CMS (CMS) Q1 2026 Earnings Call Transcript

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DATE

Tuesday, April 28, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• President and CEO — Garrick J. Rochow
• Executive Vice President and CFO — Rejji P. Hayes
• Operator

TAKEAWAYS

• Adjusted EPS -- $1.13, with full-year guidance reaffirmed at $3.83 to $3.90 per share and continued confidence toward the high end.
• Adjusted Net Income -- $346 million, up compared to the prior-year period, attributed to NorthStar performance and higher net rate relief, partially offset by March ice storm costs.
• Electric Rate Case Outcome -- Over 65% of the company’s ask approved, with a maintained 9.9% allowed ROE for the electric business by the commission.
• Pending Gas Rate Case -- Michigan Public Service Commission staff recommended approval of over 75% of the $240 million request.
• Signed Load Growth -- 110 megawatts of new customer contracts signed year to date, exceeding last year’s 100 megawatts at this point.
• Five-Year Load Growth Guidance -- Management reiterated expectations of 2%-3% annual sales growth, supported by new manufacturing, industrial, and data center activity.
• Capital Opportunity Sensitivity -- Each 1 gigawatt of new large load could generate $2 billion to $5 billion of incremental capital investment opportunity, depending on resource mix and necessary infrastructure.
• Affordability Ranking -- Michigan electric bills stated as the fourteenth lowest nationally, with both electric and gas customer bills projected to remain below the energy CPI as $24 billion is invested over the five-year plan.
• Equity Funding Actions -- Equity forward contracts totaling approximately $495 million executed in the quarter, with $142 million settled; full-year target equity issuance is approximately $700 million.
• Credit Ratings -- Moody’s and Fitch reaffirmed ratings in March; Moody’s shifted the utility to a negative outlook, citing the five-year capital plan’s size relative to recovery timing, prompting management to evaluate countermeasures.
• O&M Guidance -- Anticipated $0.04 per share of positive O&M variance for the remainder of the year, reflecting ongoing cost reduction initiatives.
• Storm Impacts -- Storm activity, including a major March ice storm, resulted in $0.05 per share negative variance, somewhat mitigated by supply business offsets.
• NorthStar Business Mix -- NorthStar continues to represent about 5% of total earnings, with thermal and renewable segments generating utility-like contracted returns and no announced strategic changes.
• Data Center Pipeline -- Pipeline of qualified large-load projects identified as over 9 gigawatts, with at least two hyperscaler data centers in advanced negotiations and not yet included in the current five-year customer investment plan.
• Regulatory Strategy -- Management described deliberate alignment and use of integrated resource, renewable energy, and distribution plans, along with mechanisms like the investment recovery mechanism, to secure constructive regulatory outcomes.

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RISKS

• Moody’s moved the utility to a negative outlook, driven by concerns about the five-year capital plan’s scale and timing of cost recovery, with management stating, "we are evaluating a variety of countermeasures to address Moody’s concerns."
• Storm costs caused a $0.05 per share negative hit, following a "sizable ice storm in March," indicating exposure to weather-driven financial volatility.
• Parent equity needs put upward pressure on funding requirements, with plans to issue approximately $700 million in equity during the year and further average annual issuances of $750 million, which Rejji P. Hayes noted is "a bit more front-end loaded."

SUMMARY

CMS Energy Corporation (NYSE:CMS) delivered adjusted EPS of $1.13 and reaffirmed full-year guidance in the $3.83 to $3.90 range, highlighting confidence in reaching the upper end. The company secured more than 65% of its requested electric rate increase and a 9.9% allowed ROE, while the pending gas rate case saw a staff recommendation supporting over 75% of the requested $240 million. Management disclosed execution of $495 million in equity forward contracts during the quarter to proactively address funding requirements, with ongoing plans for a total of $700 million in equity issuance for the year. A growing portfolio of new business—including 110 megawatts signed to date and over 9 gigawatts in the pipeline—reinforces management’s 2%-3% annual sales growth outlook and could yield substantial capital investment opportunities beyond the current plan. Moody’s negative outlook for the utility introduces potential credit risk due to concerns about the magnitude and timing of cost recovery on the anticipated $24 billion five-year capital plan.

• During the Q&A, management stated, "every gigawatt gets you somewhere between $2 billion to $5 billion of incremental CapEx," with the corresponding capital intensity likely driving higher equity and debt needs.
• CMS highlighted that incremental data center load is expected to lower average customer rates by 2% annually over a five-year period for every gigawatt integrated, providing long-term affordability benefits.
• Ongoing cost discipline is expected to yield $0.04 per share of positive O&M variance for the rest of 2026 from "CE Way and other cost reduction initiatives underway."
• Permitting and zoning for major hyperscaler data centers remain in progress across several Michigan townships, and the "timeline within the contracts—early" has not changed, according to CEO Rochow.
• Both NorthStar (including DIG) and other portfolio assets continue to operate as before, with no announced M&A or divestiture changes and management reiterating its no-comment policy on such activities.
• Guidance for annual electric and gas rate case filings continues, with the next electric filing set for June and a final decision on the current gas case expected by September or October.

