Management&apos;s Discussion and Analysis of Financial Condition and Results of Operations

METC

Michigan Electric Transmission Company, LLC, a nonaffiliated company

MGP

Manufactured gas plant

MIOSHA

Michigan Occupational Safety and Health Administration

MISO

Midcontinent Independent System Operator, Inc.

mothball

To place a generating unit into a state of extended reserve shutdown in which the unit
is inactive and unavailable for service for a specified period, during which the unit
can be brought back into service after receiving appropriate notification and completing
any necessary maintenance or other work; generation owners in MISO must request approval
to mothball a unit, and MISO then evaluates the request for reliability impacts

MPSC

Michigan Public Service Commission

Megawatt, a unit of power equal to one million watts

NAAQS

National Ambient Air Quality Standards

NPDES

National Pollutant Discharge Elimination System, a permit system for regulating point
sources of pollution under the Clean Water Act

NREPA

Part 201 of Michigan's Natural Resources and Environmental Protection Act of 1994, as
amended



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NSR
New Source Review, a construction-permitting program under the Clean Air Act

OPEB

Other Post-Employment Benefits


OPEB Plan
Postretirement health care and life insurance plans of CMS Energy and Consumers, including
certain present and former affiliates and subsidiaries

OSHA

Occupational Safety and Health Administration

PCB

Polychlorinated biphenyl

PHMSA

U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration


PPA
Power purchase agreement

PSCR
Power supply cost recovery

PURPA

Public Utility Regulatory Policies Act of 1978

RCRA

Federal Resource Conservation and Recovery Act of 1976

REC

Renewable energy credit


Regions Bank
A subsidiary of Regions Financial Corporation, a non-affiliated company

ROA

Retail Open Access, which allows electric generation customers to choose alternative electric
suppliers pursuant to Michigan's Public Acts 141 and 142 of 2000, as amended

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SEC
U.S. Securities and Exchange Commission

securitization

A financing method authorized by statute and approved by the MPSC which allows a utility to
sell its right to receive a portion of the rate payments received from its customers for the
repayment of securitization bonds issued by a special-purpose entity affiliated with such
utility

TAES

Toshiba America Energy Systems Corporation, a non-affiliated company

TCJA

Tax Cuts and Jobs Act of 2017


T.E.S. Filer City
T.E.S. Filer City Station Limited Partnership, a VIE in which HYDRACO Enterprises, Inc., a
wholly owned subsidiary of CMS Enterprises, has a 50-percent interest

VIE
Variable interest entity


                                       8

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Filing Format

This combined Form 10-Q is separately filed by CMS Energy and Consumers.
Information in this combined Form 10-Q relating to each individual registrant is
filed by such registrant on its own behalf. Consumers makes no representation
regarding information relating to any other companies affiliated with CMS Energy
other than its own subsidiaries.

CMS Energy is the parent holding company of several subsidiaries, including
Consumers and CMS Enterprises. None of CMS Energy, CMS Enterprises, nor any of
CMS Energy's other subsidiaries (other than Consumers) has any obligation in
respect of Consumers' debt securities or preferred stock and holders of such
securities should not consider the financial resources or results of operations
of CMS Energy, CMS Enterprises, nor any of CMS Energy's other subsidiaries
(other than Consumers and its own subsidiaries (in relevant circumstances)) in
making a decision with respect to Consumers' debt securities or preferred stock.
Similarly, neither Consumers nor any other subsidiary of CMS Energy has any
obligation in respect of securities of CMS Energy.

This report should be read in its entirety. No one section of this report deals
with all aspects of the subject matter of this report. This report should be
read in conjunction with the consolidated financial statements and related notes
and with MD&A included in the 2021 Form 10-K.

Available Information


CMS Energy's internet address is www.cmsenergy.com. CMS Energy routinely posts
important information on its website and considers the Investor Relations
section, www.cmsenergy.com/investor-relations, a channel of distribution for
material information. Information contained on CMS Energy's website is not
incorporated herein.

Forward-Looking Statements and Information


This Form 10-Q and other CMS Energy and Consumers disclosures may contain
forward-looking statements as defined by the Private Securities Litigation
Reform Act of 1995. The use of "might," "may," "could," "should," "anticipates,"
"believes," "estimates," "expects," "intends," "plans," "projects," "forecasts,"
"predicts," "assumes," and other similar words is intended to identify
forward-looking statements that involve risk and uncertainty. This discussion of
potential risks and uncertainties is designed to highlight important factors
that may impact CMS Energy's and Consumers' businesses and financial outlook.
CMS Energy and Consumers have no obligation to update or revise forward-looking
statements regardless of whether new information, future events, or any other
factors affect the information contained in the statements. These
forward-looking statements are subject to various factors that could cause
CMS Energy's and Consumers' actual results to differ materially from the results
anticipated in these statements. These factors include, but are not limited to,
the following, all of which are potentially significant:

•the impact and effect of recent events, such as the war in Ukraine, the
COVID-19 pandemic, and the responses to these events, and related economic
disruptions including, but not limited to, labor shortages, inflation, and
supply chain disruptions, all of which could impact CMS Energy's and Consumers'
workforce, operations, revenues, expenses, uncollectible accounts, energy
efficiency programs, pension funding, PSCR and GCR costs, capital investment
programs, cash flows, liquidity, maintenance of existing assets, and other
operating expenses

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•the impact of new regulation by the MPSC, FERC, and other applicable
governmental proceedings and regulations, including any associated impact on
electric or gas rates or rate structures

•potentially adverse regulatory treatment or failure to receive timely
regulatory orders affecting Consumers that are or could come before the MPSC,
FERC, or other governmental authorities

•changes in the performance of or regulations applicable to MISO, METC,
pipelines, railroads, vessels, or other service providers that CMS Energy,
Consumers, or any of their affiliates rely on to serve their customers


•the adoption of or challenges to federal or state laws or regulations or
changes in applicable laws, rules, regulations, principles, or practices, or in
their interpretation, such as those related to energy policy, ROA, PURPA,
infrastructure integrity or security, cybersecurity, gas pipeline safety, gas
pipeline capacity, energy waste reduction, the environment, regulation or
deregulation, reliability, COVID-19 vaccination and testing requirements, health
care reforms (including comprehensive health care reform enacted in 2010),
taxes, accounting matters, climate change, air emissions, renewable energy, the
Dodd-Frank Act, and other business issues that could have an impact on
CMS Energy's, Consumers', or any of their affiliates' businesses or financial
results

•factors affecting operations, such as costs and availability of personnel,
equipment, and materials; weather conditions; natural disasters; catastrophic
weather-related damage; scheduled or unscheduled equipment outages; maintenance
or repairs; environmental incidents; failures of equipment or materials;
electric transmission and distribution or gas pipeline system constraints;
interconnection requirements; political and social unrest; general strikes; the
government and/or paramilitary response to political or social events; and
changes in trade policies or regulations

