What changed in this filing

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Item 1A. Risk Factors

2026-02-10 compared with 2025-02-11 · 58 added, 41 removed, 215 unchanged (32% of the section changed)

41 unchanged sentences

Changes to ROA could have a material adverse effect on CMS Energy’s and Consumers’ businesses.

Michigan law allows electric customers in Consumers’ service territory to buy electric generation service from alternative electric suppliers in an aggregate amount capped at ten percent of Consumers’ sales, with certain exceptions.

The proportion of Consumers’ electric deliveries under the ROA program and on the ROA waiting list is over ten percent.

Michigan law allows electric customers in Consumers’ service territory to buy electric generation service from alternative electric suppliers in an aggregate amount capped at 10 percent of Consumers’ sales, with certain exceptions.

The proportion of Consumers’ electric deliveries under the ROA program and on the ROA waiting list is over 10 percent.

Consumers’ rates are regulated by the MPSC, while alternative electric suppliers charge market-based rates, putting competitive pressure on Consumers’ electric supply.

Groups are advocating for an ROA-like community solar system that allows third parties to sell directly to customers and offer them a regulated bill credit.

If the ROA limit were increased, this new ROA-like community solar system were allowed, or electric generation service in Michigan were deregulated, it could have a material adverse effect on CMS Energy and Consumers.

Groups are advocating for an ROA-like community solar program that allows third parties to sell directly to customers and offer them a regulated bill credit.

If the amount of ROA sales increased, this new ROA‑like community solar program were allowed, or electric generation service in Michigan were further deregulated, it could have a material adverse effect on CMS Energy and Consumers.

FERC issued an advance notice of proposed rulemaking in response to the Secretary of the DOE’s direction to FERC to consider the advance notice of proposed rulemaking as a means to standardize and expedite interconnection procedures and agreements for large electric loads.

If FERC asserts jurisdiction over the distribution components of large-load customers’ interconnections to the transmission system, or allows large-load customers to directly purchase electricity from wholesale markets, it could have a material adverse effect on CMS Energy and Consumers.

The creation of utilities by municipalities in Consumers’ service territory, or the impairment of Consumers’ franchise rights to serve customers in municipalities, could have a material adverse effect on CMS Energy’s and Consumers’ businesses.

Michigan law allows Consumers’ electric and natural gas utility businesses to serve customers pursuant to franchises granted by municipalities.

Michigan law also allows municipalities to create, own, and operate utilities.

Michigan law also allows municipalities to create, own, and operate

If one or more municipalities in Consumers’ service territory created a new or supplemental utility, or impaired the franchise under which Consumers serves customers in the municipality, it could have a material adverse effect on CMS Energy and Consumers.

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These distributed energy resources are connected to Consumers’ electric grid.

The 2023 Energy Law increases the cap on distributed generation to ten percent of utilities’ peak loads.

It also specifies an inflow and outflow rate method that must be implemented by the MPSC and provides federal funding for low-income distributed generation.

The 2023 Energy Law increases the cap on Consumers’ distributed generation program to 10 percent of utilities’ peak loads.

It also specifies an inflow and outflow rate method that must be implemented by the MPSC.

FERC policy allows many customer-owned behind-the-meter and grid-connected distributed energy resources to participate in and receive revenue from wholesale electricity markets, as governed by evolving wholesale market rules subject to FERC oversight.

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For example, MPSC orders could prevent or curtail Consumers from shutting off non‑paying customers, could prevent or limit the implementation of an electric or gas revenue mechanism, or could penalize Consumers for not meeting service and reliability standards.

Regulators could face competitive or political pressures to avoid or limit rate increases for a number of reasons, including economic downturn in the state, reliability and economic justice concerns, or decreased customer base, among others.

Regulators could face competitive or political pressures to avoid or limit rate increases for a number of reasons, including affordability concerns, economic downturn, reliability and economic justice concerns, or decreased customer base, among others.

FERC authorizes certain subsidiaries of CMS Energy, including Consumers, to sell wholesale electricity at market-based rates and to provide certain other wholesale electric services at rates and terms subject to FERC approval.

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At least one CMS Energy subsidiary participates in the wholesale electricity markets operated by ERCOT, over which FERC has limited control.

