What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-10 compared with 2025-02-11 · 394 added, 336 removed, 541 unchanged (57% of the section changed)

17 unchanged sentences

• economic conditions

• load growth

• energy commodity prices

3 unchanged sentences

CMS Energy’s and Consumers’ purpose is to provide safe, reliable, affordable, clean, and equitable energy in service of their customers.

In support of this purpose, CMS Energy and Consumers couple digital transformation with the “CE Way,” a lean operating model designed to improve safety, quality, cost, delivery, and employee morale.

In support of this purpose, CMS Energy and Consumers couple digital transformation with the “CE Way,” a lean operating system designed to improve safety, quality, cost, delivery, and employee morale.

CMS Energy and Consumers measure their progress toward the purpose by considering their impact on the “triple bottom line” of people, planet, and prosperity;

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These principles include complying with applicable safety, health, and security regulations and implementing programs and processes aimed at continually improving safety and security conditions.

CMS Energy and Consumers also place a high priority on customer value and on providing a hometown customer experience.

CMS Energy and Consumers also place a high priority on customer value and on providing reliable, affordable, and equitable energy in service of their customers.

Consumers’ customer-driven investment program is aimed at improving safety and increasing electric and gas reliability.

In September 2023, Consumers filed its Reliability Roadmap, an update to its previous Electric Distribution Infrastructure Investment Plan filed in 2021, with the MPSC.

The Reliability Roadmap outlines a five-year strategy to improve Consumers’ electric distribution system and the reliability of the grid.

The plan proposes the following spending for projects designed to reduce the number and duration of power outages to customers through investment in infrastructure upgrades, vegetation management, and grid modernization:

• capital expenditures of $7 billion through 2028;

this amount is $3 billion higher than proposed in the previous plan

• maintenance and operating spending of $1.7 billion through 2028, reflecting an increase of $300 million over the previous plan

In the electric rate case it filed in May 2024, Consumers outlined its proposal to begin implementing the Reliability Roadmap and requested rate recovery of the investments needed to support the plan’s key objectives.

In the electric rate case it filed with the MPSC in June 2025, Consumers updated its Reliability Roadmap, a five‑year strategy to improve Consumers’ electric distribution system and the reliability of the grid.

The plan proposes spending through 2029 for projects designed to reduce the number and duration of power outages to customers through investment in infrastructure upgrades, vegetation management, and grid

modernization.

Consumers has requested rate recovery of the investments needed to achieve the Reliability Roadmap’s key objectives in its electric rate cases.

Central to Consumers’ commitment to its customers are the initiatives it has undertaken to keep electricity and natural gas affordable, including:

• replacement of coal-fueled generation and PPAs with a cost-efficient mix of renewable energy, less-costly dispatchable generation sources, and energy waste reduction and demand response programs

• replacement of coal-fueled generation and PPAs with a cost-efficient and reliable mix of renewable energy, less-costly dispatchable generation sources, and energy waste reduction and demand response programs

• targeted infrastructure investment to reduce maintenance costs and improve reliability and safety

6 unchanged sentences

• workforce productivity enhancements

While CMS Energy and Consumers have experienced some supply chain disruptions and inflationary pressures, they have taken steps to mitigate the impact on their ability to provide safe and reliable service to customers.

While inflationary pressures and tariffs could impact supply chain availability and pricing, CMS Energy and Consumers are taking steps to help mitigate the impact on their ability to provide safe, reliable, affordable, clean, and equitable energy in service of their customers.

The planet element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to protect the environment.

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CMS Energy, including Consumers, has decreased its combined percentage of electric supply (self-generated and purchased) from coal by 24 percentage points since 2015.

Additionally, as a result of actions already taken through 2024, initial measurement data indicates Consumers has:

• reduced carbon dioxide emissions from owned generation by more than 30 percent since 2005

• reduced methane emissions by nearly 30 percent since 2012

• reduced the volume of water used to generate electricity by more than 50 percent since 2012

• reduced landfill waste disposal by more than two million tons since 1992

Additionally, as a result of actions already taken through 2025, preliminary data indicates Consumers has:

• reduced carbon dioxide emissions from owned generation by nearly 30 percent since 2005

• reduced methane emissions by more than 40 percent since 2012

• reduced the volume of water used to generate electricity by nearly 60 percent since 2012

• reduced landfill waste disposal by more than 2 million tons since 1992

• enhanced, restored, or protected more than 13,500 acres of land since 2017

Since 2005, Consumers has reduced its sulfur dioxide and particulate matter emissions by nearly 95 percent and its NOx emissions by more than 86 percent.

Consumers began tracking mercury emissions in 2007;

since that time, it has reduced such emissions by more than 92 percent.

• reduced sulfur dioxide and particulate matter emissions by more than 90 percent since 2005

• reduced NOx emissions by more than 85 percent since 2005

• reduced mercury emissions by more than 90 percent since 2007

Presented in the following illustration are Consumers’ reductions in these emissions:

In November 2023, Michigan enacted the 2023 Energy Law, which among other things:

• raised the renewable energy standard from the present 15 ‑ percent requirement to 50 percent by 2030 and 60 percent by 2035;

In 2023, Michigan enacted the 2023 Energy Law, which among other things:

• increased the renewable energy standard from 15 percent to 50 percent by 2030 and 60 percent by 2035;

renewable energy generated anywhere within MISO can be applied to meeting this standard, with certain limitations

• set a clean energy standard of 80 percent by 2035 and 100 percent by 2040;

low- or zero-carbon emitting resources, such as nuclear generation and natural gas generation coupled with carbon capture, are considered clean energy sources under this standard

• established a clean energy standard of 80 percent by 2035 and 100 percent by 2040;

low- or zero‑carbon emitting resources, such as nuclear generation and natural gas generation coupled with carbon capture, qualify as clean energy sources under this standard

• enhanced existing incentives for energy efficiency programs and returns earned on new clean or renewable PPAs

• created a new energy storage standard that requires electric utilities to file plans by 2029 to obtain new energy storage that will contribute to a Michigan target of 2,500 MW based on their pro rata share

• expanded the statutory cap on distributed generation resources to ten percent

Consumers filed updates to its renewable energy plan in November 2024 and plans to file updates to its Clean Energy Plan in 2026.

Together, these updated plans will serve as Consumers’ blueprint to meeting the requirements of the 2023 Energy Law by focusing on increasing the generation of renewable energy, deploying energy storage, helping customers use less energy, and offering demand response programs to reduce demand during critical peak times.

Consumers’ Clean Energy Plan details its strategy to meet customers’ long-term energy needs and was most recently revised and approved by the MPSC in 2022 under Michigan’s integrated resource planning process.

The Clean Energy Plan outlines Consumers’ long-term strategy for delivering safe, reliable, affordable, clean, and equitable energy to its customers.

This strategy includes:

• ending the use of coal in owned generation in 2025, 15 years sooner than initially planned

• purchasing the Covert Generating Station, a natural gas-fueled generating facility with 1,200 MW of nameplate capacity, allowing Consumers to continue to provide controllable sources of electricity to customers;

this purchase was completed in May 2023

• soliciting capacity from sources able to deliver to Michigan’s Lower Peninsula, including battery storage facilities

Consumers’ proposed updates to its renewable energy plan include:

• the addition of up to 9,000 MW of both purchased and owned solar energy resources

• the addition of up to 2,800 MW of new, competitively bid wind capacity

• the co-location of battery energy storage with its renewable energy assets to optimize those assets

Coupled with updates to the Clean Energy Plan, these actions will enable Consumers to achieve 60 percent renewable energy by 2035 and 100 percent clean energy by 2040, and will also contribute to Consumers’ achievement of the net-zero emissions goals discussed below.

Net-zero methane emissions from natural gas delivery system by 2030:

Under its Methane Reduction Plan, Consumers plans to reduce methane emissions from its system by about 80 percent, from 2012 baseline levels, by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices.

The remaining emissions will likely be offset by purchasing and/or producing renewable natural gas.

To date, Consumers has reduced methane emissions by nearly 30 percent.

Net-zero greenhouse gas emissions target for the entire business by 2050:

This goal incorporates greenhouse gas emissions from Consumers’ natural gas delivery system, including suppliers and

customers, and has an interim goal of reducing customer emissions by 25 percent by 2035.

• created a new energy storage standard, requiring electric utilities to file plans by 2029 to help achieve a statewide target of 2,500 MW

• expanded the statutory cap on distributed generation resources to 10 percent of the electric utility’s five‑year average peak load

Consumers’ Electric Supply Plan, its long-term strategy for delivering safe, reliable, affordable, clean, and equitable energy to its customers, is outlined in its integrated resource plan and incorporates Consumers’ Renewable Energy Plan.

The Electric Supply Plan is Consumers’ blueprint for compliance with Michigan’s 2023 Energy Law and for advancing sustainability objectives.

To meet these objectives, Consumers is executing a multi-faceted strategy.

This strategy involves taking steps to end the use of coal, including the retirement of the D.E.

Karn coal-fueled generating units, totaling 515 MW of nameplate capacity, in 2023 and obtaining MPSC approval to retire J.H.

Campbell, totaling 1,407 MW of nameplate capacity.

The retirement of J.H.

Campbell is subject to temporary extensions under emergency orders issued by the U.S.

Secretary of Energy.

For a more detailed

discussion of the emergency orders, see Consumers Electric Utility Outlook and Uncertainties—J.H.

Campbell Emergency Orders and Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters.

To continue providing controllable sources of electricity to customers, Consumers purchased the Covert Generating Station, representing 1,200 MW of nameplate capacity, in 2023 and has solicited additional capacity from controllable sources of electricity to customers.

Consumers’ updates to its Renewable Energy Plan include up to 9,000 MW of both purchased and owned solar energy resources and up to 4,000 MW of wind energy resources.

Coupled with updates to its integrated resource plan, these actions position Consumers to achieve 60‑percent renewable energy by 2035 and 100‑percent clean energy by 2040, and will also contribute to Consumers’ achievement of the emissions reductions goals discussed below.

Under its Methane Reduction Plan, Consumers has set a goal of net-zero methane emissions from its natural gas delivery system by 2030.

Consumers plans to reduce methane emissions from its system by about 80 percent from 2012 baseline levels by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices.

The remaining emissions will likely be offset through clean fuel alternatives or nature-based carbon removal pathways.