•the ability of CMS Energy and Consumers to execute cost-reduction strategies


•potentially adverse regulatory or legal interpretations or decisions regarding
environmental matters, or delayed regulatory treatment or permitting decisions
that are or could come before EGLE, the EPA, and/or the U.S. Army Corps of
Engineers, and potential environmental remediation costs associated with these
interpretations or decisions, including those that may affect Consumers' routine
maintenance, repair, and replacement classification under NSR regulations

•changes in energy markets, including availability and price of electric
capacity and the timing and extent of changes in commodity prices and
availability and deliverability of coal, natural gas, natural gas liquids,
electricity, oil, gasoline, diesel fuel, and certain related products


•the price of CMS Energy common stock, the credit ratings of CMS Energy and
Consumers, capital and financial market conditions, and the effect of these
market conditions on CMS Energy's and Consumers' interest costs and access to
the capital markets, including availability of financing to CMS Energy,
Consumers, or any of their affiliates

•the potential effects of the future transition from LIBOR to an alternative
reference interest rate in the credit and capital markets


•the investment performance of the assets of CMS Energy's and Consumers' pension
and benefit plans, the discount rates, mortality assumptions, and future medical
costs used in calculating the plans' obligations, and the resulting impact on
future funding requirements

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•the impact of the economy, particularly in Michigan, and potential future
volatility in the financial and credit markets on CMS Energy's, Consumers', or
any of their affiliates' revenues, ability to collect accounts receivable from
customers, or cost and availability of capital

•changes in the economic and financial viability of CMS Energy's and Consumers'
suppliers, customers, and other counterparties and the continued ability of
these third parties, including those in bankruptcy, to meet their obligations to
CMS Energy and Consumers

•population changes in the geographic areas where CMS Energy and Consumers
conduct business

•national, regional, and local economic, competitive, and regulatory policies,
conditions, and developments


•loss of customer demand for electric generation supply to alternative electric
suppliers, increased use of self-generation including distributed generation, or
energy waste reduction and storage

•increased renewable energy demand due to customers seeking to meet their own
sustainability goals

•the reputational or other impact on CMS Energy and Consumers of the failure to
achieve ambitions related to reducing their impact on climate change

•adverse consequences of employee, director, or third-party fraud or
noncompliance with codes of conduct or with laws or regulations

•federal regulation of electric sales, including periodic reexamination by
federal regulators of CMS Energy's and Consumers' market-based sales
authorizations


•any event, change, development, occurrence, or circumstance that could impact
the settlement agreement resolving the 2021 IRP filing or give rise to the
termination of the associated purchase agreement, including any action by a
regulatory authority or other third party to prohibit, delay, impair, or deny
approval for or consent to the 2021 IRP or the consummation of the proposed
acquisition

•the availability, cost, coverage, and terms of insurance, the stability of
insurance providers, and the ability of Consumers to recover the costs of any
insurance from customers

•the effectiveness of CMS Energy's and Consumers' risk management policies,
procedures, and strategies, including strategies to hedge risk related to
interest rates and future prices of electricity, natural gas, and other
energy-related commodities


•factors affecting development of electric generation projects, gas
transmission, and gas and electric distribution infrastructure replacement,
conversion, and expansion projects, including factors related to project site
identification, construction material pricing, schedule delays, availability of
qualified construction personnel, permitting, acquisition of property rights,
and government approvals

•potential disruption to, interruption of, or other impacts on facilities,
utility infrastructure, operations, or backup systems due to accidents,
explosions, physical disasters, global pandemics, cyber incidents, civil unrest,
vandalism, war, or terrorism, and the ability to obtain or maintain insurance
coverage for these events

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•changes or disruption in fuel supply, including but not limited to supplier
bankruptcy and delivery disruptions


•potential costs, lost revenues, reputational harm, or other consequences
resulting from misappropriation of assets or sensitive information, corruption
of data, or operational disruption in connection with a cyberattack or other
cyber incident

•potential disruption to, interruption or failure of, or other impacts on
information technology backup or disaster recovery systems

•technological developments in energy production, storage, delivery, usage, and
metering

•the ability to implement technology successfully

•the impact of CMS Energy's and Consumers' integrated business software system
and its effects on their operations, including utility customer billing and
collections


•adverse consequences resulting from any past, present, or future assertion of
indemnity or warranty claims associated with assets and businesses previously
owned by CMS Energy or Consumers, including claims resulting from attempts by
foreign or domestic governments to assess taxes on or to impose environmental
liability associated with past operations or transactions

•the outcome, cost, and other effects of any legal or administrative claims,
proceedings, investigations, or settlements


•the reputational impact on CMS Energy and Consumers of operational incidents,
violations of corporate policies, regulatory violations, inappropriate use of
social media, and other events

•restrictions imposed by various financing arrangements and regulatory
requirements on the ability of Consumers and other subsidiaries of CMS Energy to
transfer funds to CMS Energy in the form of cash dividends, loans, or advances

•earnings volatility resulting from the application of fair value accounting to
certain energy commodity contracts or interest rate contracts


•changes in financial or regulatory accounting principles or policies (e.g., the
adoption of the hypothetical liquidation at book value method of accounting for
certain non-regulated renewable energy projects)

•other matters that may be disclosed from time to time in CMS Energy's and
Consumers' SEC filings, or in other public documents


All forward-looking statements should be considered in the context of the risk
and other factors described above and as detailed from time to time in
CMS Energy's and Consumers' SEC filings. For additional details regarding these
and other uncertainties, see Part I-Item 1. Financial Statements-MD&A-Outlook
and Notes to the Unaudited Consolidated Financial Statements-Note 1, Regulatory
Matters and Note 2, Contingencies and Commitments; and Part I-Item 1A. Risk
Factors in the 2021 Form 10-K.

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Part I-Financial Information
Item 1.  Financial Statements

Index to Financial Statements

Management's Discussion and Analysis of Financial Condition and Results of Operations

           14
  CMS Energy Consolidated Financial Statements                                                    46
  Consolidated Statements of Income (Unaudited)                                                   46
  Consolidated Statements of Comprehensive Income (Unaudited)                                     48
  Consolidated Statements of Cash Flows (Unaudited)                                               49
  Consolidated Balance Sheets (Unaudited)                                                         50
  Consolidated Statements of Changes in Equity (Unaudited)                                        52
  Consumers Consolidated Financial Statements                                                     53
  Consolidated Statements of Income (Unaudited)                                                   53
  Consolidated Statements of Comprehensive Income (Unaudited)                                     54
  Consolidated Statements of Cash Flows (Unaudited)                                               55
  Consolidated Balance Sheets (Unaudited)                                                         56
  Consolidated Statements of Changes in Equity (Unaudited)                                        58
  Notes to the Unaudited Consolidated Financial Statements                                        59

        1:     Regulatory Matters                                                                 59
        2:     Contingencies and Commitments                                                      60
        3:     Financings and Capitalization                                                      65
        4:     Fair Value Measurements                                                            67
        5:     Financial Instruments                                                              69

        6:     Retirement Benefits                                                                70
        7:     Income Taxes                                                                       71
        8:     Earnings Per Share-CMS Energy                                                      72
        9:     Revenue                                                                            73
       10:     Cash and Cash Equivalents                                                          76
       11:     Reportable Segments                                                                76
       12:     Variable Interest Entities                                                         78
       13:     Exit Activities and Discontinued Operations                                        80


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CMS Energy Corporation
Consumers Energy Company
Management's Discussion and Analysis of Financial Condition and Results of
Operations

This MD&A is a combined report of CMS Energy and Consumers.