Consumers also faces regulatory uncertainty resulting from the U.S.

Secretary of Energy’s emergency orders issued under the Federal Power Act and associated DOE regulations, which direct continued

operation of the J.H.

Campbell, as well as similar prior or future executive actions, including the January 2025 and April 2025 executive orders related to energy supply and reliability.

The Federal Power Act, DOE regulations, and U.S.

Secretary of Energy emergency orders all provide for cost recovery associated with continued operations, but there is not currently a FERC-approved MISO Tariff for recovery of compliance costs associated with the continued operation of J.H.

Campbell, and continued operation of J.H.

Campbell is not contemplated in Consumers’ current MPSC rates or rate filings at the MPSC.

Consumers is pursuing cost recovery at FERC but cannot predict the outcome of those efforts or the impact of other executive actions.

The various risks associated with the MPSC and FERC regulation of CMS Energy’s and Consumers’ businesses, which include the risk of adverse decisions in any number of rate or regulatory proceedings before either agency, as well as judicial proceedings challenging any agency decisions, could have a material adverse effect on CMS Energy and Consumers.

Changes to the tariffs or business practice manuals of certain wholesale market operators such as MISO, PJM, or ERCOT, or corresponding impacts

such as interconnection delays for new electric generation or storage projects, could also have a material adverse effect on CMS Energy and Consumers.

Utility regulation, state or federal legislation, and compliance could have a material adverse effect on CMS Energy’s and Consumers’ businesses.

CMS Energy and certain of its subsidiaries, including Consumers, are subject to, or affected by, extensive utility regulation and state and federal legislation, including through application of policies and rules of numerous state and federal agencies and governmental entities.

Changes to the tariffs or business practice manuals of certain wholesale market operators such as MISO, PJM, or ERCOT, or corresponding impacts such as interconnection delays for new electric generation or storage projects, could also have a material adverse effect on CMS Energy and Consumers.

Utility regulation, state or federal legislation, regulation, and compliance could have a material adverse effect on CMS Energy’s and Consumers’ businesses.

CMS Energy and certain of its subsidiaries, including Consumers, are subject to, or affected by, extensive utility regulation and state and federal legislation and regulation, including through application of policies and rules of numerous state and federal agencies and governmental entities.

If it were determined that CMS Energy or Consumers failed to comply with applicable laws and regulations or with applicable tariff provisions, they could become subject to fines, penalties, refund or disgorgement orders, or disallowed costs, or be required to implement additional compliance, cleanup, or remediation programs, the cost of which could be material.

CMS Energy and Consumers cannot predict the impact of new laws, rules, regulations, tariffs, principles, or practices by federal or state agencies or wholesale electricity market operators, or challenges or changes to present laws, rules, regulations, tariffs, principles, or practices and the interpretation of any adoption or change.

Furthermore, any state or federal legislation concerning CMS Energy’s or Consumers’ operations could also have a material adverse effect.

CMS Energy and Consumers cannot predict the impact of new laws, rules, regulations, tariffs, principles, orders, or practices by federal or state agencies or wholesale electricity market operators, or challenges or changes to present laws, rules, regulations, tariffs, principles, orders, or practices and the interpretation of any adoption or change.

Furthermore, any state or federal legislation, regulation, order, or other action concerning CMS Energy’s or Consumers’ operations could also have a material adverse effect.

FERC, through NERC and its delegated regional entities, oversees reliability of certain portions of the electric grid.

CMS Energy and Consumers cannot predict the impact of FERC orders or actions of NERC and its regional entities on electric system reliability.

CMS Energy and Consumers cannot predict the impact of the DOE or FERC orders or actions of NERC and its regional entities on electric system reliability.

Additionally, natural gas pipeline infrastructure has recently been under scrutiny following disruptions related to extreme weather and cyber incidents.

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Achieving these plans depends on numerous factors, many of which are outside of their control.

Consumers has announced a long-term strategy for delivering clean, reliable, resilient, and affordable energy, including a plan to end the use of coal in owned generation in 2025, and other subsidiaries of CMS Energy have plans to develop and operate clean energy assets.