To date, Consumers has reduced methane emissions by more than 40 percent.

Consumers has also set a goal to reduce customer greenhouse gas emissions by 25 percent by 2035.

Consumers expects to meet this goal through carbon offset measures, renewable natural gas, energy efficiency and demand response programs, and the adoption of cost-effective emerging technologies once proven and commercially available.

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• to enhance, restore, or protect 6,500 acres of land through 2027;

Consumers has enhanced, restored, or protected more than 5,000 acres of land towards this goal

Consumers surpassed this goal during the three‑year period 2023 through 2025 and enhanced, restored, or protected 6,700 acres of land

• to reduce water usage by 1.7 billion gallons through 2027;

Consumers has reduced water usage by more than 1.3 billion gallons towards this goal

Consumers had reduced water usage by more than 1.9 billion gallons towards this goal

• to annually divert a minimum of 90 percent of waste from landfills (through waste reduction, recycling, and reuse);

during 2025, Consumers’ rate of waste diverted from landfills was 93 percent

CMS Energy and Consumers are monitoring numerous legislative, policy, and regulatory initiatives, including those to regulate and report greenhouse gases, and related litigation.

While CMS Energy and Consumers cannot predict the outcome of these matters, which could affect them materially, they intend to continue to move forward with their clean and lean strategy.

CMS Energy and Consumers are monitoring numerous legislative, policy, executive, and regulatory initiatives, including those related to regulation and reporting of greenhouse gases, and related litigation.

While CMS Energy and Consumers cannot predict the outcome of these matters, which could affect them materially, they intend to continue to move forward with a triple-bottom-line approach that focuses on people, planet, and prosperity.

The prosperity element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to meeting their financial objectives and providing economic development opportunities and benefits in the communities in which they do business.

CMS Energy’s and Consumers’ financial strength allows them to maintain solid investment-grade credit ratings and thereby reduce funding costs for the benefit of customers and investors, to attract and retain talent, and to reinvest in the communities they serve.

In 2024, CMS Energy’s net income available to common stockholders was $993 million, and diluted EPS were $3.33.

In 2025, CMS Energy’s net income available to common stockholders was $1.1 billion, and diluted EPS were $3.53.

This compares with net income available to common stockholders of $993 million and diluted EPS of $3.33 in 2024.

In 2024, electric and gas rate increases were offset partially by higher interest charges and increased depreciation and property taxes, reflecting higher capital spending.

In 2025, higher gas and electric sales, due primarily to favorable weather, and electric and gas rate increases were offset partially by increased depreciation and property taxes, reflecting higher capital spending, and higher interest charges.

A more detailed discussion of the factors affecting CMS Energy’s and Consumers’ performance can be found in the Results of Operations section that follows this Executive Overview.

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During 2025, CMS Energy and Consumers:

• created a Clean Energy Workforce Development Program for people employed in the building trades to receive training and certifications in the areas of advanced energy efficiency, lead abatement, and other work

• buried power lines in multiple Michigan communities under a targeted undergrounding pilot program in efforts to improve electric service for Consumers’ electric customers

• began installation of nearly 3,000 line sensors, 100 automatic transfer reclosers, and 1,200 iron utility poles to improve electric reliability and help prevent power outages

• expanded Consumers’ MI Clean Air program to include several renewable natural gas projects being developed and constructed across Michigan, increasing options for customers to offset emissions associated with their natural gas use

• collaborated with the Muskegon County Resource Recovery Center to develop a 250-MW solar energy center, Consumers’ first large-scale, self-developed solar project, that is expected to power 40,000 homes by 2026

• updated Consumers’ Transportation Electrification Plan, aiming to power over 1,500 new fast charging locations and serve one million electric vehicles in Michigan by 2030

• launched a new workplace electric vehicle charging program, offering rebates to businesses that install chargers, with a goal of equipping over 500 workplaces by 2030

• completed the final phase of the Mid-Michigan Pipeline project, replacing and upgrading 55 miles of natural gas transmission pipeline in five Michigan counties, ensuring safe and reliable gas flow to homes and businesses prior to the winter season

• connected over 140,000 customers with $60 million in energy-bill assistance and helped make over $100 million in statewide aid available for 2026, reinforcing Consumers’ commitment to affordability

• began operations at Muskegon Solar Energy Center, a 1,900‑acre project generating 250 MW of clean energy to power 40,000 homes and businesses, supporting Michigan’s energy needs and advancing the company’s long‑term clean energy strategy

• reached an agreement with a new data center expected to add more than 1 GW of incremental load growth in our service territory, supporting long-term sales growth and delivering economic benefits for Michigan

• expanded the use of drone technology enabling faster, safer inspections of 400 miles of hard-to-reach power lines and infrastructure resulting in reduced average outage time per customer and improved storm recovery capabilities

• announced the launch of “Green Giving,” a program enabling the general public to contribute to renewable energy while offering financial benefits to low-income customers, along with a new Residential Renewable Energy Program, which allows customers of all income levels to subscribe and match their energy usage with renewable energy sources, supporting clean energy initiatives

• moved forward with an aggressive plan to enhance grid reliability for nearly 2 million homes and businesses by clearing trees along 8,000 miles of power lines and creating a modern, stronger, and more resilient power grid through infrastructure upgrades and technology investments

• deployed eight state-of-the-art vehicles that survey the company’s nearly 30,000‑mile gas distribution system to find methane emissions, enhancing safety and reliability for Consumers’ natural gas customers

• experienced success with the underground power line pilot program in early 2025, with pilot areas seeing 100‑percent reduction in storm-related outages and improved customer satisfaction

CMS Energy and Consumers will continue to utilize the CE Way to enable them to achieve world class performance and positively impact the triple bottom line.

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Over the next five years, Consumers expects to make significant expenditures on infrastructure upgrades, replacements, and clean generation.

While it has a large number of potential investment opportunities that would add customer value, Consumers has prioritized its spending based on the criteria of enhancing public safety, increasing reliability, maintaining affordability for its customers, and advancing its environmental stewardship.

Consumers’ investment program, which is subject to approval through general rate case and other MPSC proceedings, is expected to result in annual rate-base growth of more than eight percent.

While it has a large number of potential investment opportunities that would add customer value, Consumers has prioritized its spending based on

the criteria of enhancing public safety, increasing reliability, maintaining affordability for its customers, and advancing its environmental stewardship.

Consumers’ investment program, which is subject to approval through general rate case and other MPSC proceedings, is expected to result in annual rate-base growth of more than 8 percent.

This rate-base growth, together with cost-control measures, should allow Consumers to maintain affordable customer prices.

Presented in the following illustration are Consumers’ planned capital expenditures through 2030 of $24.1 billion:

Of this amount, Consumers plans to spend $14.8 billion over the next five years primarily to maintain and upgrade its electric distribution systems and gas infrastructure in order to enhance safety and reliability, improve customer satisfaction, reduce energy waste on those systems, and facilitate its clean energy transformation.

Of this amount, Consumers plans to spend $8.8 billion on electric generation, which includes solar, wind, and natural gas-fueled generation, as well as energy storage.

Consumers also expects to spend $15.3 billion over the next five years primarily to maintain and upgrade its electric distribution systems and gas infrastructure in order to enhance safety and reliability, improve customer satisfaction, reduce energy waste on those systems, and facilitate its clean energy transformation.

Electric distribution and other projects comprise $8.6 billion primarily to strengthen circuits and substations, replace poles, and interconnect clean energy resources.

The gas infrastructure projects comprise $6.7 billion to sustain deliverability, enhance pipeline integrity and safety, and reduce methane emissions.

Consumers also expects to spend $5.2 billion on clean generation, which includes investments in wind, solar, and hydroelectric generation resources.

Regulatory matters are a key aspect of Consumers’ business, particularly rate cases and regulatory proceedings before the MPSC, which permit recovery of new investments while helping to ensure that customer rates are fair and affordable.

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2024 Electric Rate Case:

In May 2024, Consumers filed an application with the MPSC seeking a rate increase of $325 million, made up of two components.

First, Consumers requested a $303 million annual rate increase, based on a 10.25‑percent authorized return on equity for the projected 12 ‑ month period ending February 28, 2026.

The filing requested authority to recover costs related to new infrastructure investment primarily in distribution system reliability and cleaner energy resources.

Second, Consumers requested approval of a $22 million surcharge for the recovery of distribution investments made in 2023 that exceeded the rates authorized in accordance with previous electric rate orders.

In October 2024, Consumers revised its requested increase to $277 million, primarily to reflect the removal of projected capital investments associated with certain solar facilities that Consumers incorporated into its amended renewable energy plan.

The MPSC must issue a final order in this case before or in March 2025.

2023 Electric Rate Case :

In March 2024, the MPSC issued an order authorizing an annual rate increase of $92 million, which is inclusive of a $9 million surcharge for the recovery of select distribution

investments made in 2022 that exceeded the rates authorized in accordance with the December 2021 electric rate order.

In March 2025, the MPSC issued an order authorizing an annual rate increase of $176 million, which is inclusive of a $22 million surcharge for the recovery of distribution investments made in 2023 that exceeded the rate amounts authorized in accordance with previous electric rate orders.

The approved rate increase is based on a 9.90‑percent authorized return on equity.

The new rates became effective March 15, 2024.

The new rates became effective in April 2025

2025 Electric Rate Case:

In June 2025, Consumers filed an application with the MPSC seeking a rate increase of $460 million, made up of two components.

First, Consumers requested a $436 million annual rate increase, based on a 10.25‑percent authorized return on equity for the projected 12 ‑ month period ending April 30, 2027.

The filing requested authority to recover costs related to new infrastructure investment primarily in distribution system reliability.

Second, Consumers requested approval of a $24 million surcharge for the recovery of distribution investments made during the 12 months ended February 28, 2025 that exceeded the rate amounts authorized in accordance with previous electric rate orders.

In October 2025, Consumers revised its requested increase to $447 million, which includes the $24 million surcharge to recover deferred distribution investments.

The MPSC must issue a final order in this case before or in April 2026.

2024 Gas Rate Case:

In September 2025, the MPSC issued an order authorizing an annual rate increase of $157.5 million, based on a 9.80‑percent authorized return on equity.

The new rates became effective in November 2025.

