CMS Energy CMS · USD

Reportable SegmentsReportable segments consist of business units defined by the products and services they offer. CMS Energy’s and Consumers’ chief operating decision-maker is the CEO. The chief operating decision-maker evaluates segment performance and profitability using net income available to CMS Energy’s common stockholders. This metric provides a clear, consistent basis for analyzing the financial results of each segment and supports decision-making regarding the allocation of resources.Resource allocation to CMS Energy’s and Consumers’ segments begins with the annual budgeting process, which establishes initial funding and resource levels for each segment. The budget incorporates key financial and operational inputs, including anticipated revenues, expenses, and capital requirements, aligning with CMS Energy’s and Consumers’ strategic objectives and regulatory obligations. The chief operating decision-maker reviews budget-to-actual variances on a monthly basis and makes interim decisions to reallocate resources among segments as needed, ensuring a timely and effective response to changing conditions. For the electric utility and gas utility segments, the chief operating decision-maker uses this assessment to determine whether the segments are achieving their regulatory authorized return on equity. Accounting policies for CMS Energy’s and Consumers’ segments are as described in Note 1, Significant Accounting Policies. The consolidated financial statements reflect the assets, liabilities, revenues, and expenses of the individual segments when appropriate. Accounts are allocated among the segments when common accounts are attributable to more than one segment. The allocations are based on certain measures of business activities, such as revenue, labor dollars, customers, other operating and maintenance expense, construction expense, leased property, taxes, or functional surveys. For example, customer receivables are allocated based on revenue, and pension provisions are allocated based on labor dollars.Inter-segment sales and transfers are accounted for at current market prices and are eliminated in consolidated net income available to common stockholders by segment. Inter-segment sales and transfers were immaterial for all periods presented.

RevenuePresented in the following tables are the components of operating revenue:In MillionsYear Ended December 31, 2025Electric UtilityGas UtilityNorthStar Clean Energy1ConsolidatedCMS Energy, including ConsumersConsumers utility revenue$5,578 $2,468 $— $8,046 Other— — 259 259 Revenue recognized from contracts with customers$5,578 $2,468 $259 $8,305 Leasing income— — 149 149 Financing income10 6 — 16 Consumers alternative-revenue programs50 19 — 69 Total operating revenue – CMS Energy$5,638 $2,493 $408 $8,539 ConsumersConsumers utility revenueResidential$2,661 $1,701 $4,362 Commercial1,888 538 2,426 Industrial762 62 824 Other267 167 434 Revenue recognized from contracts with customers$5,578 $2,468 $8,046 Financing income10 6 16 Alternative-revenue programs50 19 69 Other non-segment revenue— — 1 Total operating revenue – Consumers$5,638 $2,493 $8,132 1Amounts represent NorthStar Clean Energy’s operating revenue from independent power production and its sales of energy commodities. In MillionsYear Ended December 31, 2024Electric UtilityGas UtilityNorthStar Clean Energy1ConsolidatedCMS Energy, including ConsumersConsumers utility revenue$4,995 $2,114 $— $7,109 Other— — 211 211 Revenue recognized from contracts with customers$4,995 $2,114 $211 $7,320 Leasing income— — 105 105 Financing income10 5 — 15 Consumers alternative-revenue programs56 19 — 75 Total operating revenue – CMS Energy$5,061 $2,138 $316 $7,515 ConsumersConsumers utility revenueResidential$2,318 $1,429 $3,747 Commercial1,674 440 2,114 Industrial670 50 720 Other333 195 528 Revenue recognized from contracts with customers$4,995 $2,114 $7,109 Financing income10 5 15 Alternative-revenue programs56 19 75 Other non-segment revenue— — 1 Total operating revenue – Consumers$5,061 $2,138 $7,200 1Amounts represent NorthStar Clean Energy’s operating revenue from independent power production and its sales of energy commodities.

Contingencies and CommitmentsCMS Energy and Consumers are involved in various matters that give rise to contingent liabilities. Depending on the specific issues, the resolution of these contingencies could negatively affect CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. In their disclosures of these matters, CMS Energy and Consumers provide an estimate of the possible loss or range of loss when such an estimate can be made. Disclosures stating that CMS Energy or Consumers cannot predict the outcome of a matter indicate that they are unable to estimate a possible loss or range of loss for the matter.CMS Energy ContingenciesCMS Land retained environmental remediation obligations for the collection and treatment of leachate at Bay Harbor after selling its interests in the development in 2002. Leachate is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site. In 2012, CMS Land and EGLE finalized an agreement establishing the final remedies and the future water quality criteria at the site. CMS Land completed all construction necessary to implement the remedies required by the agreement and will continue to maintain and operate a system to discharge treated leachate into Little Traverse Bay under an NPDES permit, which was valid through 2025. CMS Land submitted a renewal request in March 2025, and will continue to operate under the existing permit until a renewal is issued.At December 31, 2025, CMS Energy had a recorded liability of $48 million for its remaining obligations for environmental remediation. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.34 percent and an inflation rate of 1 percent on annual operating and maintenance costs. The undiscounted amount of the remaining obligation is $62 million. CMS Energy expects to pay the following amounts for long-term leachate disposal and operating and maintenance costs in each of the next five years:In Millions20262027202820292030Long-term leachate disposal and operating and maintenance costs$4 $4 $4 $4 $4 CMS Energy’s estimate of response activity costs and the timing of expenditures could change if there are changes in circumstances or assumptions used in calculating the liability.

