CMS Energy (NYSE:CMS) executives used the company’s year-end 2025 earnings call to highlight regulatory developments in Michigan, outline an expanded capital plan, and provide updated earnings guidance for 2026. Management also discussed progress on large-load opportunities tied to data centers, while emphasizing customer affordability and the company’s long-running earnings growth track record.
Regulatory milestones and pending cases
President and CEO Garrick Rochow opened the call by pointing to several regulatory outcomes in 2025 that he described as “big wins” for customers and growth in Michigan. Among them was approval of the company’s Large Load Tariff in November, which management said is designed to enable data center growth while ensuring existing customers do not pay for the required investments. Rochow said the tariff provides certainty for data centers as new load is added and can also help support more affordable rates as load grows.
Looking ahead, Rochow addressed the company’s pending electric rate case, saying he was not concerned about the administrative law judge’s proposal for decision and calling the proposed ROE level an outlier. He said CMS Energy expects a constructive outcome and an ROE of 9.9% or better. He also referenced the Michigan Public Service Commission (MPSC) staff position as “constructive,” and noted past public comments from commissioners supporting the need for improved electric reliability and constructive ROEs.
On the gas side, CMS Energy recently filed a gas rate case. Rochow said he is confident in the proposed investments to maintain a safe, reliable, and clean gas system and highlighted the proposed full gas decoupling. Later in the Q&A, CFO Rejji Hayes said the company’s intent is to focus on decoupling in the gas business and that there is no current appetite to pursue decoupling for electric. Hayes also stated that decoupling is not permitted in the electric business under legislation.
2025 performance and 2026 guidance raised
CMS Energy reported that it exceeded 2025 adjusted earnings per share guidance, delivering $3.61 per share. Rochow said the result was up “over 8%” from 2024 and reflected strong utility performance driven by constructive regulatory outcomes and robust performance at Northstar Clean Energy.
For 2026, the company raised annual adjusted EPS guidance by $0.03 to a range of $3.83 to $3.90, which management said represents 6% to 8% growth off 2025 results, with continued confidence toward the high end. CMS Energy reaffirmed its long-term adjusted EPS growth range of 6% to 8% toward the high end.
Hayes provided additional detail on the 2026 outlook, including segment assumptions:
- Utility adjusted earnings of $4.28 to $4.33 per share, assuming normal weather, constructive regulatory outcomes, and earned returns at or near authorized levels.
- Northstar contribution of $0.25 to $0.30 per share, reflecting normalized operations at Dearborn Industrial Generation (DIG), an increasingly favorable mix of capacity contracts, and completion of select renewable projects.
- Parent/other assumptions including expected equity issuances of approximately $700 million, a full year of interest expense from the prior year’s convertible debt offering, and no liability management transactions.
In the 2026 “waterfall” discussion, management said it expects a $0.22 per-share headwind from normalizing weather versus 2025, a $0.37 per-share pickup from rate relief related to prior and pending cases, and a $0.12 per-share benefit from productivity and more normalized storm activity.
Capital investment plan expanded to $24 billion
Rochow highlighted an updated five-year $24 billion utility investment plan, up $4 billion from the prior plan. CMS Energy said the plan supports 10.5% rate base growth through 2030 and is intended to improve reliability, strengthen distribution, and meet supply needs.
Management described the major drivers behind the updated plan:
- Approximately $2.5 billion increase in electric generation investment, with much of it tied to the approved renewable energy plan.
- Approximately $1.2 billion increase in electric distribution investment tied to the company’s reliability roadmap and aligned with the Liberty Distribution Audit.
- Approximately $400 million increase in gas investments, aligned with the company’s 10-year natural gas delivery plan and higher demand on the transmission system for power generation and industrial growth.
Rochow said an integrated resource plan to be filed in mid-2026 will detail additional capacity needs to replace retired plants and support existing and future growth, including a mix that includes batteries and natural gas generation to cover gaps when renewables are not producing. He noted expected retirements of Karn 3 and 4 oil-fired peakers in 2031, representing roughly a gigawatt of capacity.
Data centers: progress, timing, and customer protections
Much of the Q&A focused on large-load opportunities, particularly data centers. Rochow said the company’s “funnel” of potential projects has grown recently, including additional data centers at earlier stages and new large manufacturing prospects. He said the Large Load Tariff was a key milestone that clarified terms and conditions for serving these customers.
Regarding the data center discussed on CMS Energy’s second-quarter call, Rochow said the company has reached commercial terms on an Extraordinary Facilities Agreement and is at near-final terms on a rate agreement that would require regulatory approval. He said CMS Energy understands timing, incremental supply resources needed to serve the load, and the expected ramp timeline, with the data center potentially online as early as 2028. Management repeatedly emphasized that these data center investments are not included in the current five-year capital plan.
Hayes added that, as a general planning assumption, each additional gigawatt of load could require approximately $2.5 billion to more than $5 billion of investment, including distribution interconnection and supply resources. If such projects are secured, he said, rate base growth would rise.
Executives also discussed community zoning concerns, with Rochow saying zoning has not been an impediment and that CMS Energy has experience identifying communities more receptive to development. He cited an example of a moratorium that resulted in a new zoning ordinance allowing data centers.
Affordability, cost savings, and funding strategy
Management repeatedly returned to customer affordability. Rochow said CMS Energy has delivered more than two decades of performance while investing heavily in infrastructure, and noted that customers’ utility bills represent roughly 3% of total expenses, down 150 basis points from a decade ago even as the company invested roughly $24 billion over that period. He also said recent electric bill increases were among the lowest in the country and reiterated a goal of keeping residential bills below national and Midwest averages.
Examples cited on the call included more than $100 million of savings in 2025 attributed to the company’s “CE Way” efficiency efforts and an estimate that the energy waste reduction program would save customers about $1.2 billion in 2025. Hayes also noted that converting additional economic development opportunities could help offset bill growth, and referenced prior company sensitivity analysis that a gigawatt of large-load conversion could reduce bill CAGR by about two points.
On financing, Hayes said CMS Energy invested $3.8 billion in 2025 and funded the business through operating cash flow, bond and equity financings, and tax credit transfers, while maintaining investment-grade credit metrics and ratings. For 2026, the company expects to issue “a little over” $1.7 billion at the utility and approximately $700 million of equity at the parent level through its ATM program, and indicated it expects to file a new prospectus supplement later in the year to reflect updated equity needs.
CMS Energy said it plans to continue dividend growth, targeting a payout ratio of about 60% in 2026 and roughly 55% over time.
About CMS Energy (NYSE:CMS)
CMS Energy (NYSE: CMS) is an energy company based in Jackson, Michigan, whose principal business is the regulated utility operations of its subsidiary, Consumers Energy. The company is primarily focused on providing electric and natural gas service to customers in Michigan, operating the generation, transmission and distribution infrastructure necessary to deliver energy to residential, commercial and industrial customers. Headquartered in Jackson, CMS Energy conducts its core activities within the state and is regulated by state utility authorities.
Through Consumers Energy and related subsidiaries, CMS Energy develops, owns and operates a portfolio of generation assets and delivers a range of customer-facing services, including electricity and natural gas supply, grid management, energy efficiency programs and demand-response offerings.