2025 Gas Rate Case:

In December 2025, Consumers filed an application with the MPSC seeking an annual rate increase of $240 million based on a 10.25‑percent authorized return on equity for the projected 12‑month period ending October 31, 2027.

The MPSC must issue a final order in this case before or in October 2026.

2023 Gas Rate Case:

In December 2023, Consumers filed an application with the MPSC seeking an annual rate increase of $136 million based on a 10.25‑percent authorized return on equity for the projected test year comprising the 12‑month period ending September 30, 2025.

In May 2024, Consumers revised its requested increase to $113 million.

In July 2024, the MPSC approved a settlement agreement authorizing an annual rate increase of $35 million, based on a 9.9‑percent authorized return on equity.

Additionally, the settlement approves the use of $27.5 million, or one-fourth, of the gain on the sale of Consumers’ unregulated ASP business as an offset to the revenue deficiency in lieu of additional rate relief during the test year.

This results in effective rate relief of $62.5 million for the test year.

The settlement agreement also provides for the remaining three-fourths of the $110 million gain on the sale of the ASP business, or $82.5 million, to be provided to customers as a bill credit over a three-year period.

The new rates, including the bill credit, became effective October 1, 2024.

Looking Forward

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Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations, in the Form 10‑K for the fiscal year ended December 31, 2024, filed February 11, 2025 .

Amounts in the following tables are presented pre-tax, with the exception of income tax changes.

Presented in the following table is a summary of changes to net income available to common stockholders for 2025 versus 2024:

6 unchanged sentences

Gas rate increase, including gain amortization in lieu of rate relief 71

Absence of 2023 voluntary separation program expenses 33

Lower service restoration costs 32

Higher other income, net of expenses 4

Higher interest charges (70)

Lower coal-fueled generation costs 1

Higher income tax expenses (87)

Higher depreciation and amortization (63)

Higher interest charges (43)

Higher property taxes, reflecting higher capital spending (29)

Higher IT expenses, including early-phase ERP implementation costs (27)

Higher service restoration costs, net of 2025 deferred storm expense 2

Higher vegetation management costs (25)

Higher other electric distribution costs (13)

Higher other electric supply costs (21)

Higher other maintenance and operating expenses (30)

Higher income tax expense (36)

Higher property taxes, reflecting higher capital spending, and other (33)

Lower ASP revenue net of expense due to sale (7)

Impairment of project development assets (15)

Absence of ASP revenue, net of expense, due to sale in 2024 3

Lower other income, net of expenses (5)

NorthStar Clean Energy 8

2 unchanged sentences

1 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters—Consumers Electric Utility—J.H.

Campbell Emergency Order.

2 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters—Regulatory Assets—Service Restoration Cost Deferral.

3 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters—Regulatory Liabilities—ASP Gain.

Consumers Electric Utility Results of Operations

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Electric deliveries 1 and rate increases

Rate increase, including securitization surcharge and return on higher renewable capital spending $ 235

Higher revenue due primarily to favorable weather 45

Higher energy waste reduction program revenues 10

Rate increase, including return on higher renewable capital spending $ 210

Higher revenue due primarily to higher sales volume 29

Lower energy waste reduction program revenues (8)

Higher other revenues 20

Maintenance and other operating expenses

Lower service restoration costs 32

Absence of 2023 voluntary separation program expenses 20

Higher distribution, transmission, and generation expenses (15)

Higher energy waste reduction program costs (10)

Lower coal-fueled generation costs 2

Lower energy waste reduction program costs 8

Higher service restoration costs, net of 2025 deferred storm expense 3

Higher vegetation management costs (25)

Higher other supply costs (21)

Higher IT expenses, including early-phase ERP implementation costs (19)

Higher other distribution costs (13)

Higher other maintenance and operating expenses (11)

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Higher electric utility pre-tax earnings (25)

Higher renewable energy tax credits 2

Absence of 2024 deferred tax liability reversals (11)

State deferred tax remeasurement 4

Higher other income taxes (4)

2 unchanged sentences

2 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters—Consumers Electric Utility—J.H.

Campbell Emergency Order.

3 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters—Regulatory Assets—Service Restoration Cost Deferral.

4 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 13, Income Taxes.

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Rate increase $ 60

Lower revenue due primarily to unfavorable weather (35)

Lower ASP business revenue 2

Higher revenue due primarily to the absence of 2024 unfavorable weather 155

Higher energy waste reduction program revenues 16

Absence of ASP business revenue 2

ASP gain customer bill credit 2

Lower energy waste reduction program revenues (8)

Lower other revenues (3)

Maintenance and other operating expenses

Lower ASP business expense 2

Amortization of ASP gain 2

Absence of 2023 voluntary separation program expenses 13

Lower energy waste reduction program costs 8

Absence of 2024 ASP business expense 2

Higher energy waste reduction program costs (16)

Impairment of project development assets (15)

Higher IT expenses, including early-phase ERP implementation costs (8)

Higher maintenance and other operating expenses (19)

Depreciation and amortization

Lower depreciation rates, offset partially by higher capital spending 13

Increased plant in service, reflecting higher capital spending (25)

General taxes

Higher property taxes, reflecting higher capital spending and other (12)

Higher property taxes, reflecting higher capital spending (13)

Other income, net of expenses (3)

1 unchanged sentence

Higher gas utility pre-tax earnings (31)

Absence of 2024 deferred tax liability reversals (5)

State deferred tax remeasurement 3

Lower other income taxes 1

2 unchanged sentences

2 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 19, Exit Activities and Asset Sales.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters—Regulatory Liabilities—ASP Gain.

3 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 13, Income Taxes.

NorthStar Clean Energy Results of Operations

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Reason for the change

Higher operating earnings, primarily at DIG $ 22

Higher renewable energy tax credits 9

Higher interest charges and other expenses (11)

Lower earnings from renewable projects (24)

Higher renewable earnings primarily driven by new project development $ 26

Lower other expenses 7

Higher tax expenses (3)

Lower operating earnings, due primarily to planned major outage at DIG (22)

Year Ended December 31, 2025 $ 71

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Reasons for the change

Lower gain on extinguishment of debt 1

Higher interest charges $ (61)

Lower gains on extinguishment of debt 1

Higher interest earnings and other 21

Lower tax expense 19

Year Ended December 31, 2025 $ (138)

1 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Financings and Capitalization—CMS Energy’s Purchase of Consumers’ First Mortgage Bonds.

Cash Position, Investing, and Financing

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Non‑cash transactions 1

Unfavorable impact of changes in core working capital, 2 due primarily to lower collections and lower prices on gas sold to customers

Favorable impact of changes in other assets and liabilities, due primarily to proceeds from the sale of renewable energy tax credits 3

Unfavorable impact of changes in core working capital, 2 due primarily to fluctuations in gas prices and higher undercollections of PSCR

Unfavorable impact of changes in other assets and liabilities, due primarily to lower tax-credit sale proceeds and higher service restoration 3 and renewable energy expenditures

Year Ended December 31, 2025 $ 2,235

3 unchanged sentences

Non‑cash transactions 1

Unfavorable impact of changes in core working capital, 2 due primarily to lower collections and lower prices on gas sold to customers

Favorable impact of changes in other assets and liabilities, due primarily to proceeds from the sale of renewable energy tax credits 3

Unfavorable impact of changes in core working capital, 2 due primarily to fluctuations in gas prices and higher undercollections of PSCR

Unfavorable impact of changes in other assets and liabilities, due primarily to higher income tax payments to CMS Energy and service restoration 3 and renewable energy expenditures

Year Ended December 31, 2025 $ 2,238

2 unchanged sentences

3 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 12, Income Taxes—Renewable Energy Tax Credits.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters.

Investing Activities

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Higher capital expenditures $ (806)

Absence of 2023 purchase of Covert Generating Station

Proceeds from sale of ASP business 1

Other investing activities 7

Absence of proceeds from sale of ASP business in 2024

Other investing activities, primarily higher cost to retire property (54)

Year Ended December 31, 2025 $ (4,038)

2 unchanged sentences

Higher capital expenditures $ (472)

Absence of 2023 purchase of Covert Generating Station

Proceeds from sale of ASP business 1

Other investing activities (13)

Absence of proceeds from sale of ASP business in 2024

Other investing activities, primarily higher cost to retire property (67)

Year Ended December 31, 2025 $ (3,535)

1 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 19, Exit Activities and Asset Sales.

Financing Activities

3 unchanged sentences

Reasons for the change

Lower debt issuances $ (1,589)

Lower debt retirements 1,180

Higher debt issuances $ 1,647

Higher debt retirements (198)

Higher repayments of notes payable (37)

Higher issuances of common stock, primarily a higher settlement of forward sale contracts under the equity offering program 1 in 202 4

Higher issuances of common stock 239

Higher payments of dividends on common stock (37)

Absence of 2023 proceeds from sales of membership interests in VIEs to tax equity investors (86)

Proceeds from sale of membership interests in VIEs 59

Lower contributions from noncontrolling interest (1)

Other financing activities, primarily lower debt issuance costs

Higher distributions to noncontrolling interest (2)

Other financing activities, primarily higher debt issuance costs

Year Ended December 31, 2025 $ 2,240

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Higher repayments of notes payable (37)

Absence of a repayment of borrowings from CMS Energy in 2023 75

Borrowings from CMS Energy 340

Higher stockholder contribution from CMS Energy 185

Return of stockholder contribution to CMS Energy (320)

Absence of return of stockholder contribution to CMS Energy in 2024 320

Higher payments of dividends on common stock (103)

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Year Ended December 31, 2025 $ 1,289

1 See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization—Issuance of Common Stock.

Capital Resources and Liquidity

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Consumers also uses these sources of funding to contribute to its employee benefit plans.

Under the Inflation Reduction Act of 2022, renewable energy tax credits produced after 2022 are eligible to be transferred to third parties.

For additional details, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 12, Income Taxes—Renewable Energy Tax Credits.

Financing and Capital Resources:

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In 2023, CMS Energy entered into an equity offering program under which it may sell shares of its common stock having an aggregate sales price of up to $1 billion in privately negotiated transactions, in “at the market” offerings, or through forward sales transactions.

As of December 31, 2024, these contracts had an aggregate sales price of $28 million, maturing in November 2025.

During the year ended December 31, 2025, CMS Energy settled forward sale contracts issued under this program, resulting in net proceeds o f $497 million .