Executive Overview


CMS Energy is an energy company operating primarily in Michigan. It is the
parent holding company of several subsidiaries, including Consumers, an electric
and gas utility, and CMS Enterprises, primarily a domestic independent power
producer and marketer. CMS Energy was also the parent holding company of
EnerBank, an industrial bank located in Utah, until October 1, 2021 when
EnerBank was acquired by Regions Bank. Consumers' electric utility operations
include the generation, purchase, distribution, and sale of electricity, and
Consumers' gas utility operations include the purchase, transmission, storage,
distribution, and sale of natural gas. Consumers' customer base consists of a
mix of primarily residential, commercial, and diversified industrial customers.
CMS Enterprises, through its subsidiaries and equity investments, is engaged in
domestic independent power production, including the development and operation
of renewable generation, and the marketing of independent power production.

CMS Energy and Consumers manage their businesses by the nature of services each
provides. CMS Energy operates principally in three business segments: electric
utility; gas utility; and enterprises, its nonutility operations and
investments. Consumers operates principally in two business segments: electric
utility and gas utility. CMS Energy's and Consumers' businesses are affected
primarily by:

•regulation and regulatory matters
•state and federal legislation
•economic conditions
•weather
•energy commodity prices
•interest rates
•their securities' credit ratings

The Triple Bottom Line

CMS Energy's and Consumers' purpose is to achieve world class performance while
delivering hometown service. In support of this purpose, CMS Energy and
Consumers employ the "CE Way," a lean operating model 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
profit, which is underpinned by performance; this consideration takes into
account not only the economic value that CMS Energy and Consumers create for
customers and investors, but also their responsibility to social and
environmental goals. The triple bottom line balances the interests of employees,
customers, suppliers, regulators, creditors, Michigan's residents,

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the investment community, and other stakeholders, and it reflects the broader
societal impacts of CMS Energy's and Consumers' activities.

                     [[Image Removed: cms-20220331_g1.jpg]]

CMS Energy's Environmental, Social, Governance and Sustainability Report, which
is available to the public, describes CMS Energy's and Consumers' progress
toward world class performance measured in the areas of people, planet, and
profit.

People: The people element of the triple bottom line represents CMS Energy's and
Consumers' commitment to their employees, their customers, the residents of
local communities in which they do business, and other stakeholders.


The safety of employees, customers, and the general public is a priority of
CMS Energy and Consumers. Accordingly, CMS Energy and Consumers have worked to
integrate a set of safety principles into their business operations and culture.
These principles include complying with applicable safety, health, and security
regulations and implementing programs and processes aimed at continually
improving safety and security conditions. Since 2010, Consumers' OSHA recordable
incident rate has decreased by 40 percent.

In response to the COVID-19 pandemic, CMS Energy and Consumers have issued a
response plan that is focused on the health, safety, and well-being of their
co-workers, customers, and communities. CMS Energy and Consumers have aligned
with safety and health guidelines from the CDC, OSHA, MIOSHA, and the Michigan
Department of Health and Human Services in order to protect their employees,
customers, and contractors to ensure the continued delivery of critical energy
services.

In addition, while CMS Energy and Consumers have experienced some supply chain
disruptions, they continue to provide safe and reliable service to customers.


CMS Energy and Consumers also place a high priority on customer value and on
providing a hometown customer experience. Consumers' customer-driven investment
program is aimed at improving safety and increasing electric and gas
reliability, which has resulted in measurable improvements in customer
satisfaction.

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 and energy waste reduction and demand response programs
•targeted infrastructure investment to reduce maintenance costs and improve
reliability and safety
•supply chain optimization
•economic development to increase sales and reduce overall rates
•information and control system efficiencies
•employee and retiree health care cost sharing
•workforce productivity enhancements

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Planet: The planet element of the triple bottom line represents CMS Energy's and
Consumers' commitment to protect the environment. This commitment extends beyond
compliance with various state and federal environmental, health, and safety laws
and regulations. Management considers climate change and other environmental
risks in strategy development, business planning, and enterprise risk management
processes.

CMS Energy and Consumers continue to focus on opportunities to protect the
environment and to reduce their carbon footprint. As a result of actions already
taken, CMS Energy and Consumers have:


•decreased their combined percentage of electric supply (self-generated and
purchased) from coal by 13 percentage points since 2015
•reduced carbon dioxide emissions by over 30 percent since 2005
•reduced the amount of water used to generate electricity by nearly 30 percent
since 2012
•reduced landfill waste disposal by over 1.6 million tons since 1992
•reduced methane emissions by nearly 20 percent since 2012

Since 2005, Consumers has reduced its sulfur dioxide and particulate matter
emissions by over 90 percent and its nitrogen oxide emissions by over
80 percent. Consumers began tracking mercury emissions in 2007; since that time,
it has reduced such emissions by nearly 90 percent.

The 2016 Energy Law:


•raised the renewable energy standard to 15 percent in 2021; Consumers met the
15-percent requirement in 2021 and expects to meet the requirement in future
years with a combination of newly generated RECs and previously generated RECs
carried over from prior years
•established a goal of 35 percent combined renewable energy and energy waste
reduction by 2025; Consumers achieved 30 percent combined renewable energy and
energy waste reduction through 2021
•authorized incentives for demand response programs and energy efficiency
programs, referring to the combined initiatives as energy waste reduction
programs
•established an integrated planning process for new capacity and energy
resources

Consumers' Clean Energy Plan details its strategy to meet customers' long-term
energy needs. The Clean Energy Plan was originally outlined in Consumers'
2018 IRP, which was approved by the MPSC in 2019. Under its Clean Energy Plan,
Consumers will meet the requirements of the 2016 Energy Law using its clean and
lean strategy, which focuses on increasing the generation of renewable energy,
helping customers use less energy, and offering demand response programs to
reduce demand during critical peak times.

In June 2021, Consumers filed its 2021 IRP with the MPSC, proposing updates to
the Clean Energy Plan. In April 2022, Consumers and a broad coalition of key
stakeholders, including customer groups, environmental organizations, the
MPSC Staff, energy industry representatives, and the Michigan Attorney General,
filed a settlement agreement with the MPSC resolving Consumers' 2021 IRP. The
settlement agreement is pending approval by the MPSC.

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The settlement agreement resolving the 2021 IRP outlines Consumers' long-term
strategy for delivering clean, reliable, resilient, and affordable energy to its
customers, including plans to:

•end the use of coal-fueled generation in 2025, 15 years sooner than initially
planned
•purchase an existing natural gas-fueled generating unit, providing an
additional 1,176 MW of nameplate capacity and allowing Consumers to continue
providing controllable sources of electricity to customers
•solicit approximately 700 MW of capacity from sources in Michigan's Lower
Peninsula beginning in 2025
•expand its investment in renewable energy, adding nearly 8,000 MW of solar
generation by 2040

Under the settlement agreement resolving the 2021 IRP, Consumers would continue
to earn a return equal to its weighted-average cost of capital on payments made
under new competitively bid PPAs approved by the MPSC.