INDUSTRY GLOSSARY

• Integrated Resource Plan (IRP): A long-term planning document filed with regulators that outlines forecasted supply and demand, and specifies generation and resource investments needed to serve customers reliably and cost-effectively.
• Investment Recovery Mechanism: A regulatory tool allowing utilities to recover certain capital expenditures on a timelier basis outside traditional rate cases, reducing regulatory lag.
• NorthStar: CMS Energy Corporation’s competitive power generation and infrastructure enterprise, encompassing thermal and renewable assets and contributing roughly 5% of company earnings.
• CE Way: CMS Energy Corporation’s branded operational excellence and cost management program designed to drive efficiency and keep customer bills affordable.
• DIG (Dearborn Industrial Generation): A major thermal energy asset within the NorthStar segment, providing capacity and energy under contract.
• CapEx: Capital Expenditures, referring to funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.
• Hyperscaler: Refers to large-scale data center operators or customers with rapidly expanding computational or storage needs, typically representing significant utility load growth.
• Rate Relief: Regulatory approval allowing utilities to increase rates, generating higher revenue to offset increased costs or support investment.

Full Conference Call Transcript

Garrick J. Rochow: Thank you, Jason, and thank you, everyone, for joining us today. Our investment thesis, which you see on slide three, continues to stand the test of time. Whether it is our long capital runway, Michigan’s top-tier regulatory jurisdiction, our ability to keep bills affordable for customers, or the strong economic growth across the state, this model works. And it works consistently. It drives a premium total shareholder return, 6% to 8% adjusted EPS growth with annual compounding paired with approximately 3% dividend yield. It is a simple, durable formula. It is why CMS Energy Corporation continues to be a smart, long-term investment, delivering for more than two decades with consistent industry-leading performance.

Turning to slide four, you will see the outcome of our most recent electric rate case. The commission approved over 65% of our ask and maintained our 9.9% ROE in the electric business. I continue to be pleased with our regulatory outcomes and, most importantly, the support for our customer investments. On the graph to the left, what stands out is a consistent record of support and constructive outcomes we have seen across our electric rate case filings over the last several years. These outcomes reflect deliberate, customer-focused investments designed to deliver on Michigan’s energy law and materially improve the reliability and resiliency of the electric grid.

It is the investments approved in this rate case and previous cases that directly support better service. That includes everything from critical capital investments across the grid to advanced tree trimming on a five-year cycle—work that meaningfully reduces outages, restoration time, and customer costs. Affordability can and should go hand in hand. That is good for our customers. Our track record of consistent and constructive rate case outcomes is strong, and that is possible through a deliberate process, a constructive environment, and focused work by the team. These strong outcomes are not a one-off or by chance; they are the result of a very deliberate regulatory strategy. It starts with Michigan’s energy law and enabling legislation.

From there, we build alignment, support, and pre-approvals through a coordinated set of filings: our integrated resource plan, renewable energy plan, and five-year electric distribution plan. We also utilize proven regulatory mechanisms like the investment recovery mechanism that streamline proceedings, ensure certainty of recovery, and drive accountability. You combine that framework with strong testimony and clear business cases, and the result is exactly what you see here: constructive outcomes and the support needed for customer investments while maintaining affordability. Looking forward to our upcoming regulatory agenda, in April we saw the MPSC staff position in our current gas rate case recommending over 75% of our $240 million ask be approved.

In our twenty-year renewable energy plan, our filing will also include a growth scenario highlighting the need for additional capacity to ensure we are prepared for the growing customer base in Michigan as we see data center and manufacturing interest in our service territory. A portion of these renewables and the additional gas capacity are in our current five-year plan, with more upside opportunity given additional storage and renewables to meet Michigan’s energy law and customer load beyond the five-year plan. We have identified that for every 1 gigawatt of new large load, we could see capital opportunity of $2 billion to $5 billion. Again, those investments would be incremental to our current capital plan.

I am very proud of the team and the thoughtful work on these plans. The comprehensive analysis and modeling take months and are done with a deep commitment to building a plan that is best for our customers and our state. At CMS Energy Corporation, our customers are at the center of all we do—a promise to deliver safe, reliable, and affordable energy. While we are committed to the important and necessary investments in our electric and gas systems, we remain laser-focused on customer affordability. Our track record is strong—customer savings driven through the CE Way and further optimized with digital automation, episodic cost savings, load growth, and energy waste reduction, as further examples.