Following these settlements, CMS Energy has $8 million in outstanding forward contracts under the program, maturing November 30, 2026.

CMS Energy, NorthStar Clean Energy, and Consumers use revolving credit facilities for general working capital purposes and to issue letters of credit.

In May 2024, NorthStar Clean Energy entered into a secured revolving credit agreement which provides for up to $150 million in borrowings.

At December 31, 2024, the full capacity under this secured revolving credit agreement was borrowed.

At December 31, 2024, CMS Energy had $519 million of its revolving credit facility available and Consumers had $1.3 billion available under its revolving credit facilities.

At December 31, 2025, CMS Energy had $715 million of its revolving credit facility available, NorthStar Clean Energy had $5 million available under its revolving credit facility, and Consumers had $1.4 billion available under its revolving credit facilities.

An additional source of liquidity is Consumers’ commercial paper program, which allows Consumers to issue, in one or more placements, up to $500 million in aggregate principal amount of commercial paper notes with maturities of up to 365 days at market interest rates.

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While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities.

At December 31, 2024, there were $65 million of commercial paper notes outstanding under this program.

At December 31, 2025, there were no commercial paper notes outstanding under this program.

For additional details about these programs and facilities, see Item 8.

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< 0.70 to 1.0

NorthStar Clean Energy, including subsidiaries

NorthStar Clean Energy

Debt to capital 2

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< 0.65 to 1.0

1 Applies to CMS Energy’s revolving credit agreement, letter of credit reimbursement agreement, and term loans.

1 Applies to CMS Energy’s revolving credit agreement and letter of credit reimbursement agreement.

2 Applies to NorthStar Clean Energy’s revolving credit agreement.

3 The aggregate book value of the pledged equity interests under the revolving credit agreement was at least two‑times the aggregate commitment under the revolving credit agreement at December 31, 2025.

4 Applies to Consumers’ revolving credit agreements.

4 Applies to Consumers’ revolving credit agreements and certain letter of credit reimbursement agreements.

Material Cash Requirements:

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Consumers $ 4.1 $ 5.4 $ 5.7 $ 5.0 $ 3.9 $ 24.1

NorthStar Clean Energy, including subsidiaries 0.6 0.3 0.7 0.6 0.6 2.8

NorthStar Clean Energy 0.3 0.4 0.5 0.4 0.1 1.7

Total CMS Energy $ 4.4 $ 5.8 $ 6.2 $ 5.4 $ 4.0 $ 25.8

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Total obligations $ 3.3 $ 43.5

Purchase obligations arise from long-term contracts for the purchase of commodities and related services, and construction and service agreements.

The commodities and related services include long-term PPAs, natural gas and associated transportation, and coal and associated transportation.

Purchase obligations arise from long-term contracts for the purchase of commodities and related services, primarily long-term PPAs, and construction and service agreements.

For more information on CMS Energy’s and Consumers’ purchase obligations, see Item 8.

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Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments—Guarantees.

For additional details on letters of credit and CMS Energy’s forward sales contracts, see

For additional details on letters of credit and CMS Energy’s forward sales contracts, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Financings and Capitalization.

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These trends and uncertainties could have a material impact on CMS Energy’s and Consumers’ consolidated income, cash flows, or financial position.

During 2025, the federal government took numerous executive actions related to tariffs and trade, alleviating regulatory burdens, and environmental regulations and enforcement, among other areas of potential impact.

Many of these actions require further implementation by federal agencies and departments, and some of these actions will likely be subject to further judicial review.

CMS Energy and Consumers continue to monitor these executive actions and will continue taking steps to deliver consistently on the triple bottom line.

For additional details regarding these and other uncertainties, see Forward-looking Statements and Information;

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Consumers Electric Utility Outlook and Uncertainties

Energy Transformation:

Consumers’ Clean Energy Plan details its long-term strategy for delivering safe, reliable, affordable, clean, and equitable energy to its customers.

Coupled with Consumers’ renewable energy plan, the Clean Energy Plan will be Consumers’ blueprint to meeting the requirements of the 2023 Energy Law.

Among other things, this law:

• raised the renewable energy standard from the present 15 ‑ percent requirement to 50 percent by 2030 and 60 percent by 2035

• set a clean energy standard of 80 percent by 2035 and 100 percent by 2040;

low- or zero-carbon emitting resources, such as nuclear generation and natural gas generation coupled with carbon capture, are considered clean energy sources under this standard

While Consumers’ existing Clean Energy Plan, established under Michigan’s integrated resource planning process, provides a path towards meeting these requirements, Consumers will file updates to the plan in 2026 to expand and solidify that path.

Additionally, Consumers filed updates to its renewable energy plan in November 2024 to propose plans to meet the increased renewable energy standard.

Together, these plans will enable Consumers to achieve 60 percent renewable energy by 2035 and 100 percent clean energy by 2040.

Additionally, through its Clean Energy Plan, Consumers continues to make progress on expanding its customer programs, namely its demand response, energy efficiency, and conservation voltage reduction programs, as well as increasing its renewable energy generation.

Under its Clean Energy Plan, Consumers will eliminate the use of coal in owned generation in 2025.

Specifically, Consumers retired the D.E.

Karn coal-fueled generating units, totaling 515 MW of nameplate capacity, in June 2023 and plans to retire the J.H.

Campbell coal-fueled generating units, totaling 1,407 MW of nameplate capacity, in 2025.

The MPSC authorized Consumers to issue securitization bonds to finance the recovery of and return on the D.E.

Karn coal-fueled generating units;

Consumers issued these bonds in December 2023.

Additionally, the MPSC has authorized regulatory asset treatment for Consumers to recover the remaining book value of the J.H.

Campbell coal-fueled generating units, as well as a 9.0‑percent return on equity, commencing in 2025.

In order to continue providing controllable sources of electricity to customers while expanding its investment in renewable energy, Consumers purchased the Covert Generating Station, a natural gas-fueled generating facility with 1,200 MW of nameplate capacity, in May 2023.

Consumers has also contracted to purchase 400 MW of capacity from battery storage facilities, which will be located in

Michigan’s Lower Peninsula and are expected to be operational by 2027.

In its current form, the Clean Energy Plan forecasts additional capacity of 75 MW of battery storage by 2027 and 475 MW by 2040.

Under its Clean Energy Plan, Consumers bids new capacity and energy competitively and expects to own and operate all new wind capacity and approximately 50 percent of new solar capacity, with the remainder being built and owned by third parties.

Additionally, Consumers earns a return equal to its pre-tax weighted-average cost of capital on permanent capital structure on payments made under new clean, renewable, or energy storage PPAs with non-affiliated entities.

Under Consumers’ existing renewable energy plan, most recently amended and approved by the MPSC in August 2024, 15 percent of the electricity supplied to customers comes from renewable energy sources.

In accordance with this plan, Consumers has acquired three wind generation projects, totaling 517 MW of nameplate capacity, since 2020;

the last of these projects became operational in December 2023.

The MPSC authorized Consumers to earn a 10.7 ‑ percent return on equity on these projects.

The MPSC also approved the execution of a 20 ‑ year PPA under which Consumers will purchase 100 MW of renewable capacity, energy, and RECs from a solar generating facility that began operations in October 2024.

In November 2024, Consumers filed updates to its renewable energy plan, proposing an addition of up to 9,000 MW of both purchased and owned solar energy resources.

Of this amount, 1,060 MW of projects would support Consumers’ voluntary green program that provides full-service electric customers with the opportunity to advance the development of renewable energy beyond the present 15 ‑ percent requirement.

Under this program, Consumers competitively solicits additional renewable energy assets based on customer applications.

In the updates to its renewable energy plan, Consumers also proposed the addition of up to 2,800 MW of new, competitively bid wind capacity in Michigan and the co-location of battery energy storage with its renewable energy assets to optimize those assets.

Presented in the following illustration is the aggregate renewable capacity that Consumers expects to add to its portfolio through PPAs and owned generation proposed in its existing Clean Energy Plan and the updates to its renewable energy plan:

Consumers continues to evaluate the acquisition of additional capacity from intermittent resources and dispatchable, non ‑ intermittent clean capacity resources (including battery storage resources).

Energy Supply:

The Electric Supply Plan is Consumers’ blueprint for compliance with Michigan’s 2023 Energy Law and for advancing sustainability objectives.

Among other things, the 2023 Energy Law:

• increased the renewable energy standard from 15 percent to 50 percent by 2030 and 60 percent by 2035

• established a clean energy standard of 80 percent by 2035 and 100 percent by 2040;

low- or zero‑carbon emitting resources, such as nuclear generation and natural gas generation coupled with carbon capture, qualify as clean energy sources under this standard

• created a new energy storage standard, requiring electric utilities to file plans by 2029 to help achieve a statewide target of 2,500 MW;

the MPSC Staff has indicated that Consumers’ share of this target is 817 MW

Consumers’ integrated resource planning process provides a clear path toward these goals.

Updates to its integrated resource plan will be filed in 2026 to reinforce and expand that pathway, while recent updates to the Renewable Energy Plan—approved by the MPSC in September 2025—position Consumers to achieve 60‑percent renewable energy by 2035 and 100‑percent clean energy by 2040.

To meet these objectives, Consumers is executing a multi-faceted strategy:

• Ending the use of coal — In 2023, Consumers retired the D.E.

Karn coal-fueled generating units, totaling 515 MW of nameplate capacity, and as authorized by the MPSC, issued securitization bonds to finance the recovery of and return on those units.

Additionally, Consumers obtained MPSC approval to retire J.H.

Campbell in May 2025, totaling 1,407 MW of nameplate capacity, and to recover its remaining book value plus a 9.0‑percent return on equity through regulatory asset treatment upon its retirement.

As discussed further below, the retirement of J.H.

Campbell is subject to temporary extensions under emergency orders issued by the U.S.

Secretary of Energy.

• Resource adequacy and reliability — To maintain reliability during the transition, Consumers purchased the Covert Generating Station, representing 1,200 MW of nameplate capacity, in 2023.

Additionally, in September 2025, Consumers entered into a new 10‑year PPA with the MCV Partnership for the purchase of up to 1,240 MW of capacity and associated energy from the MCV Facility, effective June 1, 2030.

• Energy storage investments — Consumers has contracted to purchase 850 MW of capacity from battery storage facilities to be located in Michigan’s Lower Peninsula and with expected commercial operation dates through 2028.

• Renewable expansion — Recent Renewable Energy Plan updates include up to 4,000 MW of wind energy resources and up to 9,000 MW of both purchased and owned solar energy resources, of which 1,060 MW will support Consumers’ voluntary green pricing program.

Presented in the following illustration is the aggregate renewable capacity that Consumers expects to add to its portfolio through PPAs and owned generation under its integrated resource plan, voluntary green pricing program, and Renewable Energy Plan updates:

The company earns a return equal to its pre-tax weighted-average cost of capital on permanent capital structure for payments under new clean, renewable, or energy storage PPAs with non-affiliated entities.

Consumers will continue to competitively bid new capacity and energy resources, ensuring a balanced portfolio of intermittent renewables and dispatchable clean resources.

Any resulting contracts are subject to MPSC approval.

Through these integrated plans, Consumers is advancing Michigan’s clean energy transition while maintaining system reliability, affordability, and regulatory compliance.

Campbell Emergency Orders:

In May 2025, before the planned closure of J.H.

Campbell, the U.S.

Secretary of Energy issued an emergency order under section 202(c) of the Federal Power Act requiring J.H.

Campbell to continue operating for 90 days, through August 20, 2025.

Subsequently, the

Secretary of Energy issued two additional emergency orders for 90 days each, ultimately requiring continued operation of J.H.

Campbell through February 17, 2026.

These orders stated that continued operation of J.H.

Campbell was required to meet an energy emergency across MISO’s North and Central regions.

Consistent with the Federal Power Act and DOE regulations, the orders authorize Consumers to obtain cost recovery at FERC.

As directed, Consumers has continued to make J.H.

Campbell available in the MISO market and, in June 2025, filed a complaint at FERC seeking a modification of the MISO Tariff to establish a mechanism for recovery and allocation of the cost to comply with this order.

In August 2025, FERC granted Consumers’ complaint and ordered MISO to revise its tariff accordingly.

MISO submitted a compliance filing with FERC in September 2025, and FERC approval of the compliance filing remains pending.

For additional discussion of this FERC proceeding and Consumers’ request for recovery, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters.

Following the May 2025 emergency order, several third-party stakeholders, including the Michigan Attorney General, the Organization of MISO States, and a group of environmental and public interest groups, asked the U.S.

Secretary of Energy to reconsider the May 2025 emergency order.

In July 2025, after the U.S.

Secretary of Energy took no action on those requests, several parties filed petitions for review of the May 2025 emergency order in federal court.

The requests for rehearing were subsequently denied, and similar challenges to the August and November 2025 orders are underway.

Secretary of Energy may issue more orders to require the continued operation of J.H.

While the timing and content of future orders and the outcome of third-party legal challenges are not yet known, Consumers is committed to pursuing cost recovery as provided for under applicable laws, orders, and proceedings.

Electric Customer Deliveries and Revenue:

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• weather fluctuations

• Michigan’s economic conditions, including utilization, expansion, or contraction of large commercial and industrial facilities, economic development, population trends, electric vehicle adoption, and housing activity

• Michigan’s economic conditions, including data center expansion;

utilization, expansion, or contraction of large commercial and industrial facilities;

economic development;

population trends;

electric vehicle adoption;

and housing activity

Electric ROA:

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.

At December 31, 2024, electric deliveries under the ROA program were at the ten‑percent limit.

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.

At December 31, 2025, electric deliveries under the ROA program were at the 10‑percent limit.

Fewer than 300 of Consumers’ electric customers purchased electric generation service under the ROA program.

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District Court for the Eastern District of Michigan challenging the constitutionality of a local clearing requirement.

The complaint requests the federal court to issue a permanent injunction prohibiting the MPSC from implementing a local clearing requirement on individual electric providers.

In February 2023, the U.S.

The complaint requested the federal court to issue a permanent injunction prohibiting the MPSC from implementing a local clearing requirement on individual electric providers.

In 2023, the U.S.

District Court for the Eastern District of Michigan dismissed the complaint.

In March 2023, ABATE and the other intervenor filed a claim of appeal of the Eastern District Court’s decision with the U.S.

ABATE and the other intervenor filed a claim of appeal of the Eastern District Court’s decision with the U.S.

Court of Appeals for the Sixth Circuit.

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In January 2025, Consumers filed a petition for rehearing and en banc review with the Sixth Circuit Court of Appeals, requesting the Court to reconsider and reverse the panel’s opinion.

Hydroelectric Facilities:

In February 2024, Consumers issued a request for proposals to explore the possibility of selling its 13 river hydroelectric dams located throughout Michigan.

Consumers has solicited community feedback on the dams’ futures, as federal operating licenses for the dams begin to expire in 2034.

Consumers continues to evaluate each dam’s future, options for which include, but are not limited to, renewing operating licenses, transferring ownership, or removing the facilities.

In February 2025, the Sixth Circuit Court of Appeals issued an order denying Consumers’ petition for rehearing and en banc review.

The case has therefore been remanded to the District Court for the Eastern District of Michigan for consideration of whether the MPSC’s local clearing requirement meets the strict scrutiny standard pursuant to the Court of Appeals’ decision.

The remanded proceeding has begun at the Eastern District Court;

there is no deadline for decision.

Sale of Hydroelectric Facilities:

In September 2025, Consumers signed an agreement to sell its 13 river hydroelectric dams, which are located throughout Michigan, to a non-affiliated company.

Additionally, Consumers signed an agreement to purchase power generated by the facilities for 30 years, at a price that reflects the counterparty’s acceptance of the risks and rewards of ownership of the facilities, including FERC licensing obligations.

The agreements are contingent upon MPSC and FERC approval, for which Consumers filed in October 2025.

Timing of the regulatory review process is uncertain and could extend 12 to 18 months or longer.

In Consumers’ most recent electric rate case, the MPSC approved deferred accounting treatment for costs of owning and operating the hydroelectric dams pending and until completion of the transaction.

At December 31, 2025, the net book value of the hydroelectric facilities was immaterial.

To ensure necessary staffing at the hydroelectric facilities through the anticipated sale, Consumers has provided current employees at the facilities with a retention incentive program.

Subsequently, to ensure continued safe operation of the facilities after the sale, the buyer will offer employment to the current

hydroelectric employees for a period of at least a year.

The retention incentive benefits are contingent upon MPSC and FERC approval of the sale transaction.

Electric Rate Matters:

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Consumers filed a response to the audit report in November 2024.

In June 2025, the MPSC issued an order adopting the audit’s findings and recommendations.

Consumers is committed to working with the MPSC to continue improving electric reliability and safety in Michigan.

Performance-based Financial Incentives/Disincentives Mechanism:

In February 2025, the MPSC issued an order establishing a mechanism through which the state’s largest electric utilities, including Consumers, could realize up to $10 million each in incentives or penalties annually for meeting or failing to meet reliability benchmarks, beginning in 2026.

As directed, Consumers filed proposed company-specific baseline metrics for the performance mechanism in April 2025;

the MPSC approved Consumers’ proposed metrics in December 2025.

2025 Electric Rate Case:

In May 2024, Consumers filed an application with the MPSC seeking a rate increase of $325 million, made up of two components.

First, Consumers requested a $303 million annual rate increase, based on a 10.25‑percent authorized return on equity for the projected 12 ‑ month period ending February 28, 2026.

The filing requested authority to recover costs related to new infrastructure investment primarily in distribution system reliability and cleaner energy resources.

In June 2025, Consumers filed an application with the MPSC seeking a rate increase of $460 million, made up of two components.

First, Consumers requested a $436 million annual rate increase, based on a 10.25‑percent authorized return on equity for the projected 12 ‑ month period ending April 30, 2027.

The filing requested authority to recover costs related to new infrastructure investment primarily in distribution system reliability.

In October 2025, Consumers revised its requested increase to $447 million.

Presented in the following table are the components of the revised requested increase in revenue:

Projected 12-Month Period Ending February 28 2026

Components of the requested rate increase

Projected 12-Month Period Ending April 30 2027

Investment in rate base $ 192

Operating and maintenance costs 157

Sales and other revenue 41

Cost of capital 67

Sales and other revenue 7

Subtotal $ 423

The MPSC must issue a final order in this case before or in March 2025.

Consumers submitted its 2025 PSCR plan to the MPSC in September 2024 and, in accordance with its proposed plan, self-implemented the 2025 PSCR charge beginning in January 2025.

The MPSC must issue a final order in this case before or in April 2026.

Large-load Tariff:

In November 2025, the MPSC approved changes to Consumers’ standard large‑customer tariff to govern service for new large electricity users such as data centers.

Consumers sought these changes to protect existing customers.

The changes apply to customers with a minimum service threshold of 100 MW and require a minimum 15‑year contract (beyond the construction period), an 80‑percent minimum demand billing obligation, upfront fees, and strong collateral and exit‑fee protections to ensure these large customers fully cover their own costs of service and do not shift risk or costs to existing customers.

Each large-load contract must receive MPSC approval before taking effect.

The MPSC also directed Consumers to present multiple cost‑allocation and rate-design options before its next rate case to ensure that large-load customers pay their fair share of system costs going forward.

Depreciation Rate Case:

In December 2025, Consumers filed a depreciation case related to its electric and common utility property.

In this case, Consumers requested to increase depreciation expense, and its recovery of that expense of $34 million annually based on December 31, 2024 balances.

Retention Incentive Program:

Under its Clean Energy Plan, Consumers will retire the J.H.

Campbell coal-fueled generating units in 2025.

In order to ensure necessary staffing at J.H.

Campbell through retirement, Consumers has implemented a retention incentive program.

The aggregate cost of the J.H.

Campbell program through 2025 is estimated to be less than $50 million;

Consumers expects to recognize $5 million of retention benefit costs in 2025.

The MPSC has approved deferred accounting treatment for these costs;

these expenses are deferred as a regulatory asset.

The retirement of J.H.

Campbell is subject to temporary extensions under emergency orders issued by the U.S.

Secretary of Energy.

As a result, Consumers has implemented retention measures to ensure appropriate staffing levels and expects to incur up to $4 million during each 90‑day emergency order period.

Consumers will seek recovery of these retention costs from FERC, consistent with rate recovery sought for other costs of complying with the emergency orders.