The 2021 IRP, as settled, would allow Consumers to exceed its breakthrough goal
of at least 50 percent combined renewable energy and energy waste reduction by
2030.

Presented in the following illustration is Consumers' 2021 capacity portfolio
and its future capacity portfolio under the proposed 2021 IRP settlement. This
illustration includes the effects of purchased capacity and energy waste
reduction and uses the nameplate capacity for all energy sources:

                     [[Image Removed: cms-20220331_g2.jpg]]

1 Does not include RECs.

2 These amounts and fuel sources will vary and are dependent on a one-time
competitive solicitation to acquire approximately 700 MW of capacity from
sources in Michigan's Lower Peninsula beginning in 2025.

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In addition to its plan to eliminate its use of coal-fueled generation by 2025,
Consumers has set 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 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.

Net-zero carbon emissions from electric business by 2040: This goal includes not
only emissions from Consumers' owned generation, but also emissions from the
generation of power purchased through long-term PPAs and from the MISO energy
market. Consumers expects to meet 90 percent of its customers' needs with clean
energy sources by 2040 through execution of its Clean Energy Plan. Carbon offset
measures including, but not limited to, carbon sequestration, methane emission
capture, forest preservation, and reforestation may be used to close the gap to
achieving net-zero carbon emissions.

Net-zero greenhouse gas emissions target for entire natural gas system by 2050:
This goal, announced in March 2022, includes suppliers and customers, and has an
interim goal of reducing customer emissions by 20 percent by 2030. Consumers
expects to meet this goal through carbon offset measures, renewable natural gas,
energy efficiency and demand response programs, and adopting emerging
technologies.

Additionally, to advance its environmental stewardship in Michigan and to
minimize the impact of future regulations, Consumers announced the following
fiveyear targets during 2018:


•to reduce its water use by one billion gallons; since 2017, Consumers reduced
its water usage by over 1.3 billion gallons cumulatively
•to enhance, restore, or protect 5,000 acres of land; since 2017, Consumers
enhanced, restored, or protected over 6,000 acres of land cumulatively
•to reduce the amount of waste taken to landfills by 35 percent; compared to
2017, Consumers reduced its landfill waste by 44 percent in 2021

Consumers exceeded each of these targets and is evaluating new targets for the
coming years.


CMS Energy and Consumers are monitoring numerous legislative, policy, and
regulatory initiatives, including those to regulate 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.

Profit: The profit 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 preserve and create jobs, and to
reinvest in the communities they serve.

For the three months ended March 31, 2022, CMS Energy's net income available to
common stockholders was $351 million, and diluted EPS were $1.21. This compares
with net income available to common stockholders of $349 million and diluted EPS
of $1.21 for the three months ended March 31, 2021. In 2022, higher electric and
gas sales due primarily to favorable weather were offset partially by increased
distribution, transmission, generation, and compression expenses and increased
depreciation and property taxes, reflecting higher capital spending. A more
detailed discussion of the

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factors affecting CMS Energy's and Consumers' performance can be found in the
Results of Operations section that follows this Executive Overview.

Over the next five years, Consumers expects weather-normalized electric and gas
deliveries to remain stable relative to 2021. This outlook reflects the effects
of energy waste reduction programs offset largely by modest growth in electric
and gas demand.

Performance: Impacting the Triple Bottom Line


CMS Energy and Consumers remain committed to achieving world class performance
while delivering hometown service and positively impacting the triple bottom
line of people, planet, and profit. During 2021, CMS Energy and Consumers:

•realized approximately $55 million in cost reductions by leveraging the CE Way
and through other initiatives
•introduced a new economic development rate designed to attract new business to
Michigan and encourage existing businesses to expand their operations
•achieved five-year planet goals, set in 2018, to save one billion gallons of
water; enhance, restore or protect 5,000 acres of land in Michigan; and reduce
waste sent to landfills by 35 percent
•introduced a new three-year electric vehicle pilot program designed to help
fleet owners transition to electric vehicles
•announced plans to begin development of a renewable natural gas facility that
will convert agricultural waste into clean, renewable natural gas
•expanded their renewable energy programs that assist both business and
residential customers in meeting their sustainability goals
•received recognition as #1 utility company in the U.S. for America's Best
Employers for Women and America's Best Employers for Diversity by Forbes®

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.
Consumers' investment plan and the regulatory environment in which it operates
also drive its ability to impact the triple bottom line.

Investment Plan: Consumers expects to make capital investments of $25 billion
over the next ten years. Over the next five years, Consumers expects to make
significant expenditures on infrastructure upgrades and replacements and
electric supply projects. 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 is expected to result
in annual rate-base growth of six to eight percent. This rate-base growth,
together with cost-control measures, should allow Consumers to maintain
affordable customer prices.

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The settlement agreement resolving the 2021 IRP, which is subject to MPSC
approval, would add nearly $1 billion of capital expenditures to the
$14.3 billion that Consumers already expects to make from 2022 through 2026,
which are presented in the following illustration:
                     [[Image Removed: cms-20220331_g3.jpg]]

Of this amount, Consumers plans to spend $10.8 billion over the next five years
to maintain and upgrade its gas infrastructure and electric distribution systems
in order to enhance safety and reliability, improve customer satisfaction,
reduce energy waste on those systems, and facilitate its clean energy
transformation. The gas infrastructure projects comprise $6.4 billion to sustain
deliverability, enhance pipeline integrity and safety, and reduce methane
emissions. The electric distribution projects comprise $4.4 billion to
strengthen circuits and substations, replace poles, and interconnect clean
energy resources. Consumers also expects to spend $2.8 billion on new clean
generation, which includes investments in wind, solar, and hydro electric
generation resources, and $0.7 billion on other electric supply projects.

Regulation: 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. Important regulatory events and developments not already
discussed are summarized below.

2022 Electric Rate Case: In April 2022, Consumers filed an application with the
MPSC seeking a rate increase of $272 million, made up of two components. First,
Consumers requested a $266 million annual rate increase, based on a 10.25
percent authorized return on equity for the projected twelve-month period ending
December 31, 2023. The filing requested authority to recover future investments
associated with distribution system reliability, solar generation, environmental
compliance, and enhanced technology. Second, Consumers requested approval of a
surcharge for the recovery of $6 million of distribution investments made in
2021 that exceeded what was authorized in rates in accordance with the
December 2020 electric rate order.

2021 Gas Rate Case: In December 2021, Consumers filed an application with the
MPSC seeking an annual rate increase of $278 million, based on a 10.5 percent
authorized return on equity and a projected

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twelve-month period ending September 30, 2023. The filing requests authority to
recover new infrastructure investment and related costs that are expected to
allow Consumers to improve system safety and reliability and reduce fugitive
methane emissions. In April 2022, Consumers reduced its requested annual rate
increase to $233 million, based on a 10.25 percent authorized return on equity.