Our efforts here are meaningful and impactful. As a result, Michigan electric bills are the fourteenth lowest in the nation, well below the national average and also below the Midwest average. In our bill growth, you see on the left side of the slide, among the lowest in the country. On the right side of the slide, looking forward, customer bills—electric and gas—remain below the energy CPI, while investing over $24 billion over our five-year plan period. I am pleased with our progress, but we are not done yet. While delivering, we are sharply focused on continuing to bring down costs for our customers, particularly for those most in need. Additionally, affordability is supported by growth.

Michigan continues to make headlines and top rankings nationwide as we see new or expanding load materialize in the state and support 2% to 3% annual sales growth. This growth allows us to spread fixed costs over a larger customer base and improve affordability for all customers. We have significant interest in our service territory with contracts for roughly 100 megawatts of new load signed last year, and we have exceeded that in just Q1 of this year—approximately 110 megawatts of signed contracts year to date. This is all on top of the approximately 450 megawatts connected last year. As I have shared in many investor meetings, Michigan has more engineers per capita than any other state.

We are the second most diverse state in agriculture. We have many aerospace and defense businesses and a rich automotive heritage. Our service territory is growing with manufacturing and industrial, bringing with it large investments, jobs, supply chains, and commercial and residential growth. One of our larger recently signed contracts is with Michigan Potash and Salt Company, a strategic and critical mineral manufacturer and the only established and sustainable potash reserve in the U.S., expanding in our service territory, bringing with it 130 jobs and over $1.3 billion of investment in Michigan. I love seeing growth like this and the value that it brings to Michigan, our customers, communities, and investors.

There is also diversity in this growth, which is important in the context of data centers, which I will cover on the next slide. Moving on to our growth pipeline, you see that win here on slide eight with Michigan Potash moving through the funnel to a signed contract. There were also several other smaller customer expansions not shown on the slide that make up roughly 110 megawatts year to date. In addition to strong manufacturing and industrial processing, Michigan continues to attract data center interest, and I am pleased with the progress we have made over the last quarter.

Our announced data center continues to close in on final contract after reaching commercial terms on the extraordinary facilities agreement and now commercial terms on the rate contract. As I mentioned in our year-end call, another data center has continued to progress in advanced contract negotiations. I am also pleased with community engagement and the forward progress experienced at a local zoning level. Keep in mind, these data centers are not yet reflected in our five-year customer investment plan, and associated additional investments will not be borne by existing customers. In fact, each gigawatt of new data center load that materializes in our service territory will reduce our average customer rate by 2% annually over a five-year period.

Now on to the financials for the quarter. In the first quarter, we reported adjusted earnings per share of $1.13. We remain confident in this year’s guidance and long-term outlook and are reaffirming all our financial objectives. Our full-year guidance remains at $3.83 to $3.90 per share, with continued confidence toward the high end. Longer term, we continue to guide toward the high end of our adjusted EPS growth range of 6% to 8%. With that, I will hand the call over to Rejji.

Rejji P. Hayes: Thank you, Garrick, and good morning, everyone. On slide 10, you will see our standard waterfall chart, which illustrates the key drivers impacting our financial performance for the quarter and our year-to-go expectations. For clarification purposes, all of the variance analyses herein are in comparison to 2025, both on a first quarter and a nine-months-to-go basis. In summary, through the first quarter of 2026, we delivered adjusted net income of $346 million, or $1.13 per share, which compares favorably to the comparable period in 2025, largely due to NorthStar outperforming a relatively soft comp in the first quarter of last year coupled with higher rate relief net of investments at the utility.

These sources of positive variance were partially offset by a significant ice storm in our electric service territory in March. From a top-line perspective at the utility, heating degree days in Michigan ended up at relatively normal volumes for the quarter, as a relatively warm March and February offset a typically cold January. The impact of normal weather drove $0.01 per share of favorable variance versus 2025. Rate relief net of investment-related expenses resulted in $0.11 per share of positive variance due to the residual benefits of last year’s constructive electric and gas rate orders as well as earnings associated with ongoing renewable projects at the utility.

Moving on to cost trends, as noted, we experienced an uptick in storm activity during the quarter, including a sizable ice storm in March, which was bigger than last year’s storm. As such, we saw $0.05 per share of negative variance for this cost category, which includes some positive offsets associated with our electric supply business. In our catch-all category represented by the final bucket in the actual section of the chart, you will note a positive variance of $0.04 per share, largely driven by the impact of achieving key milestones for ongoing renewable projects at NorthStar and a reversal of last year’s outage at DIG, partially offset by higher parent financing costs, namely a higher average share count.

Looking ahead, we plan for normal weather as always, which equates to $0.23 per share of negative variance for the remaining nine months of the year driven by the absence of favorable temperatures experienced in 2025, primarily in our electric business. From a regulatory perspective, we are assuming $0.24 per share of positive variance, which is largely driven by the constructive electric rate order received from the commission in March, ongoing benefits of renewable projects at the utility, and the assumption of a constructive outcome in our pending gas rate case.