For additional details on this program, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 20, Exit Activities and Asset Sales.

For additional details on the emergency orders, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters.

Electric Environmental Outlook:

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MATS, emission standards for electric generating units published by the EPA based on Section 112 of the Clean Air Act, continue to apply to Consumers.

The company has complied, and continues to comply, with the MATS regulation and does not expect MATS to materially impact its environmental strategy.

In June 2025, the EPA issued a proposed rule to repeal changes made to the MATS rule in 2024.

The company has complied, and continues to comply, with the MATS regulation and both the 2024 and proposed 2025 versions of MATS have minimal impacts on Consumers’ electric generating units.

Consumers does not expect MATS to materially impact its environmental strategy.

CSAPR requires Michigan and many other states to improve air quality by reducing power plant emissions that, according to EPA modeling, contribute to ground-level ozone in other downwind states.

Since its 2015 effective date, CSAPR has been revised several times.

In June 2023, the EPA published the Good Neighbor Plan, a revision to CSAPR.

This regulation tightens allowance budgets for electric generating units in Michigan between 2023 and 2029 and changes the mechanism for allocating such allowances on a year-over-year basis beginning in 2026.

In June 2024, the U.S.

Supreme Court stayed the Good Neighbor Plan pending judicial review and, as a result, the allowance requirements for Michigan revert back to the prior effective CSAPR ozone season rule.

Regardless of the outcome of this litigation and which version of the rule applies, Consumers expects this regulation will have minimal financial and operational impact in the near and/or long term.

Consumers complies with this regulation and expects it to have minimal financial and operational impact in the near and/or long term.

In 2015, the EPA lowered the NAAQS for ozone and made it more difficult to construct or modify power plants and other emission sources in areas of the country that do not meet the ozone standard.

As of May 2023, three counties in western Michigan have been designated as not meeting the ozone standard.

As of 2023, three counties in western Michigan have been designated as not meeting the ozone standard.

Based on recent data, the EPA reclassified these counties from “moderate” to “serious” nonattainment.

None of Consumers’ fossil-fuel-fired generating units are located in these areas.

In March 2024, the EPA published a lower fine particulate matter NAAQS, which will likely result in newly designated nonattainment areas in Michigan starting in 2026.

Consumers does not expect this rule to have significant impacts on its fossil-fuel-fired generating assets or its clean energy strategy.

Additionally, a December 2025 court decision vacated the EPA’s 2023 redesignation of a seven‑county area in southeast Michigan from moderate ozone nonattainment to attainment.

None of Consumers’

fossil-fuel-fired generating units are located in these areas.

Consumers will continue to monitor the impact of the recent court decision on the seven-county area in southeast Michigan, including resulting agency actions, but does not anticipate it will have any impact on Consumers’ generating assets.

In March 2024, the EPA published a lower fine particulate matter NAAQS, which could result in newly designated nonattainment areas in Michigan starting in 2026.

In 2025, EGLE proposed nonattainment areas for Kalamazoo and Wayne counties, with a decision by the EPA expected in 2026.

Consumers does not have any fossil-fuel-fired generating assets in these counties and therefore does not expect this rule to have significant impacts on its existing generating assets or its clean energy strategy.

Consumers will continue to monitor NAAQS rulemakings and litigation to evaluate potential impacts to its generating assets.

In December 2024, the EPA published a proposal to amend new source performance standards for new, modified, and reconstructed stationary combustion turbines to lower emission limits for NOx.

This may impact future gas-fueled, simple-cycle turbine projects.

Consumers will work with industry stakeholder groups to comment on the proposed rule and will monitor the rulemaking.

In January 2026, the EPA published a final rule amending new source performance standards for new, modified, and reconstructed stationary combustion turbines to lower emission limits for NOx.

This final rule requires new large simple-cycle turbine units with higher capacity factors to install control equipment for NOx emissions.

Consumers is evaluating this rule to determine its impact.

Consumers continues to evaluate these rules in conjunction with other EPA and EGLE rulemakings, litigation, executive orders, treaties, and congressional actions.

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• changes in how certain units are operated, including the installation of additional emission control equipment

• the retirement, mothballing, or repowering with an alternative fuel of some of Consumers’ generating units

• the retirement, mothballing, extended operation, or repowering with an alternative fuel of some of Consumers’ generating units

• changes in Consumers’ environmental compliance costs

• the purchase or sale of allowances

• the purchase or sale of emission allowances

Greenhouse Gases:

There have been numerous legislative and regulatory initiatives at the state, regional, national, and international levels that involve the potential regulation and reporting of greenhouse gases.

There have been numerous legislative, executive, and regulatory initiatives at the state, regional, national, and international levels that involve the potential regulation and reporting of greenhouse gases.

Consumers continues to monitor and comment on these initiatives, as appropriate.

In September 2025, the EPA proposed a rule to reconsider the Greenhouse Gas Reporting Program by eliminating the reporting obligations from numerous emission sources, including Consumers’ electric generation sites and distribution equipment.

Reporting of carbon dioxide to the EPA, however, will continue for sources subject to the Clean Air Act Acid Rain Program, which includes Consumers’ fossil-fuel-fired electric generation.

This change could result in inconsistent approaches in voluntary greenhouse gas accounting for industrial sources.

In April 2024, the EPA finalized its rule under Section 111 of the Clean Air Act to address greenhouse gas emissions from new combustion turbine electric generating units and existing coal-, gas-, and oil‑fueled steam electric generating units.

Notably, these rules do not address existing combustion turbine electric generating units, though the EPA has announced that it will release a draft rule for these types of units at a later time.

Under its Clean Energy Plan, Consumers will eliminate the use of coal in owned generation in 2025 and does not expect this rule will have a significant impact on its gas- and oil-fueled steam electric generating assets or its Clean Energy Plan.

Future EPA regulations addressing greenhouse gas emissions from existing combustion turbine electric generating units may apply to Consumers’ gas-fueled combustion turbine facilities and may have a material financial and operational impact.

These rules do not address existing combustion turbine electric generating units.

In June 2025, the EPA issued a proposed rule containing two different pathways to rescind these requirements.

Consumers does not expect these proposed changes will have a significant impact on its existing gas- and oil-fueled steam electric generating assets.

Consumers will continue to follow the EPA rules that address greenhouse gas emissions and will continue to evaluate potential impacts to its operations.

In 2020, Michigan’s Governor signed an executive order creating the Michigan Healthy Climate Plan, which outlines goals for Michigan to achieve economy-wide net-zero greenhouse gas emissions and to be carbon neutral by 2050.

The executive order aims for a 28 ‑ percent reduction below 2005 levels of greenhouse gas emissions by 2025.

Consumers has already surpassed the 28 ‑ percent reduction milestone for its owned electric generation.

The 2023 Energy Law codifies much of the Governor’s goals.

For additional details on the 2023 Energy Law, see the Planet section of the Executive Overview.

Increased frequency or intensity of severe or extreme weather events, including those due to climate change, could materially impact Consumers’ facilities, energy sales, and results of operations.

Consumers is unable to predict these events;

however, Consumers evaluates the potential physical impacts of climate change on its operations, including increased frequency or intensity of storm activity;

however, Consumers evaluates the potential physical impacts of climate

change on its operations, including increased frequency or intensity of storm activity;

increased precipitation;

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While Consumers cannot predict the outcome of changes in U.S.

policy or of other legislative, executive, or regulatory initiatives involving the potential regulation or reporting of greenhouse gases, it intends to move forward with its Clean Energy Plan, its present net-zero goals, and its emphasis on reliable and resilient electric supply.

policy or of other legislative, executive, or regulatory initiatives involving the potential regulation or reporting of greenhouse gases, it intends to move forward with its compliance with Michigan’s clean energy requirements, its own sustainability goals, and its emphasis on reliable and resilient electric supply.

Litigation, international treaties, executive orders, federal laws and regulations (including regulations by the EPA), and state laws and regulations, if enacted or ratified, could ultimately impact Consumers.

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• purchase emission allowances or credits (including potential greenhouse gas offset credits)

• curtail operations

• curtail operations or modify existing facility retirement schedules

• arrange for alternative sources of supply

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This rule adopts minimum standards for the disposal of non‑hazardous CCRs in CCR landfills and surface impoundments and criteria for the beneficial use of CCRs.

The rule also sets out conditions under which some CCR units

would be forced to cease receiving CCRs and related process water and to initiate closure.

The rule also sets out conditions under which some CCR units would be forced to cease receiving CCRs and related process water and to initiate closure.

Due to continued litigation, many aspects of the rule have been remanded to the EPA, resulting in more proposed and final rules.

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The new rule adopts minimum standards for impoundments at electric generating facilities that became inactive before the 2015 CCR rule’s effective date.

During 2024, owners and operators were required to assess if an inactive facility contains a legacy surface impoundment and then, for identified locations, proceed with the compliance schedule.

During 2024, owners and operators were required to assess whether an inactive facility contains a legacy surface impoundment and then, for identified locations, proceed with the compliance schedule.

Additionally, the EPA established groundwater monitoring, corrective action, closure, and post-closure care requirements for CCR surface impoundments and landfills closed prior to the effective date of the 2015 CCR rule, but that do not meet the closure technical and performance standards of the May 2024 rule.

These include inactive CCR landfills that were previously exempted from regulation but that are now considered CCR management units.

Owners are required to conduct an evaluation at active facilities and any inactive facilities with at least one legacy impoundment to identify CCR management units and determine an appropriate course of action (closure, groundwater treatment, etc.) for each identified unit according to established compliance milestone schedules.

Owners are required to conduct an evaluation at active facilities or any inactive facilities with at least one legacy impoundment to identify CCR management units and determine an appropriate course of action (closure, groundwater treatment, etc.) for each identified unit according to established compliance milestone schedules.

In February 2026, the EPA issued a final rule extending the compliance milestone schedule for CCR management units.

This extension does not have a material impact on Consumers’ compliance strategy.

Separately, Congress passed legislation in 2016 allowing participating states to develop permitting programs for CCRs under RCRA Subtitle D.

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Consumers has historically been authorized to recover in electric rates costs related to coal ash disposal sites that supported power generation.

Consumers has completed an assessment of inactive facilities as required by the 2024 CCR rule, and did not identify any legacy impoundments.

Consumers is continuing with evaluations related to CCR management units and 2024 CCR rule impacts on the state permit program.