Looking Forward


CMS Energy and Consumers will continue to consider the impact on the triple
bottom line of people, planet, and profit in their daily operations as well as
in their long-term strategic decisions. Consumers will continue to seek fair and
timely regulatory treatment that will support its customer-driven investment
plan, while pursuing cost-control measures that will allow it to maintain
sustainable customer base rates. The CE Way is an important means of realizing
CMS Energy's and Consumers' purpose of achieving world class performance while
delivering hometown service.

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Results of Operations

CMS Energy Consolidated Results of Operations

                                                              In Millions, Except Per Share Amounts

Three Months Ended March 31                                                                    2022        2021           Change
Net Income Available to Common Stockholders                                                                     $   351          $   349          $     2
Basic Earnings Per Average Common Share                                                                         $  1.21          $  1.21          $     -
Diluted Earnings Per Average Common Share                                                                       $  1.21          $  1.21          $     -


                                                                 In Millions

Three Months Ended March 31                                             2022      2021      Change
Electric utility                                                                       $  167      $ 155      $ 12
Gas utility                                                                               216        181        35
Enterprises                                                                                 8         14        (6)
Corporate interest and other                                                              (44)       (35)       (9)
Discontinued operations                                                                     4         34       (30)
Net Income Available to Common Stockholders                                            $  351      $ 349      $  2

Presented in the following table is a summary of after-tax changes to net income
available to common stockholders for the three months ended March 31, 2022
versus 2021:


                                                                         In Millions

Three Months Ended March 31, 2021                                                                              $   349
Reasons for the change
Consumers electric utility and gas utility
Electric sales                                                                                $    16
Gas sales                                                                                          39
Electric rate increase                                                                              4

Lower income tax expense                                                                           17
Lower non-operating retirement benefits expenses                                                    5

Higher distribution, transmission, generation, and compression
expenses

                                                                                          (13)
Higher property taxes, reflecting higher capital spending                                          (6)
Higher depreciation and amortization                                                               (5)

Higher forestry costs                                                                              (4)

Other                                                                                              (6)
                                                                                                               $    47
Enterprises                                                                                                         (6)
Corporate interest and other                                                                                        (9)
Discontinued operations                                                                                            (30)
Three Months Ended March 31, 2022                                                                              $   351


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Consumers Electric Utility Results of Operations

Presented in the following table are the detailed changes to the electric
utility's net income available to common stockholders for the three months ended
March 31, 2022 versus 2021 (amounts are presented pre-tax, with the exception of
income tax changes):

                                                                         In Millions

Three Months Ended March 31, 2021                                                                              $   155
Reasons for the change
Electric deliveries1 and rate increases
Higher revenue due primarily to favorable weather and sales mix                               $    22

Rate increase, including return on higher renewable capital
spending

                                                                                            5
Lower energy waste reduction program revenues                                                      (5)

Lower other revenues                                                                               (1)
                                                                                                               $    21
Maintenance and other operating expenses
Lower energy waste reduction program costs                                                          5

Higher distribution, transmission, and generation expenses                                         (8)
Higher forestry costs                                                                              (5)

Higher maintenance and other operating expenses                                                    (4)
                                                                                                                   (12)

Depreciation and amortization
Increased plant in service, reflecting higher capital spending,
net of impact from depreciation rate case settlement

                                                                 2
General taxes
Higher property taxes, reflecting higher capital spending                                                           (3)
Other income, net of expenses
Lower non-operating retirement benefits expenses and other                                                           4

Interest charges                                                                                                     1
Income taxes

Higher electric utility pre-tax earnings                                                           (3)
Lower other income taxes                                                                            2
                                                                                                                    (1)
Three Months Ended March 31, 2022                                                                              $   167

1Deliveries to end-use customers were 9.2 billion kWh in 2022 and
8.7 billion kWh in 2021.

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Consumers Gas Utility Results of Operations

Presented in the following table are the detailed changes to the gas utility's
net income available to common stockholders for the three months ended
March 31, 2022 versus 2021 (amounts are presented pre-tax, with the exception of
income tax changes):

                                                                         In Millions

Three Months Ended March 31, 2021                                                                              $   181
Reasons for the change
Gas deliveries1 and rate increases

Higher revenue due primarily to favorable weather and sales mix                               $    54
Lower other revenues                                                                               (3)
                                                                                                               $    51
Maintenance and other operating expenses
Higher distribution, transmission, and compression expenses                                        (9)

Higher maintenance and other operating expenses                                                    (1)
                                                                                                                   (10)
Depreciation and amortization
Increased plant in service, reflecting higher capital spending                                                      (9)
General taxes
Higher property taxes, reflecting higher capital spending                                                           (7)
Other income, net of expenses
Lower non-operating retirement benefits expenses and other                                                           2

Interest charges                                                                                                    (1)

Income taxes
Lower income tax expense due primarily to accelerated
amortization of excess deferred income taxes2

Lower income tax expense due primarily to acceleration of tax
benefits associated with cost of removal2

                                                           7
Higher gas utility pre-tax earnings                                                                (7)

                                                                                                                     9
Three Months Ended March 31, 2022                                                                              $   216

1Deliveries to end-use customers were 140 bcf in 2022 and 124 bcf in 2021.

2See Note 7, Income Taxes.

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Enterprises Results of Operations

Presented in the following table are the detailed after-tax changes to the
enterprises segment's net income available to common stockholders for the three
months ended March 31, 2022 versus 2021:


                                                      In Millions

Three Months Ended March 31, 2021                                                   $ 14
Reason for the change
Lower earnings at DIG and equity method investees

$ (6)


Three Months Ended March 31, 2022

$ 8

Corporate Interest and Other Results of Operations

Presented in the following table are the detailed after-tax changes to corporate
interest and other results for the three months ended March 31, 2022 versus
2021:


                                    In Millions

Three Months Ended March 31, 2021                                 $ (35)
Reasons for the change
Consolidated tax adjustment                                       $  (7)
Preferred stock dividends                                            (2)

Three Months Ended March 31, 2022                                 $ (44)

Results of Discontinued Operations


On October 1, 2021, EnerBank was acquired by Regions Bank. As a result,
EnerBank's results of operations through the date of the sale are presented as
income from discontinued operations on CMS Energy's consolidated statements of
income for the three months ended March 31, 2021. For additional details see,
Note 13, Exit Activities and Discontinued Operations.

Presented in the following table are the detailed after-tax changes to
discontinued operations for the three months ended March 31, 2022 versus 2021:


                                                                              In Millions

Three Months Ended March 31, 2021                                                                              $    34
Reason for the change
Additional EnerBank sale proceeds, net of tax and transaction costs                                            $     4
Absence of 2021 earnings from discontinued operations                                                              (34)
Three Months Ended March 31, 2022                                                                              $     4


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Cash Position, Investing, and Financing


At March 31, 2022, CMS Energy had $474 million of consolidated cash and cash
equivalents, which included $28 million of restricted cash and cash equivalents.
At March 31, 2022, Consumers had $38 million of consolidated cash and cash
equivalents, which included $26 million of restricted cash and cash equivalents.

Operating Activities

Presented in the following table are specific components of net cash provided by
operating activities for the three months ended March 31, 2022 versus 2021:


                                                                                          In Millions
CMS Energy, including Consumers
Three Months Ended March 31, 2021                                                         $    832
Reasons for the change
Higher net income                                                                         $      3
Noncash transactions1                                                                         (17)

Gain from post-closing adjustment to 2021 sale of EnerBank2                                     (5)

Unfavorable impact of changes in core working capital,3 due primarily to the timing
of collections on higher gas and electric deliveries in 2022

                                  (125)

Favorable impact of changes in other assets and liabilities, due primarily to an
insurance recovery

                                                                              19
Three Months Ended March 31, 2022                                                         $    707

Consumers

Three Months Ended March 31, 2021                                                         $    841
Reasons for the change
Higher net income                                                                         $     47
Noncash transactions1                                                                          (8)

Unfavorable impact of changes in core working capital,3 due primarily to the timing
of collections on higher gas and electric deliveries in 2022

                                  (144)

Favorable impact of changes in other assets and liabilities, due primarily to an
insurance recovery

                                                                               9
Three Months Ended March 31, 2022                                                         $    745

1Noncash transactions comprise depreciation and amortization, changes in
deferred income taxes and investment tax credits, and other noncash operating
activities and reconciling adjustments.

2For information regarding the sale of EnerBank, see Note 13, Exit Activities
and Discontinued Operations.

3Core working capital comprises accounts receivable, accrued revenue,
inventories, accounts payable, and accrued rate refunds.

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Investing Activities

Presented in the following table are specific components of net cash used in
investing activities for the three months ended March 31, 2022 versus 2021:


                                                                                          In Millions
CMS Energy, including Consumers
Three Months Ended March 31, 2021                                                         $   (283)
Reasons for the change
Higher capital expenditures                                                               $    (84)

Additional proceeds from post-closing adjustment related to 2021 sale of EnerBank1

               5

Absence of cash provided by discontinued operations in 20211                                  (178)
Other investing activities                                                                       1
Three Months Ended March 31, 2022                                                         $   (539)

Consumers

Three Months Ended March 31, 2021                                                         $   (458)
Reasons for the change
Higher capital expenditures                                                               $    (73)

Other investing activities                                                                       2
Three Months Ended March 31, 2022                                                         $   (529)

1For information regarding the sale of EnerBank, see Note 13, Exit Activities
and Discontinued Operations.

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Financing Activities

Presented in the following table are specific components of net cash used in
financing activities for the three months ended March 31, 2022 versus 2021:


                                                                                          In Millions
CMS Energy, including Consumers
Three Months Ended March 31, 2021                                                         $   (210)
Reasons for the change

Higher debt retirements                                                                   $     (1)

Lower issuances of common stock                                                                 (5)

Higher payments of dividends on common and preferred stock                                     (10)

Absence of cash used in discontinued operations in 20211                                        73

Other financing activities, primarily the payment of a long-term contract liability

            (17)
Three Months Ended March 31, 2022                                                         $   (170)

Consumers

Three Months Ended March 31, 2021                                                         $   (384)

Reasons for the change


Higher repayments of borrowings from CMS Energy                                           $   (142)
Higher stockholder contribution from CMS Energy                                                300
Lower payments of dividends on common stock                                                      1

Other financing activities                                                                       3
Three Months Ended March 31, 2022                                                         $   (222)

1For information regarding the sale of EnerBank, see Note 13, Exit Activities
and Discontinued Operations.

Capital Resources and Liquidity


CMS Energy and Consumers expect to have sufficient liquidity to fund their
present and future commitments. CMS Energy uses dividends and tax-sharing
payments from its subsidiaries and external financing and capital transactions
to invest in its utility and nonutility businesses, retire debt, pay dividends,
and fund its other obligations. The ability of CMS Energy's subsidiaries,
including Consumers, to pay dividends to CMS Energy depends upon each
subsidiary's revenues, earnings, cash needs, and other factors. In addition,
Consumers' ability to pay dividends is restricted by certain terms included in
its articles of incorporation and potentially by FERC requirements and
provisions under the Federal Power Act and the Natural Gas Act. For additional
details on Consumers' dividend restrictions, see Notes to the Unaudited
Consolidated Financial Statements-Note 3, Financings and Capitalization-Dividend
Restrictions. During the three months ended March 31, 2022, Consumers paid
$275 million in dividends on its common stock to CMS Energy.

Consumers uses cash flows generated from operations and external financing
transactions, as well as stockholder contributions from CMS Energy, to fund
capital expenditures, retire debt, pay dividends, and fund its other
obligations. Consumers also uses these sources of funding to contribute to its
employee benefit plans.


Financing and Capital Resources: CMS Energy and Consumers rely on the capital
markets to fund their robust capital plan. Barring any sustained market
dislocations or disruptions, CMS Energy and Consumers expect to continue to have
ready access to the financial and capital markets and will continue

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to explore possibilities to take advantage of market opportunities as they arise
with respect to future funding needs. If access to these markets were to
diminish or otherwise become restricted, CMS Energy and Consumers would
implement contingency plans to address debt maturities, which could include
reduced capital spending.

In 2020, 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
$500 million in privately negotiated transactions, in "at the market" offerings,
through forward sales transactions, or otherwise.

CMS Energy has entered into forward sales transactions under this program, which
allow CMS Energy to either physically settle the contracts by issuing shares of
its common stock at the then-applicable forward sale price specified by the
agreement or net settle the contracts through the delivery or receipt of cash or
shares. CMS Energy may settle the contracts at any time through their maturity
dates, and presently intends to physically settle the contracts by delivering
shares of its common stock. As of March 31, 2022, these contracts have an
aggregate sales price of $56 million, maturing through June 2022. For more
information on these forward sale contracts, see Notes to the Unaudited
Consolidated Financial Statements-Note 3, Financings and Capitalization-Issuance
of Common Stock.

At March 31, 2022, CMS Energy had $526 million of its revolving credit facility
available and Consumers had $1.1 billion available under its revolving credit
facilities. CMS Energy and Consumers use these credit facilities for general
working capital purposes and to issue letters of credit. 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 the aggregate in
commercial paper notes with maturities of up to 365 days at market interest
rates. These issuances are supported by Consumers' revolving credit facilities.
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 March 31, 2022, there were no commercial paper notes outstanding
under this program. For additional details on CMS Energy's and Consumers'
revolving credit facilities and commercial paper program, see Notes to the
Unaudited Consolidated Financial Statements-Note 3, Financings and
Capitalization.

Certain of CMS Energy's and Consumers' credit agreements contain covenants that
require CMS Energy and Consumers to maintain certain financial ratios, as
defined therein. At March 31, 2022, no default had occurred with respect to any
financial covenants contained in CMS Energy's and Consumers' credit agreements.
CMS Energy and Consumers were each in compliance with these covenants as of
March 31, 2022, as presented in the following table:

                                      Limit        Actual
CMS Energy, parent only
Debt to Capital1               < 0.70 to 1.0   0.54 to 1.0
Consumers
Debt to Capital2               < 0.65 to 1.0   0.46 to 1.0

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

2Applies to Consumers' revolving credit agreements and letter of credit
agreement.

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Outlook

Several business trends and uncertainties may affect CMS Energy's and Consumers'
financial condition and results of operations. These trends and uncertainties
could have a material impact on CMS Energy's and Consumers' consolidated income,
cash flows, or financial position. For additional details regarding these and
other uncertainties, see Forward-Looking Statements and Information; Notes to
the Unaudited Consolidated Financial Statements-Note 1, Regulatory Matters and
Note 2, Contingencies and Commitments; and Part II-Item 1A. Risk Factors.

Consumers Electric Utility Outlook and Uncertainties


Clean Energy Plan: Consumers' Clean Energy Plan details its strategy to meet
customers' long-term energy needs and provides the foundation for its goal to
achieve net-zero carbon emissions from its electric business by 2040. Under this
net-zero goal, Consumers plans to eliminate the impact of carbon emissions
created by the electricity it generates or purchases for customers.
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 and pumped storage generation.

The Clean Energy Plan was originally outlined in Consumers' 2018 IRP, which was
approved by the MPSC in 2019. In June 2021, Consumers filed its 2021 IRP with
the MPSC, proposing updates to the Clean Energy Plan. In April 2022, Consumers
and a broad coalition of key stakeholders, including customer groups,
environmental organizations, the MPSC Staff, energy industry representatives,
and the Michigan Attorney General, filed a settlement agreement with the MPSC
resolving Consumers' 2021 IRP. The settlement agreement is pending approval by
the MPSC.

Under the settlement agreement resolving the 2021 IRP, Consumers would eliminate
the use of coal-fueled generation in 2025 and would expect to meet 90 percent of
its customers' needs with clean energy sources by 2040. Specifically, the
settlement agreement includes:

•the retirement of the D.E. Karn coal-fueled generating units, totaling 515 MW
of nameplate capacity, in 2023
•the retirement of the J.H. Campbell coal-fueled generating units, totaling
1,407 MW of nameplate capacity, in 2025
•the retirement of the D.E. Karn oil and gas-fueled generating units, totaling
1,219 MW of nameplate capacity, in 2031, the units' original retirement date

The MPSC has authorized Consumers to issue securitization bonds to finance the
recovery of and return on the D.E. Karn coal-fueled generating units. Under the
settlement agreement resolving the 2021 IRP, Consumers would receive regulatory
asset treatment to recover the remaining book value of the J.H. Campbell
coal-fueled generating units, as well as 9.0 percent return on equity.

The settlement agreement proposes that Consumers bridge the transition away from
coal generation with:


•the purchase of the New Covert Generating Facility, a natural gas-fueled
generating unit with 1,176 MW of nameplate capacity in Van Buren County,
Michigan, for $815 million, subject to certain adjustments, in 2023
•a one-time competitive solicitation to acquire approximately 700 MW of capacity
from sources in Michigan's Lower Peninsula beginning in 2025; of this amount,
500 MW would be from dispatchable sources

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These actions are expected to allow Consumers to continue providing controllable
sources of electricity to customers while expanding its investment in renewable
energy. The 2021 IRP forecasts renewable energy capacity levels of 30 percent in
2025, 43 percent in 2030, and 61 percent in 2040, including the addition of
nearly 8,000 MW of solar generation. Additionally, the settlement agreement
would accelerate Consumers' deployment of battery storage from 2030 to 2024,
with 75 MW of energy storage by 2027 and 550 MW by 2040.

Under its 2021 IRP, Consumers would continue to bid new capacity competitively
and would own and operate at least 50 percent of new capacity, with the
remainder being built and owned by third parties. Under the settlement agreement
resolving the 2021 IRP, Consumers would continue to earn a return equal to its
weighted-average cost of capital on payments made under new competitively bid
PPAs approved by the MPSC.

In support of its Clean Energy Plan, Consumers issued requests for proposals in
2019 and 2020, each to acquire up to 300 MW of new capacity from projects to be
operational in Michigan's Lower Peninsula by May 2023. Specifically, Consumers
solicited offers to enter into PPAs with or purchase solar generation projects
ranging in size from 20 MW to 150 MW and to enter into PPAs with PURPA
qualifying facilities up to 20 MW.

In addition, Consumers issued a request for proposals in September 2021 to
acquire up to 500 MW of new capacity from projects to be operational in
Michigan's Lower Peninsula by December 2024. Specifically, Consumers solicited
offers to enter into PPAs with or purchase solar generation projects up to
300 MW in size and to enter into PPAs with PURPA qualifying facilities up to
five MW in size. Consumers expects to acquire at least 250 MW through long-term
PPAs. Any contracts entered into as a result of the requests for proposals would
be subject to MPSC approval.

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As a result of the requests for proposals, Consumers has entered into PPAs to
purchase renewable capacity, energy, and RECs from solar generating facilities
and build transfer agreements to purchase solar generating facilities, as
presented in the following table:

                                                                                   Targeted Commercial
Type of Agreement                            Capacity (MW)   Location of Facility           Operation1        Date of Agreement      Date of MPSC Approval
2019 request
                                                                  Calhoun County,
PPA (25 years)                                         140               Michigan                 2022            December 2020                 April 2021
Build transfer agreement                               150  Southeastern Michigan                 2024             January 2021                 April 2021

2020 request
PPA (20 years)                                          30     Manistee, Michigan                 2022                 May 2021             September 2021
                                                                  Calhoun County,
PPA (25 years)2                                        100               Michigan                 2023             October 2021              November 2021
                                                                  Jackson County,
PPA (20 years)2                                        125               Michigan                 2023             October 2021              November 2021
Build transfer agreement                               150  Southeastern Michigan                 2024             October 2021              November 2021

2021 request
                                                              Genesee and Saginaw
PPA (25 years)3                                        150       County, Michigan                 2024               March 2022                    Pending
                                                                Hillsdale County,
PPA (25 years)3                                        150               Michigan                 2024               March 2022                    Pending

1 For build transfer agreements, represents the date Consumers expects to take
full ownership and begin commercial operation.

2 This agreement provides Consumers the option to purchase the associated solar
generating facility after ten years.

3 This agreement provides Consumers a right of first refusal option to purchase
the associated solar generating facility.


In March 2022, the U.S. Department of Commerce announced it is opening inquiries
into whether manufacturers of solar modules that are produced in certain
countries using supplies obtained from China are circumventing antidumping and
countervailing duties which apply to Chinese modules. The U.S. Department of
Commerce's inquiry process is expected to last until at least the second half of
2022 or early 2023. Consumers anticipates that the supply of solar modules into
the U.S. from affected countries will be substantially restricted until a final
decision is reached and any additional tariffs or duties that may apply are
known. Consumers is closely monitoring this situation and its impacts on pending
and planned solar projects.

Renewable Energy Plan: The 2016 Energy Law raised the renewable energy standard
to 15 percent in 2021. Consumers is required to submit RECs, which represent
proof that the associated electricity was generated from a renewable energy
resource, in an amount equal to at least the required percentage of Consumers'
electric sales volume each year. Under its renewable energy plan, Consumers met
the 15-

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percent requirement in 2021 and expects to meet the requirement in future years
with a combination of newly generated RECs and previously generated RECs carried
over from prior years.

Under Consumers' renewable energy plan, the MPSC has approved the acquisition of
up to 525 MW of new wind generation projects and authorized Consumers to earn a
10.7 percent return on equity on any projects approved by the MPSC.
Specifically, the MPSC has approved the following:

•purchase and construction of a 150-MW wind generation project in Gratiot
County, Michigan; the project became operational in 2020
•purchase of a 166-MW wind generation project in Hillsdale, Michigan; the
project became operational and Consumers took full ownership in February 2021
•purchase of a wind generation project under development, with capacity of up to
201 MW, in Gratiot County, Michigan; Consumers expects to take full ownership
and begin commercial operation of the project before 2024

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 149-MW solar
generating facility to be constructed in Calhoun County, Michigan; the facility
is targeted to be operational in 2022.

Voluntary Large Customer Renewable Energy Program: Consumers provides service
under a program that provides large full-service electric customers with the
opportunity to advance the development of renewable energy beyond the
requirements of the 2016 Energy Law. In September 2021, the MPSC approved
Consumers' request to amend its renewable energy plan to remove the annual
subscription limit associated with this program. The MPSC also approved up to
1,000 MW of new wind and solar generation projects between 2024 and 2027 to meet
customer demand for the program. Consumers will competitively solicit for
additional renewable energy assets based on customer applications and will
construct the assets based on customer subscriptions to the program. Consumers
issued the first request for proposals in March 2022.

Electric Customer Deliveries and Revenue: Consumers' electric customer
deliveries are seasonal and largely dependent on Michigan's economy. The
consumption of electric energy typically increases in the summer months, due
primarily to the use of air conditioners and other cooling equipment. In
addition, Consumers' electric rates, which follow a seasonal rate design, are
higher in the summer months than in the remaining months of the year. In
June 2021, electric residential customers transitioned to a summer peak
time-of-use rate that allows them to take advantage of lower-cost energy during
off-peak times during the summer months. Thus, customers can reduce their
electric bills by shifting their consumption from onpeak to offpeak times.

Over the next five years, Consumers expects weather-normalized electric
deliveries to remain stable relative to 2021. This outlook reflects the effects
of energy waste reduction programs offset largely by modest growth in electric
demand. Actual delivery levels will depend on:

•energy conservation measures and results of energy waste reduction programs
•weather fluctuations
•Michigan's economic conditions, including utilization, expansion, or
contraction of manufacturing facilities, population trends, 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 March 31, 2022, electric deliveries under the ROA program were at
the tenpercent limit. Of Consumers' 1.9 million electric customers, fewer than
300, or 0.02 percent, purchased electric generation service under the ROA
program.

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The 2016 Energy Law established a path to ensure that forward capacity is
secured for all electric customers in Michigan, including customers served by
alternative electric suppliers under ROA. The law also authorized the MPSC to
ensure that alternative electric suppliers have procured enough capacity to
cover their anticipated capacity requirements for the four-year forward period.
In 2017, the MPSC issued an order establishing a state reliability mechanism for
Consumers. Under this mechanism, if an alternative electric supplier does not
demonstrate that it has procured its capacity requirements for the four-year
forward period, its customers will pay a set charge to the utility for capacity
that is not provided by the alternative electric supplier. All alternative
electric suppliers have demonstrated that they have procured their capacity
requirements through the MISO planning year beginning June 1, 2024.

During 2017, the MPSC issued orders finding that it has statutory authority to
determine and implement a local clearing requirement, which requires all
electric suppliers to demonstrate that a portion of the capacity procured to
serve customers during peak demand times is located in the MISO footprint in
Michigan's Lower Peninsula. In 2020, the Michigan Supreme Court affirmed the
MPSC's statutory authority to implement a local clearing requirement on
individual electric providers.

In 2020, ABATE and another intervenor filed a complaint against the MPSC in the
U.S. 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.
Consumers filed a motion to intervene and defend the local clearing requirement
in that federal litigation; this motion was granted in January 2021 and a
non-jury trial is scheduled for August 2022.

Electric Rate Matters: Rate matters are critical to Consumers' electric utility
business. For additional details on rate matters, see Notes to the Unaudited
Consolidated Financial Statements-Note 1, Regulatory Matters and Note 2,
Contingencies and Commitments.

2022 Electric Rate Case: In April 2022, Consumers filed an application with the
MPSC seeking a rate increase of $272 million, made up of two components. First,
Consumers requested a $266 million annual rate increase, based on a 10.25
percent authorized return on equity for the projected twelve-month period ending
December 31, 2023. The filing requested authority to recover future investments
associated with distribution system reliability, solar generation, environmental
compliance, and enhanced technology. Second, Consumers requested approval of a
surcharge for the recovery of $6 million of distribution investments made in
2021 that exceeded what was authorized in rates in accordance with the
December 2020 electric rate order. In its application, Consumers provided
extensive cost/benefit analysis and other information to support the prudence of
certain categories of capital expenditures, as requested by the MPSC in its
final order in Consumers' 2021 electric rate case. For additional details on the
2021 electric rate case, see Notes to the Unaudited Consolidated Financial
Statements-Note 1, Regulatory Matters.

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

                                                  In Millions

Projected Twelve-Month Period Ending December 31 2023
Components of the requested rate increase
Investment in rate base

                               $ 120
Operating and maintenance costs                          55
Cost of capital                                          42
Sales and other revenue                                  49
Subtotal                                              $ 266
Surcharge                                                 6
Total                                                 $ 272


Ludington Plant Overhaul Contract Dispute: Consumers and DTE Electric, co-owners
of Ludington, are parties to a 2010 engineering, procurement, and construction
contract with TAES, under which TAES is charged with performing a major overhaul
and upgrade of Ludington. TAES' performance has been unsatisfactory and resulted
in overhaul project delays. Consumers and DTE Electric have demanded that TAES
provide a comprehensive plan to resolve quality control concerns, including
adherence to its warranty commitments and other contractual obligations.
Consumers and DTE Electric have taken extensive efforts to resolve these issues
with TAES, including a formal demand to TAES' parent, Toshiba Corporation, under
a parent guaranty it provided in the contract. TAES has not provided a
comprehensive plan or otherwise met its performance obligations. In order to
enforce the contract, Consumers and DTE Electric filed a complaint against TAES
and Toshiba Corporation in the U.S. District Court for the Eastern District of
Michigan in April 2022. Consumers cannot predict the financial impact or outcome
of this matter. An unfavorable outcome could have a material adverse effect on
CMS Energy's and Consumers' financial condition, results of operations, or
liquidity.

Retention Incentive Program: In 2019, