperiod[243]OperationalEfficiencyandCustomerPrograms−CMSEnergyandConsumersfocusonenergywastereductionthroughefficiencyanddemand−sideconservationinitiatives[70]−Consumersreducedwaterusagebyover750milliongallonsin2022,aimingforatotalreductionof1.5billiongallonsby2026[139]−Consumersexpectsweather−normalizedelectricdeliveriestoremainrelativelystableoverthenextfiveyearscomparedto2022,reflectingenergywastereductionprogramsandmodestgrowthinelectricdemand[195]−ElectricdeliveriesundertheROAprogramwereatthe10103 million related to MGP site remediation costs, with costs deferred and recovered over a ten-year period[243] Operational Efficiency and Customer Programs - CMS Energy and Consumers focus on energy waste reduction through efficiency and demand-side conservation initiatives[70] - Consumers reduced water usage by over 750 million gallons in 2022, aiming for a total reduction of 1.5 billion gallons by 2026[139] - Consumers expects weather-normalized electric deliveries to remain relatively stable over the next five years compared to 2022, reflecting energy waste reduction programs and modest growth in electric demand[195] - Electric deliveries under the ROA program were at the 10% limit, with fewer than 300 (0.02%) of Consumers' 1.9 million electric customers participating[221] - Consumers implemented retention incentive programs costing 32 million for D.E. Karn and an estimated 50millionforJ.H.Campbell,with50 million for J.H. Campbell, with 16 million recognized in 2023[225] Financial Instruments and Credit Facilities - CMS Energy has forward sales contracts with an aggregate sales price of 441million,maturingthroughDecember2024,andintendstosettlethembydeliveringsharesofitscommonstock[209]−Consumersissued441 million, maturing through December 2024, and intends to settle them by delivering shares of its common stock[209] - Consumers issued 1.525 billion in first mortgage bonds during the six months ended June 30, 2023, with various interest rates and maturity dates[250] - Consumers renewed a short-term credit agreement with CMS Energy, allowing borrowing up to 500million,withnooutstandingborrowingsasofJune30,2023[261]−Underthesupplierfinancingprogram,tradepayablesrecordedwere500 million, with no outstanding borrowings as of June 30, 2023[261] - Under the supplier financing program, trade payables recorded were 23 million at June 30, 2023, compared to less than 1millionatDecember31,2022[262]−Thesupplierfinancingprogramrequirespaymentofconfirmedinvoiceswithin60days,withnocollateralorfeesprovidedbyConsumers[262]CashFlowandWorkingCapital−CMSEnergy′snetcashprovidedbyoperatingactivitiesforthesixmonthsendedJune30,2023was1 million at December 31, 2022[262] - The supplier financing program requires payment of confirmed invoices within 60 days, with no collateral or fees provided by Consumers[262] Cash Flow and Working Capital - CMS Energy's net cash provided by operating activities for the six months ended June 30, 2023 was 1,705 million, up from 1,059millionin2022,drivenbyfavorablechangesincoreworkingcapital[156]−Consumers′netcashprovidedbyoperatingactivitiesforthesixmonthsendedJune30,2023was1,059 million in 2022, driven by favorable changes in core working capital[156] - Consumers' net cash provided by operating activities for the six months ended June 30, 2023 was 1,759 million, up from 1,159millionin2022,primarilyduetohighercollectionsandlowergaspurchaseprices[156]−AtJune30,2023,CMSEnergyhad1,159 million in 2022, primarily due to higher collections and lower gas purchase prices[156] - At June 30, 2023, CMS Energy had 529 million available under its revolving credit facility, while Consumers had 1.3billionavailableunderitsrevolvingcreditfacilities[186]CustomerDeliveriesandSales−Deliveriestoend−usecustomersforthethreemonthsendedJune30,2023were49bcf,downfrom51bcfin2022,andforthesixmonthsendedJune30,2023,deliverieswere168bcf,downfrom191bcfin2022[152]−Deliveriestoend−usecustomersforthethreemonthsendedJune30,2023were8.9billionkWh,adecreasefrom9.1billionkWhin2022[172]−ForthesixmonthsendedJune30,2023,deliveriestoend−usecustomerswere17.7billionkWh,downfrom18.3billionkWhin2022[172]CleanEnergyPlanandRenewableEnergyTargets−UndertheCleanEnergyPlan,Consumersexpectstomeet901.3 billion available under its revolving credit facilities[186] Customer Deliveries and Sales - Deliveries to end-use customers for the three months ended June 30, 2023 were 49 bcf, down from 51 bcf in 2022, and for the six months ended June 30, 2023, deliveries were 168 bcf, down from 191 bcf in 2022[152] - Deliveries to end-use customers for the three months ended June 30, 2023 were 8.9 billion kWh, a decrease from 9.1 billion kWh in 2022[172] - For the six months ended June 30, 2023, deliveries to end-use customers were 17.7 billion kWh, down from 18.3 billion kWh in 2022[172] Clean Energy Plan and Renewable Energy Targets - Under the Clean Energy Plan, Consumers expects to meet 90% of its customers' needs with clean energy sources by 2040, with renewable energy capacity levels forecasted at 30% in 2025, 43% in 2030, and 61% in 2040[189] - Consumers plans to acquire up to 700 MW of capacity through PPAs, with up to 500 MW from dispatchable sources, starting in 2025[214][216] Other Financial and Operational Metrics - NorthStar Clean Energy's net income for the three months ended June 30, 2023 was 3 million, down from 7millionin2022,andforthesixmonthsendedJune30,2023,netincomewas7 million in 2022, and for the six months ended June 30, 2023, net income was 10 million, down from $15 million in 2022[154] - Level 2 inputs include observable market-based inputs such as quoted prices for similar assets or liabilities in active or inactive markets[263]