For additional details, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 9, Asset Retirement Obligations.

Consumers completed an assessment of inactive facilities as required by the 2024 CCR rule, and did not identify any legacy impoundments.

Consumers is continuing evaluations related to CCR management units and 2024 CCR rule impacts on the state permit program.

Multiple water-related regulations apply, or may apply, to Consumers.

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The EPA also regulates the discharge of wastewater through its effluent limitation guidelines for steam electric generating plants.

In 2020, the EPA revised previous guidelines related to the discharge of certain wastewater, but allowed for extension of the compliance deadline from the end of 2023 to the end of 2025, upon approval by EGLE through the NPDES permitting process.

Consumers received such an extension for its J.H.

Campbell coal-fueled generating units, which it plans to retire in 2025.

In April 2024, the EPA released a final rule updating its effluent limitation guidelines for existing coal-fueled units.

This rule regulates additional wastewater streams previously not regulated, including combustion residual leachate and legacy wastewater.

Consumers has submitted timely NPDES permit applications and will be working with EGLE to incorporate applicable provisions during the permit renewal process.

Consumers has submitted the appropriate notices of planned participation in compliance with this rule.

Consumers has also submitted timely NPDES permit applications and will be working with EGLE to incorporate applicable provisions during the permit renewal process.

Many of Consumers’ facilities maintain NPDES permits, which are vital to the facilities’ operations.

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Multiple regulations apply, or may apply, to Consumers relating to protected species and habitats.

Statutes like the federal Endangered Species Act, the Migratory Bird Treaty Act, and the Bald and Golden Eagle Protection Act of 1940 may impact operations at Consumers’ facilities.

In 2021, the U.S.

Fish and Wildlife Service announced its intent to regulate incidental take under the Migratory Bird Treaty Act but has not yet published a proposed rule.

Statutes like the federal Endangered Species Act, the Migratory Bird Treaty Act, and the Bald and Golden Eagle Protection Act of 1940 and changes to permitting may impact operations at Consumers’ facilities.

In February 2024, the U.S.

Fish and Wildlife Service published a final rule, effective April 2024, providing for bald eagle general permits for qualifying wind farms and electric distribution systems.

While any resulting permitting and monitoring fees and/or restrictions on operations could impact Consumers’ existing and future operations, Consumers does not expect any material changes to its environmental strategy or Clean Energy Plan as a result of this rule.

Fish and Wildlife Service published a final rule providing for bald eagle general permits for qualifying wind farms and electric distribution systems.

Consumers has received, or is pursuing, bald eagle general permits for all its wind farms.

Additionally, Consumers regularly monitors proposed changes to the listing status of several species within its operational area.

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For additional details on other electric environmental matters, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments—Consumers Electric Utility Contingencies—Electric Environmental Matters.

Financial Statements

and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments—Consumers Electric Utility Contingencies—Electric Environmental Matters.

Consumers Gas Utility Outlook and Uncertainties

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Projected 12-Month Period Ending October 31 2027

Components of the requested rate increase

Investment in rate base $ 108

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Cost of capital 66

ASP gain previously used to offset revenue requirement 27

Sales/gross margin 1

The MPSC must issue a final order in this case before or in October 2026.

Consumers submitted its 2025 ‑ 2026 GCR plan to the MPSC in December 2024 and, in accordance with its proposed plan, expects to self-implement the 2025 ‑ 2026 GCR charge beginning in April 2025.

Gas Pipeline and Storage Integrity and Safety:

Department of Transportation’s Pipeline and Hazardous Materials Safety Administration has published various rules that expand federal safety standards for gas transmission pipelines and underground storage facilities.

Initial expanded requirements for transmission pipelines took effect in 2020, with additional requirements released in 2023.

There are also proposed rules expanding requirements for gas distribution systems and leak detection and repair.

To comply with these rules, Consumers will incur increased capital and operating and maintenance costs to install and remediate pipelines and to expand inspections, maintenance, and monitoring of its existing pipelines and storage facilities.

Consumers’ gas operations are governed by federal and state pipeline safety rules, and there are robust processes and procedures in place to maintain compliance with these regulations.

Department of Transportation’s Pipeline and Hazardous Materials Safety Administration has published various rules that revise federal safety standards for gas transmission pipelines and underground storage facilities.

Consumers has implemented measures to achieve compliance with the revised rules.

There are also proposed rules expanding requirements for gas safety, although these rules are subject to reconsideration by the current administration.

Under the proposed rules, Consumers will incur increased capital and increased operating and maintenance costs to install and remediate pipelines and to expand inspections, maintenance, and monitoring of existing pipelines and storage facilities.

Although associated capital or operating and maintenance costs relating to these regulations could be material and cost recovery cannot be assured, Consumers expects to recover such costs in rates consistent with the recovery of other reasonable costs of complying with laws and regulations.

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In 2015, the EPA lowered the NAAQS for ozone and made it more difficult to construct or modify natural gas compressor stations and other emission sources in areas of the country that do not meet the ozone standard.

As of May 2023, three counties in western Michigan have been designated as not meeting the ozone standard.

As of 2023, three counties in western Michigan have been designated as not meeting the ozone standard.

Based on recent data, the EPA reclassified these counties from “moderate” to “serious” nonattainment, which has more stringent requirements.

One of Consumers’ compressor stations is in an ozone nonattainment area.

One of Consumers’ compressor stations is in a serious ozone nonattainment area.

Consequently, Consumers has initiated plans to retrofit equipment at this compressor station to lower NOx emissions.

Consumers will continue to monitor NAAQS rulemakings and evaluate potential impacts to its compressor stations and other applicable natural gas storage and delivery assets.

Additionally, a December 2025 court decision vacated the EPA’s 2023 redesignation of the seven‑county area in southeast Michigan from moderate ozone nonattainment to attainment.

Four of Consumers’ compressor stations are located in these counties, with one station having assets that may be impacted by the redesignation change.

Consumers will continue to monitor the recent court decision’s impact on the seven-county area in southeast Michigan, including resulting agency actions, and the potential impacts to compressor station assets.

Consumers will continue to monitor NAAQS rulemakings and litigation, and evaluate potential impacts to its compressor stations and other applicable natural gas storage and delivery assets.

In March 2024, the EPA published a lower fine particulate matter NAAQS, which could result in newly designated nonattainment areas in Michigan starting in 2026.

In 2025, EGLE proposed nonattainment areas for Kalamazoo and Wayne counties, with a decision by the EPA expected in 2026.

Consumers has one compressor station located in Wayne County and will continue to monitor NAAQS rulemakings and litigation to evaluate potential impacts to the natural gas compressor station assets.

Greenhouse Gases:

There is increasing interest at the federal, state, and local levels in potential regulation of greenhouse gases or their sources.

In January 2024, the EPA proposed a new fee for emitting certain waste from petroleum and natural gas systems, as directed under the Inflation Reduction Act of 2022.

The proposed fees could apply to methane emissions from transmission pipeline, compression, or underground storage that exceed annual thresholds;

however, initial analysis indicates Consumers would not be subject to fees under its routine operations.

This regulation or others, if adopted, may involve requirements to reduce methane emissions from Consumers’ gas utility operations and carbon dioxide emissions from customer use of natural gas.

Consumers will continue to monitor this proposed rule for potential impacts.

The executive order aims for a 28 ‑ percent reduction below 2005 levels of greenhouse gas emissions by 2025.

For additional details on the executive order, see Outlook—Consumers Electric Utility Outlook and Uncertainties.

Some interest exists at the various levels of government in regulating greenhouse gases or their sources.

Future regulations, if adopted, may involve requirements to reduce methane emissions from Consumers’ gas utility operations and carbon dioxide emissions from customer use of natural gas.

Consumers will continue to monitor such potential rules for impacts.

In September 2025, the EPA proposed a rule to reconsider the Greenhouse Gas Reporting Program by removing the natural gas distribution segment from the reporting obligations under the petroleum and natural gas source category, and proposed to delay the reporting obligations until 2034 for the remaining sources in this category.

If this proposal is finalized as proposed, it could result in inconsistent approaches in voluntary greenhouse gas accounting for industrial sources.

Consumers is making voluntary efforts to reduce its gas utility’s methane emissions.

Under its Methane Reduction Plan, Consumers has set a goal of net-zero methane emissions from its natural gas delivery system by 2030.

Under its Methane Reduction Plan, Consumers has set a goal of net-zero methane emissions from its natural gas delivery

system by 2030.

The remaining emissions will likely be offset by purchasing and/or producing renewable natural gas.

To date, Consumers has reduced methane emissions by nearly 30 percent.

In 2022, Consumers also announced a net-zero greenhouse gas emissions target for its entire natural gas system by 2050.

This includes suppliers and customers, and has an interim goal of reducing customer emissions by 25 percent by 2035.

The remaining emissions will likely be offset through clean fuel alternatives or nature-based carbon removal pathways.

To date, Consumers has reduced methane emissions by more than 40 percent.

Consumers has also set a goal to reduce customer greenhouse gas emissions by 25 percent by 2035.

Consumers’ Natural Gas Delivery Plan, a rolling ten ‑ year investment plan to deliver safe, reliable, clean, and affordable natural gas to customers, outlines ways in which Consumers can make early progress toward these goals in a cost-effective manner, including energy waste reduction, carbon offsets, and renewable natural gas supply.

Consumers has already initiated work in these key areas by continuing to expand its energy waste reduction targets and by offering gas customers the ability to offset their carbon footprint associated with natural gas use by purchasing renewable natural gas and/or carbon credits associated with Michigan forest preservation.

Consumers has two renewable natural gas facilities under construction scheduled for commercial operation in late 2025, and is planning to develop two additional facilities to achieve commercial operation in 2026.

Consumers is evaluating and monitoring newer technologies to determine their role in achieving Consumers’ interim and long-term net-zero goals, including biofuels, synthetic methane, carbon capture sequestration systems, and other innovative technologies.

Consumers has renewable natural gas facilities under construction scheduled for commercial operation in 2026 and is monitoring regulatory developments and market conditions closely as part of its ongoing evaluation of the projects.

As part of this evaluation, two early‑phase renewable natural gas development projects have been paused indefinitely, and Consumers recognized an impairment charge of $15 million related to these projects in 2025.