On the cost side, we anticipate lower overall O&M expense equating to $0.04 per share of positive variance at the utility for the remainder of the year, largely driven by expected cost performance through the CE Way and other cost reduction initiatives underway. Lastly, in the penultimate bar on the right-hand side, you will see an estimated range of $0.06 to $0.13 per share of positive variance, which incorporates continued solid performance at NorthStar, partially offset by planned parent financing costs including the effects of equity dilution. Before moving on, I will just note that our track record of delivering on our financial objectives over the last two decades, irrespective of the circumstances, speaks for itself.

That said, we will always do the worrying so you do not have to. We remain confident in our ability to deliver on our financial and operational objectives this year to the benefit of all stakeholders. Slide 11 offers an update to our funding needs in 2026 at the utility and the parent. As a reminder, the convertible debt that was opportunistically issued last November addressed a good portion of our financing needs at the parent for the year while offering significant financial flexibility on our remaining needs.

From an equity needs perspective, given the trading performance of our stock during the first quarter versus our plan assumptions, we executed equity forward contracts totaling approximately $495 million, significantly de-risking our planned needs for the year. As you can see in the table on the slide, we settled approximately $142 million of said equity contracts during the quarter, and as per our guidance, we plan to issue an aggregate amount of approximately $700 million over the course of the year. Finally, we will look to complete the balance of our financing plan at the utility over the remainder of the year, and as always, we will be opportunistic and look to capitalize on strong market conditions.

Moving on to credit quality, I am pleased to report that both Moody’s and Fitch reaffirmed our credit ratings in March as indicated at the bottom of the table on slide 12. That said, it is worth noting that Moody’s did move the utility to a negative outlook largely due to the size of our five-year capital investment plan relative to the timing of cost recovery, particularly for large projects with protracted construction cycles. Needless to say, we are evaluating a variety of countermeasures to address Moody’s concerns. As always, we will continue to target solid investment-grade credit ratings and we will manage our key credit metrics accordingly as we balance the needs of the business.

With that, I will hand it back to Garrick for his final remarks before the Q&A session.

Garrick J. Rochow: Thanks, Rejji. At CMS Energy Corporation, we deliver—twenty-three years now of consistent, industry-leading performance regardless of circumstances, year in and year out. You can count on CMS Energy Corporation to deliver for all of its stakeholders. With that, Rob, please open the lines for Q&A.

Operator: Thank you very much, Garrick. The question-and-answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key followed by the digit one on your touch-tone telephone. If you are using a speaker function, please make sure you pick up your handset. We will proceed in the order you signal us, and we will take as many questions as time permits. If you find that your question has been answered, you may remove yourself by pressing the star key followed by the digit one. We will pause for just a second. Our first question comes from the line of Richard Sutherland from Truist. Your line is open.

Analyst: Hey, good morning.

Garrick J. Rochow: Hey. Welcome.

Analyst: Thank you. There has been a lot of attention on data centers, and there is a lot to dig into here. You talked about confidence in what you are seeing. I am curious about the opportunities as it stands now relative to last quarter, and in particular, if you see both of these data centers come through, what is the potential to defer or delay your electric rate case filing cadence on the back of that? Anything you can speak to there—load ramp—would be helpful. Thank you.

Garrick J. Rochow: I am very pleased with the progress. Let me take a step back. If I start with the pipeline, we have shared historically it is roughly about 9 gigawatts. There are customers that are falling out of the pipeline and going through what we saw with Michigan Potash and having successful contracts. There are new companies coming in, and so the pipeline is strong and actually much larger than 9 gigawatts. Those are the ones that are more qualified, you might say, in the process. As I shared in the Q4 call, I continue to be pleased with the progress of the data centers—the hyperscalers—in our service territory, looking at different locations, multiple locations, to locate those data centers.

We have made great progress with the contractual pieces with those companies. I am pleased with that, pleased with the work the team is doing, and we are working through the zoning process here in Michigan. I have seen those data center companies out meeting with local commissions and communities. We are standing side by side with them to address those issues. So a lot of positive progress. In the context of the “stay out” you are referring to—the DTE approach—I have not seen their filing yet, so I cannot speak to the specifics, just what has been in the media.

I will say this: we, in November, put a tariff in place—a really great tariff—setting the standard, really one of the best in the country. These hyperscalers have quickly adapted to it. They know what the hurdle mark looks like. I am very pleased with it. It speaks to how we protect existing customers, we protect the business, and it really provides a path for benefits to flow back to customers, which is critically important. It is also important to put this in context. There is significant capital runway—there are a lot of opportunities to invest in this business. We are investing heavily in the electric grid to improve reliability and resiliency so it is better for our customers.

I hate when a customer is without power and the cost and the impact of that. I appreciate the commissioners’ comments on how affordability and reliability can go hand in hand; they are not opposed. We have this twenty-year IRP for the supply needs of the state. We have to meet Michigan’s energy law and the renewables, but we also have to think about those times when the sun is not shining or the wind is not blowing. Batteries make up a part of that, but we have to introduce natural gas to replace some of our existing peaking. That is an important piece of investment right now. There is also the importance of the safety of the gas system.

That is why we are in annual rate cases. But the most important thing is affordability for our customers right now. We have talked about that through the CE Way, through episodic cost savings. A big piece of this is growth, and that is how I tie it back to data centers. Whether that is internal focus or what we are doing externally, know this: we are focused on the root cause. We have important investments, and we believe we can go in for annual rate cases and keep them close to the rate of inflation for our customers.

One thing that is important about annual rate cases is we pass along savings to our customers every single time, and that is what we are focused on. The stats are we are the fourteenth lowest electric bill out there. That is still not good enough because affordability is defined by our customers, and there are some customers that are struggling. We need to help them, and that is what we are focused on—affordability for our customers. Thanks for your question. Long answer, but there is a lot there.

Analyst: Certainly a lot there, and I appreciate the comprehensive response. Switching gears, there have been some media reports out there around NorthStar. Maybe to zoom out broadly across your portfolio, if you were to consider any transactions around the portfolio, do you have any guiding lights around how you think about the qualitative versus quantitative aspects of a deal—in particular, accretion, dilution, the prospects of near-term dilution versus breakeven over the long term?

Garrick J. Rochow: Just to be clear, we have a long-standing company policy: we do not comment on M&A. Period. What I have shared about NorthStar in the past is consistent with other investor meetings or earnings calls. Look at the thermal assets—Dearborn Industrial Generation. Energy and capacity prices are increasing. We strike bilateral contracts and layer them over time. They have been better than plan, and we have shown that in some of the slides before. In terms of the renewables, we have used this baseball analogy: we hit singles and doubles. We are not aiming for home runs. These are solid projects.

We do one or two of them a year—maybe three in a busy year—utility-like returns or better, with a contracted off-taker, long-term contracts. We safe harbor the assets out in the 2028–2029 time frame and look to recycle the capital. That whole NorthStar mix is about 5% of our earnings mix. The rest is utility.

Analyst: Understood. Thanks for the time.

Garrick J. Rochow: Thank you.

Operator: Your next question comes from the line of Wells Fargo. This is Marvella on for Shahriar Pourreza. Your line is open.

Analyst: Maybe building on the data center topic, what specific color can you give us on what is going on with Gaines Township and the Microsoft data center—status there and how we should be thinking about public pushback?

Garrick J. Rochow: My mom used to say good things come to those who wait, and my mom was right. I talked about the contract pieces in my remarks, and I shared that I am pleased with the zoning piece. It is important for the investment community to understand Michigan’s local units of government. There are roughly 2,800 local units in Michigan. About 96% of the state is covered by some kind of township. In those townships there are planning commissions or planning boards. They work through zoning, but they also work on site layout and other plans, and then there is a township board. There are several steps in that approval process.

I have been pleased because not only have the data centers been meeting with the township and planning officials; we have been meeting with them, and we have seen good progress. They are doing good due diligence. They are elected officials, and they are doing the right things. They have to dig into property tax impact, zoning requirements, implications for agricultural or industrial land, water, and so on. They are making sure they do good due diligence. I appreciate the process. I am familiar with it because we go through it when we are doing big projects, whether a gas pipeline or a solar project. Again, I feel good about where we are headed.

My mom was right—good things come to those who wait—and we are working through that process and are pleased with where it is headed.

Analyst: Thanks, that is super helpful. Following up on case cadence, are there any specific triggers that would increase the time between cases?

Garrick J. Rochow: In terms of settlement, we have stayed out of cases before. That is not abnormal or unusual for us. I would certainly consider that in the future. I go back to my comments: large capital runway and the ability to pass savings forward to our customers. At the heart of it, this is not about skipping cases and pushing a wave; it is about bringing affordability to our customers. That is where we are focused.

Operator: Your next question comes from the line of Jefferies. Your line is open.

Analyst: Garrick, given the Gaines Township tabling on April 15, can you reaffirm the “as early as 2028” online date for your final-stages prospect, or has that timeline softened?

Garrick J. Rochow: The project timelines are the same. 2028 is the timeline within the contracts—early electrons, you might say, and then a ramp over 2029–2030. Those time frames are the same.

Analyst: Thank you. Without naming the customer, is the prospect you have reached commercial agreement with the same one tied to the Gaines process or a different site in your territory?

Garrick J. Rochow: There are at least two hyperscalers that we are in advanced negotiation with. I have shared that one we are finalizing the contract with, and there are many more in the pipeline. I really cannot disclose more at this time.

Analyst: Thanks. Last one: given some news out there, and keeping in mind your policy, higher level—where IPP multiples are trading and the DIG re-contracting out past 2030—has anything shifted in how you are thinking about NorthStar strategically, or is DIG still something you see being part of CMS Energy Corporation well into the next decade?

Garrick J. Rochow: Consistent with how we have talked about it in previous investor meetings and earnings calls, there is no change. I walked through the thermal units and the renewables earlier, and that stands.

Operator: Your next question comes from the line of Nicholas Joseph Campanella from Barclays. Your line is open.

Nicholas Joseph Campanella: Hey, thanks for taking my questions, and thanks for the time. There are two opportunities. We do not know who the commercial agreement is specifically with. I understand from the prepared remarks and your response earlier you are still working through the permit. I am trying to understand more granularity on what is needed for the permit and your expectation to have that done by summer—or will this go through the entire year?

Garrick J. Rochow: It varies depending on location. I am not trying to dodge your question; there are multiple townships, and these hyperscalers are pursuing investment in multiple properties in multiple areas of the state. I cannot give a blanket status. There are steps: first, the planning commission determines whether it meets zoning requirements and whether there must be a change; then they review a site layout; and eventually it goes to the township board. It varies by place. The hyperscalers are looking at multiple locations and are at multiple points in that process—and have advanced within that process.

They are active in the communities, meeting with local officials and communities and doing the right things, which gives me optimism about the progress underway. We know this process well. When they pause to do more due diligence and listen to constituents, it goes back and forth. It would not be appropriate for me to jump ahead and predict the date. Let those elected officials do their work. You will be one of the first to know, Nick, when we make the announcements.

Nicholas Joseph Campanella: Thanks, I appreciate that. Since you have executed on the bulk of 2026 equity needs—still a little outstanding—how are you thinking about being proactive to de-risk 2027 and 2028? My understanding is there might be more front-end equity in this five-year plan.

Rejji P. Hayes: Yeah, Nick, appreciate the question. To reground on the five-year equity needs we walked through on our fourth-quarter call: we are planning $700 million this year—that is still the plan—and then on average thereafter for the next four years it will be $750 million, but it is far from linear; that is just a simple average. As you rightly noted, it is a bit more front-end loaded. We expect the majority of the equity needs to be issued in the first three years of this plan, commensurate with the capital plan. We have been big proponents of the equity forward product, which we used to good effect in the first quarter.

As I noted, we already priced just under $500 million to take that risk off the table and settled a small portion in the first quarter. That will be the bias going forward. While I believe we are undervalued, there is valuation and then there is what is in our plan. We saw the stock trading at levels above our plan assumptions over the course of the quarter, so we were opportunistic. If we see the stock continue to trade at levels better than our plan assumptions this year and in subsequent years, we may execute additional equity forwards to de-risk 2027 and beyond.

First and foremost, we will prioritize our needs in 2026, address those, and then see where we are by the second half of the year.

Nicholas Joseph Campanella: That is helpful. Thank you. One more—reflecting on past portfolio rotation efforts like the EnerBank sale—strategically, is there appetite to do something like that again, or do you continue to have very clear line of sight to the high end of the 6% to 8% through 2026–2028?

Garrick J. Rochow: No comments on M&A, and we are providing guidance on the call.

Nicholas Joseph Campanella: Thank you for the time.

Garrick J. Rochow: Thank you.

Operator: Your next question comes from the line of JPMorgan. Your line is open.

Analyst: Good morning. This is Aiden Kelly on for Jeremy Tonet. How are you thinking about affordability going into the elections? What is the level of understanding from the candidates over the possibility that utilities could lower rates with new data center load, and any thoughts there?

Garrick J. Rochow: There is an important slide in our deck—one of my favorites—showing consistent growth over twenty-three years: multiple CEOs, different governors, Republicans and Democrats, different commissions and legislators, and we have delivered. The sweet spot—the secret sauce—is being an honest broker focused on what is best for Michigan and our customers, and listening to policymakers and candidates to see what they want to get done and how we can be a solution provider. I was with a governor candidate last night, and that is what we were talking about—how can we be a solution provider? You stay in that space—hard as it may be—and you build trust.

It is an election year; we are a purple state, and we are used to a lot of back and forth. I sleep well at night not because I am arrogant or know how this plays out, but because we have a good team. Focus on the customer, build trust, and you can find solutions. Even though we are the fourteenth lowest state for electric bills—and you can present that data—the reality is affordability is defined by the end user. We have to keep working on that. Some of that is internal tools; some is external. I walk around with two pages of ideas for policymakers. We meet with all the gubernatorial candidates.

