CMS Energy Boosts 5-Year Capex to $20 Billion

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Michigan combination gas and electric utility holding company CMS Energy Corporation (NYSE:CMS) (Jackson, Michigan) has boosted its five-year capital spending $3 billion to $20 billion, and an additional $20 billion or more could be added for the 2030-2045 period, company officials told investors late last week when it announced earnings.

About 68% of the planned 2025-2029 investment, or about $13.7 billion, will be directed to the company's electric utility operations, which include a regulated electric utility and a merchant clean energy business called NorthStar Clean Energy. The remaining $6.3 billion will be invested in the gas utility. The $20 billion in planned capital expenditures (capex) is an 11% increase over the company's 2024-2028 capex budget of $17 billion. For more on CMS' prior five-year capex program, see February 22, 2024, article - CMS Energy Boosts Planned Capex to $17 Billion over Five Years.

On a percentage basis, capital spending over the 2025-2029 period is slated to rise the most in the company's NorthStar Clean Energy unit, where five-year spending will rise approximately 50%, to $5.1 billion from $3.4 billion in the prior five-year plan, CMS officials said on an earnings call February 6. Capital investment at CMS' electric distribution unit over the next five years will rise an estimated 18%, to $8.6 billion from $7.3 billion for the 2024-2028 period. Planned capex for the gas utility unit will hold steady at approximately $6.3 billion for the next five years.

Click on the image at right to see an annual and functional breakdown of CMS' planned capital spending for 2025-2029.

Industrial Info is tracking 12 CMS capital projects valued at about $2 billion. Four are considered high-probability (81-99% of moving forward as planned) while five are considered medium-probability (70-80%), and three are seen as low-probability (0-69%). Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can learn more by viewing the related project reports.

The $20 billion in planned capital outlays over the 2025-2029 period could grow by an additional $20 billion or more over the longer term, from 2030 to 2045, company officials said February 6.

These longer-term opportunities include about $10 billion to boost electric reliability in the electric distribution business between 2030 and 2035. These key investments include replacing about 20,000 utility poles each year, undergrounding approximately 400 miles per year of distribution cable and rebuilding 20% of the utility's substations over the next 10 years.

The clean energy business also is scheduled to make as much as $10 billion in capital investments over the 2030-2045 period, including 9,000 megawatts (MW) of new solar and 4,000 MW of new wind, to meet Michigan's 60% renewable energy target by 2035 in cost-effective manner.

Speaking about the company's planned $3 billion increase in capital investments in generation and distribution, Garrick Rochow, CMS' president and chief executive officer, said they "were significant and needed increase designed to deliver better customer service through improved reliability in distribution and supply."

He said the company "had a long runway of customer investments which are incremental to our five-year plan and give us confidence in our financial performance and continued growth of our company."

A third leg of growth, which is being assessed currently, will be contained in an integrated resource plan (IRP) the company plans to file next year, which will cover the years 2027 to 2045 and beyond. Without estimating incremental capital spending attributing any incremental capital spending, the CMS chief told investors that the 2026 IRP will include more than 850 MW of battery energy storage and additional investments to "support demand growth, drive resource adequacy and address intermittency of renewables." That may mean that new dispatchable generation capacity, possibly in the form of new natural gas generation, could be afoot.

CMS earned $255 million on just under $2 billion of revenue for the fourth quarter of 2024. Quarterly earnings fell slightly on flat revenue. For 2024, the company earned $947 million on $7.5 billion in revenue. Full-year 2024 earnings rose about $139 million over 2023 earnings on a slight gain in revenue.

Bolstered by strong full-year earnings and the company's near-term and long-term outlook, the CMS board of directors increased the company's common stock dividend by about 5.4% per share.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).