Income TaxesCMS Energy and its subsidiaries file a consolidated U.S. federal income tax return as well as a Michigan Corporate Income Tax return for the unitary business group and various other state unitary group combined income tax returns. Income taxes are allocated based on each company’s separate taxable income in accordance with the CMS Energy tax sharing agreement.Presented in the following table is the difference between actual income tax expense on continuing operations and income tax expense computed by applying the statutory U.S. federal income tax rate:In Millions, Except Tax RateAmountPercentAmountPercentAmountPercentYears Ended December 31202520242023CMS Energy, including ConsumersIncome from continuing operations before income taxes$1,248 $1,123 $954 Income tax expense at statutory rate262 21.0 %236 21.0 %200 21.0 %Increase (decrease) in income taxes from: State and local income taxes, net of federal income tax effect177 6.2 58 5.1 40 4.2 Tax creditsRenewable energy tax credits(68)(5.4)(71)(6.4)(55)(5.8)Other(6)(0.5)(6)(0.5)(7)(0.7)Nontaxable or nondeductible items3 0.2 4 0.4 3 0.3 Changes in unrecognized tax benefits9 0.7 2 0.2 (11)(1.2)Other adjustmentsTCJA excess deferred taxes(42)(3.4)(43)(3.8)(40)(4.2)Deferred tax adjustment2— — (16)(1.4)— — Taxes attributable to noncontrolling interests15 1.2 12 1.1 17 1.8 Other, net(4)(0.3)— — — — Income tax expense$246 $176 $147 Effective tax rate19.7 %15.7 %15.4 %In Millions, Except Tax RateAmountPercentAmountPercentAmountPercentYears Ended December 31202520242023ConsumersIncome from continuing operations before income taxes$1,417 $1,209 $1,028 Income tax expense at statutory rate298 21.0 %254 21.0 %216 21.0 %Increase (decrease) in income taxes from: State and local income taxes, net of federal income tax effect180 5.7 60 5.0 47 4.6 Tax creditsRenewable energy tax credits(46)(3.2)(51)(4.2)(43)(4.2)Other(6)(0.4)(6)(0.5)(7)(0.7)Nontaxable or nondeductible items3 0.2 3 0.2 3 0.3 Changes in unrecognized tax benefits9 0.6 1 0.1 (12)(1.2)Other adjustmentsTCJA excess deferred taxes(42)(3.0)(43)(3.6)(40)(3.9)Deferred tax adjustment2— — (16)(1.3)— — Other, net(8)(0.6)(2)(0.2)(3)(0.2)Income tax expense$288 $200 $161 Effective tax rate20.3 %16.5 %15.7 %1In June 2025, state deferred tax balances were increased by $12 million to reflect a change in Illinois tax policy that establishes nexus for Consumers. The policy change is effective for tax years beginning January 1, 2026.

Stock-based CompensationCMS Energy and Consumers provide a PISP to officers, employees, and non‑employee directors based on their contributions to the successful management of the company. The PISP has a ten‑year term, expiring in May 2030.In 2025, all awards were in the form of restricted stock or restricted stock units. The PISP also allows for unrestricted common stock, stock options, stock appreciation rights, phantom shares, performance units, and incentive options, none of which was granted in 2025, 2024, or 2023.Shares awarded or subject to stock options, phantom shares, or performance units may not exceed 6.5 million shares from June 2020 through May 2030. CMS Energy and Consumers may issue awards of up to 3,965,601 shares of common stock under the PISP as of December 31, 2025. Shares for which payment or exercise is in cash, as well as shares that expire, terminate, or are canceled or forfeited, may be awarded or granted again under the PISP.All awards under the PISP vest fully upon death. Upon a change of control of CMS Energy or termination under an officer separation agreement, the awards will vest in accordance with specific officer agreements. If stated in the award, for restricted stock recipients who terminate employment due to retirement or disability, a pro-rata portion of the award will vest upon termination, with any market-based award also contingent upon the outcome of the market condition and any performance-based award contingent upon the outcome of the performance condition. The pro-rata portion is equal to the portion of the service period served between the award grant date and the employee’s termination date. The remaining portion of the awards will be forfeited. All awards for directors vest fully upon retirement. Restricted shares may be forfeited if employment terminates for any other reason or if the minimum service requirements are not met, as described in the award document.Restricted Stock Awards: Restricted stock awards for employees under the PISP are in the form of performance-based, market-based, and time-lapse restricted stock. Award recipients receive shares of CMS Energy common stock that have dividend and voting rights. The dividends on time-lapse restricted stock are paid in cash or in CMS Energy common stock. The dividends on performance-based and market-based restricted stock are paid in restricted shares equal to the value of the dividends.