Consumers has announced a long-term strategy for delivering clean, reliable, resilient, and affordable energy, and other subsidiaries of CMS Energy have plans to develop and operate clean energy assets.

The MPSC, FERC, other regulatory authorities, or other third parties may prohibit, delay, or impair some or all of CMS Energy’s and Consumers’ planned acquisitions or development of owned or purchased electric generation and storage capacity.

Consumers’ planned electric generation capacity, including renewable generation or storage projects, may be adversely impacted by interconnection delays at MISO or in the footprints of other regional transmission organizations, and/or by interconnection costs.

CMS Energy and Consumers and its contractors may be unable to acquire, site, construct timely, and/or permit generation and storage capacity, including some or all of the generation and storage capacity proposed in Consumers’ plan.

proposed in Consumers’ plan.

CMS Energy and Consumers’ ability to implement their plans may be affected by environmental regulations, global supply chain disruptions, import tariffs, and changes in the cost, availability, and supply of generation and storage capacity.

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Customer programs such as energy efficiency and demand response may not realize the projected levels of customer participation.

Consumers has also announced its Reliability Roadmap.

Consumers has also announced its electric Reliability Roadmap.

The Reliability Roadmap includes larger investments in grid hardening, distribution capacity, and automation to deliver better than median reliability to customers given increasingly severe weather and customer adoption of new technologies.

The MPSC or other third parties may prohibit, delay, or impair the Reliability Roadmap and some or all

of the associated capital investments.

The MPSC or other third parties may prohibit, delay, or impair the Reliability Roadmap and some or all of the associated capital investments.

Consumers’ ability to implement its plan may be affected by global supply chain disruptions and/or workforce availability.

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Additionally, changes in federal, state, or local tax rates or other changes in tax laws could have adverse impacts.

The change in administration and the expiring tax cuts in the TCJA could result in changes to the renewable energy tax credits enacted in the Inflation Reduction Act of 2022.

These changes could impact CMS Energy’s and Consumers’ clean energy efforts.

In July 2025, President Trump signed the OBBBA into law.

CMS Energy and Consumers evaluated the provisions of the OBBBA and concluded that the legislation is not expected to have a material impact on their respective financial statements.

This conclusion is subject to change as additional guidance or interpretations become available.

CMS Energy and its subsidiaries, including Consumers, must comply with the Dodd-Frank Act and its related regulations.

6 unchanged sentences

CMS Energy and Consumers have interests in fossil-fuel-fired power plants, other types of power plants, and natural gas systems that emit greenhouse gases.

Federal, state, and local environmental laws and rules, as well as international accords and treaties, could require CMS Energy and Consumers to install additional equipment for emission controls, undertake heat-rate improvement projects, purchase carbon emissions allowances, curtail operations, invest in generating capacity with fewer carbon dioxide emissions, or take other significant steps to manage or lower the emission of greenhouse gases.

Federal, state, and local environmental laws, regulations and orders, as well as international accords and treaties, could require CMS Energy and Consumers to install additional equipment for emission controls, undertake heat-rate improvement projects, purchase carbon emissions allowances, curtail or extend operations, invest in generating capacity with fewer carbon dioxide emissions, or take other significant steps to manage or lower the emission of greenhouse gases.

Similarly, Consumers could be restricted from constructing natural gas infrastructure due to potential environmental regulations, which could require more costly alternatives.

1 unchanged sentence

• a change in policy/regulation, regulators’ implementation of policy/regulation or litigation originated by third parties against CMS Energy or Consumers due to CMS Energy’s or Consumers’ greenhouse gas or other emissions or CCR disposal and storage

• impairment of CMS Energy’s or Consumers’ reputation due to their greenhouse gas or other emissions and public perception of their response to potential environmental regulations, rules, and legislation

• weather that may affect customer demand, company operations, or company infrastructure, including catastrophic weather-related damage and extreme temperatures;

2 unchanged sentences

Consumers expects to collect fully from its customers, through the ratemaking process, expenditures incurred to comply with environmental regulations, but cannot guarantee this outcome.

There is not currently a FERC-approved MISO Tariff for recovery of compliance costs associated with the continued operation of J.H.

Campbell, and continued operation of J.H.

Campbell is not contemplated in Consumers’ current MPSC rates or rate filings at the MPSC.