We approach it as a business leader, not just from an energy perspective. Every one of these candidates is focused on growing Michigan. The three leading candidates are supportive of data centers in a thoughtful, comprehensive way. We talked about how that can shape affordability. They are concerned about education; we help with those conversations because we are concerned too. We can work with all three of the leading candidates. Be an honest broker, focus on the customer, listen to what they are trying to get done. Some focus on low-to-moderate income; some focus on the business environment. We can do both and provide good solutions for our customers to help on affordability.

Rejji P. Hayes: All I would add to Garrick’s remarks is to reemphasize the flywheel and algorithm in our financial planning. Affordability remains one of the key governors in our planning process. For almost twenty-five years, we do not take a plan to our board, let alone to the street, unless it passes the laugh test from an affordability perspective, meets balance sheet hurdle rates, and can we get the work done. On affordability, the dimensions are broad: we look at compound annual growth of rates over the planning period, we benchmark versus the region and the country, and we take into account both rates and bills.

While we have grown rate base historically high single digits and now low double digits in our forecast, we are still self-funding two thirds to three quarters of that rate base growth with CE Way, episodic cost reductions, and energy waste reduction. Over time, we hope it will also be sales growth as we execute on the economic development pipeline. That is how, even while growing rate base, you keep bills and rates in low single-digit levels year in and year out, irrespective of who is running the state.

Analyst: Makes sense. One separate question on CapEx upside: could you remind us what underlies the “1 gigawatt equals $2 billion to $5 billion of CapEx” sensitivity—what drives the low and high ends?

Rejji P. Hayes: For the low end—around $2 billion—you have assumptions of storage resources and our current estimates for a simple-cycle combustion turbine, plus some infrastructure costs like substation work and wires. As you move toward the high end, a couple things occur. First, a change in resource—if the cup runneth over and we see highly successful conversion of the backlog, we would potentially look at combined-cycle gas. That starts to get you toward the upper range. You likely warrant additional infrastructure—substations and wires—as you see additional economic development come to fruition. It is also important that we comply with the clean energy law requirements, which are predicated on sales. That also adds to the high end of the equation.

That is what drives the range.

Operator: Your next question comes from the line of Michael Sullivan from Wolfe Research. Your line is open.

Michael Sullivan: Good morning. On the data center pipeline, you talked to incremental CapEx upside that is not in the plan. As we think about your earnings trajectory, is this something that can contribute in the next five years if you bring these over the finish line?

Rejji P. Hayes: Appreciate the question. It is really a function of the load ramp. Most opportunities in our backlog today—particularly those in advanced to final stages—have load ramps that really start to materialize, as Garrick noted, in the 2028 time frame. Some that are slightly lower probability are 2029–2030, and the material ramp is really in the next decade. Supply needs will increase commensurately with that ramp. While we would see additional capital investment opportunities likely come in the next five-year plan that we roll out, it is a little early to suggest whether it would put upward pressure on our EPS growth range. Job one is to convert these opportunities. If we see success, it will drive additional capital investment opportunities.

Given the ramp, we will see what happens over the next five to ten years, but it is premature to say it would immediately increase EPS growth.

Michael Sullivan: Looking ahead to the IRP filing you have coming up, you mentioned a growth scenario highlighting the need for additional capacity. Tying that into the questions around NorthStar, is there any world where DIG can be used as a solution? I know it has been tried in the past—any change in appetite to use that asset to meet additional demand growth?

Garrick J. Rochow: Going back to our last IRP, we attempted to bring DIG into the utility. From an affiliate transaction perspective, it was too big of a hurdle, and we do not see proposing that in this IRP to bring it into the utility. Stepping back, I am pleased with the team’s work on this IRP—about 1.5 gigawatts of net natural gas to replace existing, and for resource adequacy of the grid, you need renewables and batteries, but there are times of day and year where you need natural gas to peak. Campbell 3 and 4—which are older oil-fired and gas-fired peaking units—this really works to replace those almost megawatt-for-megawatt from a capacity perspective.

The renewable story—much of what is approved is in the REP. As part of this IRP, we are looking out twenty-plus years, so it will give some color and context for investments beyond the five-year capital plan out into the ten-year window as well. In this IRP, we have to do multiple scenarios, and one is a growth scenario. Given interest from manufacturing, industrial processing, and data centers, that is important. That would mean more batteries, more renewables, and potentially other assets. Those line up well with the contracts we are working through and should come together through the IRP process.

Operator: Your next question comes from the line of Travis Miller from Morningstar. Your line is open.

Travis Miller: Good morning. State legislation update—does anything get done in an election year? Any impact on your cadence of regulatory filings?

Garrick J. Rochow: Most focus, particularly after spring recess, will be on the state budget. It has been a bit contentious given our purple state. It was contentious last year and will likely be that way this year as well, and it dragged out most of the year. I do not know that we will see a whole lot of policy movement. If we do, know that we are engaged and focused on finding the right solution for customers. In some cases, there are great ideas in bills that can help with affordability, and we would like to see those progress with the right mechanisms. We will see if there is enough time and space in the sessions.

Travis Miller: Any change in your rate case cadence—electric in spring and gas in fall?

Garrick J. Rochow: No. We will file our electric rate case in June. For the gas case, we had staff position in April. The PFD will come out in the August time frame, and then it is September–October for the final order. That is roughly when you will see the gas order if we go the full distance.

Operator: Your next question comes from the line of Andrew Weisel from Scotiabank. Your line is open.

Andrew Weisel: Good morning. On the demand side, you signed 110 megawatts of new load year to date versus 100 megawatts signed last year and 450 megawatts connected last year. Of the 110 new, when do you expect that to connect and ramp? Does that take you to the high end of the 2% to 3%?

Garrick J. Rochow: It varies—different customers make that up. Some are expansions underway; some will play out over this five years. For Michigan Potash, we got permission to talk about jobs and investment, but not timeline yet; we will share specifics when we can. What we have communicated in our five-year plan is 2% to 3% load growth, and we keep giving concrete examples of how that is materializing, giving us confidence in delivering that for shareholders and customers.

Andrew Weisel: You mentioned Moody’s has the utility on negative outlook and you are considering countermeasures. Can you elaborate on options and how proactive you need to be?

Rejji P. Hayes: Since this is at the OpCo, and you are constrained by the ratemaking capital structure, we will have to evaluate a variety of solutions and likely educate the commission and other stakeholders on what we would do over the next twelve to eighteen months to avoid further action by Moody’s. Not prepared to elaborate on specifics today; I think they are fairly intuitive—related to the ratemaking capital structure, cost of capital, and the like. We are exploring a variety of qualitative and quantitative measures and will have conversations over time with key stakeholders.

Andrew Weisel: One last one. Without speculating on M&A, would you consider splitting NorthStar into pieces—DIG versus the renewables development business?

Garrick J. Rochow: I appreciate the persistence. No comment on M&A.

Operator: Your next question comes from the line of Sophie Karp from KeyBanc. Your line is open.

Sophie Karp: Good morning. You highlighted increasing diversity within your development pipeline. Is it fair to think about deemphasizing data centers in that pipeline? Any change in attractiveness of your service territory for hyperscalers?

Garrick J. Rochow: No, it is not a deemphasis at all. I love Michigan, and I like to see we are growing in a variety of ways. More engineers per capita has attracted businesses alone. Our rich automotive heritage and the WWII era defense base has stuck—defense projects are underway. There is some onshoring as well. We are the second most diverse state in agriculture, and we have seen more food processing. We will have more announcements coming. There is really diverse growth in the state. Data centers are in there; we are making great progress. That is one part of our growth story, and I love the diversification.

That is unique and gives me a lot of confidence in our future and growth profile.

Rejji P. Hayes: Adding to Garrick’s comments, we talk about the full portfolio versus just data centers. About 15% of that 9 gigawatt backlog is represented by non–data center opportunities. When you do the math, that is over a gigawatt—quite impactful. We have talked about positive spillover effects: sustainable job growth and commercial activity once you get residential and population growth. Those are higher-margin customer classes than industrial. We like the data center opportunities, but also the non–data center ones—large manufacturing companies and so on—because of the externalities. There is a lot of good momentum in Michigan and diverse opportunities.

Operator: Your next question comes from the line of Anthony Crowdell from Mizuho. Your line is open.

Anthony Crowdell: Good morning. I think the equity issuance plan steps up from $500 million in 2025 to $750 million on average over 2026–2030. Does incremental large-load conversion above your base case reduce the need for equity, or does it accelerate capital intensity and therefore increase equity?

Rejji P. Hayes: Because our customer investment plan does not include these large-load prospects, converting one or two of the larger opportunities would likely put upward pressure on our capital plan. As we noted, every gigawatt gets you somewhere between $2 billion to $5 billion of incremental CapEx. That would put upward pressure on CapEx and thus on financing needs—equity, debt, and all things in between. There would likely be additional equity needs, funding growth and rate base expansion as a result. So yes, upward pressure on equity, but because capital grows with the conversion.

Anthony Crowdell: Perfect. That is all I had. And, Garrick, you are right—Mom is always right.

Garrick J. Rochow: Thanks, Anthony.

Operator: We have reached the end of our question and answer session. I will now turn the call back over to Garrick J. Rochow for closing remarks.

Garrick J. Rochow: Thanks, Rob. I would like to thank you for joining us today. I look forward to seeing you at the American Gas Association Financial Forum. Take care and stay safe.

Operator: This concludes today’s conference. We thank everyone for your participation.

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