CMS Energy (CMS) Q1 FY26 earnings call: guidance and Q&A

Asked about the current state of data center opportunities and if their materialization could defer electric rate case filings, similar to DTE's approach.

Garrick Rochow expressed satisfaction with data center progress, noting a 9 GW pipeline of qualified customers and advanced contract negotiations for hyperscalers. He highlighted the existing tariff that protects customers and provides benefits. He explained the company's commitment to annual rate cases due to a large capital runway, the need to pass savings to customers, and the focus on affordability, which is supported by growth from data centers.

“But the biggest thing and the most important thing is affordability for our customers right now. And we've talked about that through the CE way. We've talked about that through episodic cost savings. But a big piece of this is growth, and that's how I tie it back to data centers.”

asked by Richard Sutherland from Truist · answered by Garrick Rochow

Inquired about the company's guiding principles for potential transactions, specifically regarding NorthStar, given media reports.

Garrick Rochow stated the company's long-standing policy not to comment on M&A. He reiterated that NorthStar, comprising thermal assets (Dearborn Industrial Generation) and renewables, represents about 5% of the company's earnings mix, with the rest being utility. He noted thermal assets are outperforming and renewables are solid projects with utility-like returns.

“Well, just to be clear about this, we have a long-standing company policy. We don't comment on M&A period.”

asked by Richard Sutherland from Truist · answered by Garrick Rochow

Asked for specific color on the Microsoft data center in Gaines Township, its status, and how to think about public pushback.

Garrick Rochow indicated progress on contract finalization and zoning, noting the multi-step approval process involving planning commissions and township boards in Michigan's local government structure. He emphasized that data center companies are actively engaging with communities and officials, and while the process involves due diligence and back-and-forth, he feels good about the direction. He declined to predict a specific date for completion.

“My mom used to say good things come to those that wait. And my mom was right. And I've talked about the contract in my prepared remarks, talked about the contract pieces, and I shared with you, I'm pleased with the zoning piece.”

asked by Marcella Petiprin from Wells Fargo · answered by Garrick Rochow

Asked how the company plans to proactively derisk equity needs for 2027 and 2028, given the front-end loaded nature of the 5-year plan's equity requirements.

Rejji Hayes explained that the majority of equity needs are in the first three years of the plan. He highlighted the use of equity forward contracts, with nearly $0.5 billion already priced for 2026. He stated that if the stock continues to trade favorably, the company may execute equity forwards to derisk 2027 and beyond, but the immediate priority is 2026 needs.

“if we do see the stock continue to trade at levels that are better, not just in our plan assumptions this year, but also in subsequent years, we may look to execute on equity forwards for -- to derisk '27 and beyond.”

asked by Nicholas Campanella from Barclays · answered by Rejji Hayes

Asked for elaboration on potential countermeasures being considered to address Moody's negative outlook on the utility.

Rejji Hayes noted that the negative outlook is at the OpCo level, which limits the toolkit compared to a parent company. He stated that solutions would likely involve educating the commission and other stakeholders on necessary actions over the next 12-18 months, focusing on the rate-making capital structure and potentially cost of capital. He indicated that specific alternatives are being explored but not yet ready for public disclosure.

“it's at the OpCo and you're really constrained in terms of your rate making capital structure. We're going to have to evaluate a variety of different solutions and likely have to educate the commission and other stakeholders on what we would have to do over the next 12 to 18 months to avoid Moody's taking further action.”

asked by Andrew Weisel from Scotiabank · answered by Rejji Hayes