LeasesLesseeCMS Energy and Consumers lease various assets from third parties, including coal-carrying railcars, real estate, service vehicles, and gas pipeline capacity. In addition, CMS Energy and Consumers account for several of their PPAs as leases.CMS Energy and Consumers do not record right-of-use assets or lease liabilities on their consolidated balance sheets for rentals with lease terms of 12 months or less, most of which are for the lease of real estate and service vehicles. Lease expense for these rentals is recognized on a straight-line basis over the lease term.CMS Energy and Consumers include future payments for all renewal options, fair market value extensions, and buyout provisions reasonably certain of exercise in their measurement of lease right-of-use assets and lease liabilities. In addition, certain leases for service vehicles contain end-of-lease adjustment clauses based on proceeds received from the sale or disposition of the vehicles. CMS Energy and Consumers also include executory costs in the measurement of their right-of-use assets and lease liabilities, except for maintenance costs related to their coal-carrying railcar leases.Most of Consumers’ PPAs contain provisions at the end of the initial contract terms to renew the agreements annually under mutually agreed‑upon terms at the time of renewal. Energy and capacity payments that vary depending on quantities delivered are recognized as variable lease costs when incurred. Consumers accounts for a PPA with one of CMS Energy’s equity method subsidiaries as a finance lease.Presented in the following table is information about CMS Energy’s and Consumers’ lease right-of-use assets and lease liabilities:In Millions, Except as NotedCMS Energy, including ConsumersConsumersDecember 312025202420252024Operating leasesRight-of-use assets1$22$24$18$20Lease liabilitiesCurrent lease liabilities23333Non-current lease liabilities319211517Finance leasesRight-of-use assets1401199076Lease liabilities4Current lease liabilities6464Non-current lease liabilities1351128169Weighted-average remaining lease term (in years)Operating leases20202019Finance leases24261922Weighted-average discount rateOperating leases5.3%5.3%5.4%5.4%Finance leases55.9%5.8%4.9%4.8%1CMS Energy’s and Consumers’ operating right-of-use lease assets are reported as other non‑current assets on their consolidated balance sheets.

CMS Energy’s and Consumers’ security function, led by the Vice President of IT and Security and CIO, is accountable for cyber and physical security and is subject to various state, federal, and industry cybersecurity, physical security, and privacy regulations. Their cybersecurity program is responsible for assessing, identifying, and managing risks from cybersecurity threats using industry frameworks, as well as best practices developed by government and industry partners. All employees and contractors are required to complete annual trainings on a variety of security-related topics. Additionally, the companies continuously upgrade technological investments designed to prevent, detect, and respond to attacks. The companies’ electric, natural gas, and corporate systems each follow standards, controls, and requirements designed to maintain compliance with applicable regulations and standards, such as MPSC, NERC critical infrastructure protection, and payment card industry regulations. Technology projects and third-party service providers are reviewed for adherence to cybersecurity requirements. CMS Energy’s and Consumers’ cybersecurity program focuses on finding and remediating vulnerabilities in their systems. The companies use third-party firms for penetration testing, audits, and assessments, and conduct technical exercises to practice their response to simulated events as well as tabletop exercises to test that response using their incident command system, including leadership decisions. The companies also have a dedicated, proactive function focused fully on monitoring CMS Energy’s and Consumers’ systems and responding when cybersecurity attacks occur. This includes regular information sharing with industry partners, peer utilities, and state and federal partners. The companies’ incident response plan outlines the individuals responsible, the methods employed, and the timeline for notifying state and federal governmental agencies. The companies retain a third-party cybersecurity firm to assist with potentially significant cybersecurity incidents and have invested in cybersecurity insurance to offset costs incurred from any such cybersecurity incidents. To manage cybersecurity risks associated with the companies’ use of third-party service providers, the companies incorporate security requirements into contracts, when deemed applicable, and pursue third-party security certifications for vendors with a higher risk profile.

Regulatory MattersRegulatory matters are critical to Consumers. The Michigan Attorney General, ABATE, the MPSC Staff, residential customer advocacy groups, environmental organizations, and certain other parties typically participate in MPSC proceedings concerning Consumers, such as Consumers’ rate cases and PSCR and GCR processes. Intervenors also participate in certain FERC matters, including FERC’s regulation of certain wholesale rates that affect Consumers’ power supply costs. These parties often challenge various aspects of those proceedings, including the prudence of Consumers’ policies and practices, and seek cost disallowances and other relief. The parties also have appealed significant MPSC and FERC orders. Depending upon the specific issues, the outcomes of rate cases and proceedings, including judicial proceedings challenging MPSC and FERC orders or other actions, could negatively affect CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. Consumers cannot predict the outcome of these proceedings.Regulatory Assets and LiabilitiesConsumers is subject to the actions of the MPSC and FERC and therefore prepares its consolidated financial statements in accordance with the provisions of regulatory accounting. A utility must apply regulatory accounting when its rates are designed to recover specific costs of providing regulated services. Under regulatory accounting, Consumers records regulatory assets or liabilities for certain transactions that would have been treated as expense or revenue by non‑regulated businesses.