Consumers is evaluating and monitoring newer technologies to determine their role in achieving Consumers’ interim and long-term net-zero goals, including biofuels, geothermal, synthetic methane, carbon capture sequestration systems, and other innovative technologies.

NorthStar Clean Energy Outlook and Uncertainties

CMS Energy’s primary focus with respect to its NorthStar Clean Energy businesses is to maximize the value of generating assets, its share of which represents 1,658 MW of capacity, and to pursue opportunities for the development of renewable generation projects.

In December 2024, NorthStar Clean Energy entered into an agreement to sell, for approximately $40 million, a noncontrolling interest in the holding company of a 100‑MW wind project located in Paulding County, Ohio.

Additionally, in January 2025, NorthStar Clean Energy signed an agreement to sell, for approximately $10 million, a noncontrolling interest in the holding company of a 24‑MW solar project located in Delta Township, Michigan and all interest in the holding company of a 3‑MW solar project located in Phillips, Wisconsin.

These sales are expected to close in the first half of 2025.

NorthStar Clean Energy’s operations may be subject to various federal, state, and local environmental laws and regulations.

CMS Energy’s primary focus with respect to its NorthStar Clean Energy businesses is to maximize the value of generating assets representing 1,665 MW of capacity, and to pursue opportunities for the development of renewable generation projects, including leveraging strategic partnerships and available tax incentives.

In December 2025, NorthStar Clean Energy sold a Class A membership interest in BG Solar Holdings to a tax equity investor.

BG Solar Holdings is the holding company of a 200-MW solar generation project being constructed in Branch County, Michigan.

All of the project’s nameplate capacity has been committed under a 15‑year renewable energy purchase agreement.

The tax equity investor contributed $15 million and recognized a deemed contribution of $35 million associated with BG Solar Holdings’ sale of investment tax credits related to a portion of the project placed into service for tax purposes in 2025.

The tax equity investor will contribute additional amounts upon commercial operation of the project in 2026.

NorthStar Clean Energy retained a Class B membership interest in BG Solar Holdings.

Earnings, tax attributes, and cash flows generated by BG Solar Holdings will be allocated among and distributed to the membership classes in accordance with the ratios specified in the associated limited liability company operating agreement;

these ratios change over time and are not representative of the ownership interest percentages of each membership class.

For additional details, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 19, Variable Interest Entities.

Trends, uncertainties, and other matters related to NorthStar Clean Energy that could have a material impact on CMS Energy’s consolidated income, cash flows, or financial position include:

• investment in and financial benefits received from renewable energy and energy storage projects, including changes to tax and trade policy

• delays or difficulties in financing, constructing, and developing projects, including those arising from the performance of contractors, suppliers, or other counterparties

• changes in energy, capacity, and other commodity prices

• severe weather events and climate change associated with increasing levels of greenhouse gases

• changes in various environmental laws, regulations, principles, or practices, or in their interpretation

• indemnity obligations assumed in connection with ownership interests in facilities that involve tax equity financing

• representations, warranties, and indemnities provided in connection with sales of assets

• delays or difficulties in obtaining environmental permits

For additional details regarding NorthStar Clean Energy’s uncertainties, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments—Guarantees.

NorthStar Clean Energy Environmental Outlook:

NorthStar Clean Energy’s operations are subject to various federal, state, and local environmental laws and regulations.

Multiple environmental laws and regulations are subject to litigation.

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CSAPR requires Michigan and many other states to improve air quality by reducing power plant emissions that, according to EPA modeling, contribute to ground-level ozone in other downwind states.

Since its 2015 effective date, CSAPR has been revised several times.

In June 2023, the EPA published the Good Neighbor Plan, a revision to CSAPR.

In June 2024, the U.S.

Supreme Court stayed the Good Neighbor Plan pending judicial review and, as a result, the allowance requirements for Michigan revert back to the prior effective CSAPR ozone season rule.

Under the June 2023 revision, NorthStar Clean Energy could incur increased costs to purchase allowances or retrofit equipment.

In December 2024, the EPA published a proposal to amend new source performance standards for new, modified, and reconstructed stationary combustion turbines to lower emission limits for NOx.

This may impact future gas-fueled, simple-cycle turbine projects.

NorthStar will monitor this rulemaking.

For additional details regarding the ozone or fine particulate matter NAAQS or CSAPR, including the Good Neighbor Plan, see Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook.

NorthStar Clean Energy complies with this regulation and expects it to have minimal financial and operational impact in the near and/or long term.

In March 2024, the EPA published a lower fine particulate matter NAAQS, which could result in newly designated nonattainment areas in Michigan starting in 2026.

In 2025, EGLE proposed nonattainment areas for Kalamazoo and Wayne counties, with a decision by the EPA expected in 2026.

NorthStar Clean Energy has two fossil-fuel-fired generating units in these counties and therefore will continue to monitor NAAQS rulemaking and litigation to evaluate potential impacts to its generating assets.

In January 2026, the EPA published a final rule amending new source performance standards for new, modified, and reconstructed stationary combustion turbines to lower emission limits for NOx.

This final rule requires new large simple-cycle turbine units with higher capacity factors to install control equipment for NOx emissions.

NorthStar Clean Energy will monitor this rulemaking.

A December 2025 court decision vacated the EPA’s 2023 redesignation of the seven‑county area in southeast Michigan from moderate ozone nonattainment to attainment.

NorthStar Clean Energy has one electric generating station located within this area.

NorthStar Clean Energy will continue to monitor the recent court decision’s impact on the seven-county area in southeast Michigan, including resulting agency actions, and the potential impacts to compressor station assets.

For additional details regarding the ozone NAAQS, see Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook.

In September 2025, the EPA proposed a rule to reconsider the Greenhouse Gas Reporting Program by eliminating the reporting obligations from numerous emission sources.

Reporting of carbon dioxide to the

EPA, however, will continue for sources subject to the Clean Air Act Acid Rain Program.

This change could result in inconsistent approaches in voluntary greenhouse gas accounting for industrial sources.

Notably, these rules do not address existing combustion turbine electric generating units, though the EPA has announced that it will release a draft rule for these types of units at a later time.

Due to the anticipated replacement of coal as a fuel at its one remaining coal-fueled steam electric generating facility, these regulations will not apply to NorthStar Clean Energy’s facilities.

Future EPA regulations addressing greenhouse gas emissions from existing combustion turbine electric generating units may apply to NorthStar Clean Energy’s gas-fueled combustion turbine facilities and may have a material financial and operational impact.

These rules do not address existing combustion turbine electric generating units.

In June 2025, the EPA issued a proposed rule containing two different pathways to rescind these requirements.

Neither pathway impacts NorthStar Clean Energy’s existing facilities.

NorthStar Clean Energy will continue to follow the EPA rules that address greenhouse gas emissions and will continue to evaluate potential impacts to its operations.

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NorthStar Clean Energy applies for renewal of these permits every five years.

Failure of EGLE to renew any NPDES permit, a successful appeal against a permit, a change in the interpretation or

scope of NPDES permitting, or onerous terms contained in a permit could have a significant detrimental effect on the operations of a facility.

Trends, uncertainties, and other matters related to NorthStar Clean Energy that could have a material impact on CMS Energy’s consolidated income, cash flows, or financial position include:

• investment in and financial benefits received from renewable energy and energy storage projects, including changes to renewable energy tax credits

• changes in energy and capacity prices

• severe weather events and climate change associated with increasing levels of greenhouse gases

• changes in commodity prices on certain derivative contracts that do not qualify for hedge accounting and must be marked to market through earnings

• changes in various environmental laws, regulations, principles, or practices, or in their interpretation

• indemnity obligations assumed in connection with ownership interests in facilities that involve tax equity financing

• representations, warranties, and indemnities provided by CMS Energy in connection with sales of assets

• delays or difficulties in obtaining environmental permits for facilities located in areas associated with environmental justice concerns

For additional details regarding NorthStar Clean Energy’s uncertainties, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments—Guarantees.

Failure of EGLE to renew any NPDES permit, a successful appeal against a permit, a change in the interpretation or scope of NPDES permitting, or onerous terms contained in a permit could have a significant detrimental effect on the operations of a facility.

Other Outlook and Uncertainties

Tax Legislation:

CMS Energy and Consumers are subject to changing tax laws.

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

The legislation allows for the immediate expensing of domestic research and development costs and includes changes to clean energy tax credits enacted by the Inflation Reduction Act of 2022.

While the OBBBA restores, and makes permanent, the 100‑percent bonus depreciation deduction, it also retains a provision that allows utilities to take a full deduction of interest expense in lieu of 100‑percent bonus depreciation.

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, Consumers, and certain of their subsidiaries are named as parties in various litigation matters, as well as in administrative proceedings before various courts and governmental agencies, arising in the ordinary course of business.

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Because Consumers has regulated operations, it uses regulatory accounting to recognize the effects of the regulators’ decisions on its financial statements.

Consumers continually assesses whether future recovery of its regulatory assets is probable by

considering communications and experience with its regulators and changes in the regulatory environment.

Consumers continually assesses whether future recovery of its regulatory assets is probable by considering communications and experience with its regulators and changes in the regulatory environment.

If Consumers determined that recovery of a regulatory asset were not probable, Consumers would be required to write off the asset and immediately recognize the expense in earnings.

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Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments.

Derivative Instruments:

CMS Energy and Consumers account for certain contracts as derivative instruments.

If a contract is a derivative and does not qualify for the normal purchases and sales exception, it is recorded on the consolidated balance sheets at its fair value.

For the FTRs at Consumers, changes in fair value are deferred as regulatory assets or liabilities.

The criteria used to determine if an instrument qualifies for derivative accounting or for an exception from derivative accounting are complex and often require judgment in application.

Changes in business strategies or market conditions, as well as a requirement to apply different interpretations of the derivative accounting literature, could result in changes in accounting for a single contract or groups of contracts, which could have a material impact on CMS Energy’s and Consumers’ financial statements.

For additional details on CMS Energy’s and Consumers’ derivatives and how the fair values of derivatives are determined, see Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Fair Value Measurements.

Income Taxes:

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New Accounting Standards

There are no new accounting standards issued but not yet effective that are expected to have a material impact on CMS Energy’s or Consumers’ consolidated financial statements.

For details regarding new accounting standards issued but not yet effective, See Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, New Accounting Standards.

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 7. Management’s Discussion and Analysis