Consumers is pursuing cost recovery at FERC but cannot predict the outcome of those efforts or the impact of other executive actions.

If Consumers were unable to recover these expenditures from customers in rates, CMS Energy or Consumers could be required to seek significant additional financing to fund these expenditures.

11 unchanged sentences

CMS Energy and Consumers expect to incur additional substantial costs related to environmental remediation of former sites.

Consumers expects to incur additional substantial costs related to the remediation of its former MGP sites and other response activity costs at a number of other former sites, including, but not limited to, sites of retired coal-fueled electric generating units and sites containing coal ash and related materials, under

NREPA, RCRA, CERCLA and related state and federal regulations.

Consumers believes these costs should be recoverable in rates but cannot guarantee that outcome.

34 unchanged sentences

CMS Energy’s and Consumers’ utility operations are seasonal.

The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment, while peak demand for natural gas occurs in the winter due to colder temperatures and the resulting use of natural gas as heating fuel.

resulting use of natural gas as heating fuel.

Accordingly, CMS Energy’s and Consumers’ overall results may fluctuate substantially on a seasonal basis.

4 unchanged sentences

Data center electric demand could require a rapid and significant increase in generation capacity and grid infrastructure in the MISO footprint as well as in Consumers’ service territory, which could have a material effect on CMS Energy and Consumers.

Alternatively, this rapid expansion of data centers and resulting increase in demand for electric power in MISO and in Consumers’ service territory may not develop as planned.

Alternatively, this rapid expansion of data centers and resulting increase in demand for electric power in MISO and in Consumers’ service territory may not develop as anticipated.

Efforts to attract data center developers could be unsuccessful as other utilities and regions compete for these projects, which may limit future load growth.

In addition, local zoning, permitting, land‑use constraints, and other external factors outside Consumers’ control could impede data center development.

If these challenges arise and cannot be effectively mitigated, the anticipated benefits of data center load growth may not materialize.

Further, even when data center customers enter into contracts to purchase utility service, there is a risk they may not fulfill their contractual or tariff obligations.

CMS Energy and Consumers are subject to information security risks, risks of unauthorized access to their systems, and technology failures.

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These events could impact the reliability of electric generation and electric and gas delivery and also subject CMS Energy and Consumers to financial harm.

Cyber attacks, which include the use of malware, ransomware, computer viruses, and other means for disruption or

unauthorized access against companies, including CMS Energy and Consumers, are increasing in frequency, scope, and potential impact.

Cyber attacks, which include the use of malware, ransomware, computer viruses, and other means for disruption or unauthorized access against companies, including CMS Energy and Consumers, are increasing in frequency, scope, and potential impact.

While CMS Energy and Consumers have not been subject to cyber incidents that have had a material impact on their operations to date, their security measures in place may be insufficient to prevent a major cyber incident in the future.

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In addition, because CMS Energy’s and Consumers’ generation, transmission, and distribution systems are part of an interconnected system, a disruption caused by a cyber incident at another utility, electric generator, system operator, or commodity supplier could also adversely affect CMS Energy or Consumers.

A variety of technological tools and systems, including both company-owned information technology and technological services provided by outside parties, support critical functions.

A variety of technological tools and systems, including both company-owned IT and technological services provided by outside parties, support critical functions.

The failure of these technologies, including backup systems, or the inability of CMS Energy and Consumers to have these technologies supported, updated, expanded, or integrated into other technologies, could hinder their business operations.

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CMS Energy and Consumers are subject to risks that are beyond their control, including but not limited to natural disasters, civil unrest, terrorist attacks and related acts of war, cyber incidents, vandalism, and other catastrophic events.

Natural disasters, severe weather, extreme temperatures, fires, smoke, flooding, wars, terrorist acts, civil unrest, vandalism, theft, cyber incidents, pandemics, and other catastrophic events could result in severe damage to CMS Energy’s and Consumers’ assets beyond what could be recovered through insurance policies (which are subject to deductibles, limitations, and self-insurance amounts that could be material), could require CMS Energy and Consumers to incur significant upfront costs, and could severely disrupt operations, resulting in loss of service to customers.

Natural disasters, severe weather, extreme temperatures, wildfires, fires, smoke, flooding, wars, terrorist acts, civil unrest, vandalism, theft, cyber incidents, government shutdowns, pandemics, and other catastrophic events could result in severe damage to CMS Energy’s and Consumers’ assets beyond what could be recovered through insurance policies (which are subject to deductibles, limitations, and self‑insurance amounts that could be material), could require CMS Energy and Consumers to incur significant upfront costs, and could severely disrupt operations, resulting in loss of service to customers.

There is also a risk that regulators could, after the fact, conclude that Consumers’ preparedness or response to such an event was inadequate and take adverse actions as a result.

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CMS Energy and Consumers manage commodity price risk using established policies and procedures, and they may use various contracts to manage this risk, including swaps, options, futures, and forward contracts.

No assurance can be made that these strategies will be successful in managing

CMS Energy’s and Consumers’ risk or that they will not result in net liabilities to CMS Energy or Consumers as a result of future volatility.

No assurance can be made that these strategies will be successful in managing CMS Energy’s and Consumers’ risk or that they will not result in net liabilities to CMS Energy or Consumers as a result of future volatility.

A substantial portion of Consumers’ operating expenses for its electric generating plants and vehicle fleet consists of the costs of obtaining commodities.

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Unforeseen outages or maintenance of the electric and gas delivery systems, power plants, gas infrastructure including storage facilities and compression stations, wind energy or solar equipment, energy storage assets, and energy products owned in whole or in part by CMS Energy or Consumers may be required for many reasons.

When unplanned outages occur, CMS Energy and Consumers will not only

incur unexpected maintenance expenses, but may also have to make spot market purchases of electric and gas commodities that may exceed CMS Energy’s or Consumers’ expected cost of generation or gas supply, be forced to curtail services, or retire a given asset if the cost or timing of the maintenance is not reasonable and prudent.

When unplanned outages occur, CMS Energy and Consumers will not only incur unexpected maintenance expenses, but may also have to make spot market purchases of electric and gas commodities that may exceed CMS Energy’s or Consumers’ expected cost of generation or gas supply, be forced to curtail services, or retire a given asset if the cost or timing of the maintenance is not reasonable and prudent.

Unplanned generator outages could reduce the capacity credit CMS Energy or Consumers receives from MISO and could cause CMS Energy or Consumers to incur additional capacity costs in future years.

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CMS Energy and Consumers depend on these counterparties to remit payments and perform contracted services in a timely and adequate fashion.

In addition, any delay or default in payment or performance, including inadequate performance, of contractual obligations (such as contractual obligations by third parties to perform work, supply equipment, provide services, and meet related specifications or requirements), could have a material adverse effect on CMS Energy and Consumers.

In addition, any delay or default in payment or performance, including inadequate performance, of contractual obligations (such

as contractual obligations by third parties to purchase utility services, perform work, supply equipment, provide services, and meet related specifications or requirements), could have a material adverse effect on CMS Energy and Consumers.

Volatility and disruptions in capital and credit markets could have a negative impact on CMS Energy’s and Consumers’ lenders, vendors, contractors, suppliers, customers, and other counterparties, causing them to fail to meet their obligations.

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Reputational damage could have a material adverse effect and could result in negative customer perception and increased regulatory oversight.

A work interruption or other union actions could adversely affect Consumers.

At December 31, 2024, unions represent 46 percent of Consumers’ employees.

Consumers’ union agreements expire in 2025.

If these employees were to engage in a strike, work stoppage, or other slowdown, Consumers could experience a significant disruption in its operations and higher ongoing labor costs.

A work interruption or other union actions could adversely affect CMS Energy and Consumers.

At December 31, 2025, unions represent 45 percent of Consumers’ employees and 22 percent of NorthStar Clean Energy’s employees.

Consumers’ union agreements expire in 2030 and the majority of NorthStar Clean Energy’s represented employees have an agreement that expires in 2029.

If these employees were to engage in a strike, work stoppage, or other slowdown, CMS Energy or Consumers could experience a significant disruption in its operations and higher ongoing labor costs.

Failure to attract and retain an appropriately qualified workforce could adversely impact CMS Energy’s and Consumers’ results of operations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors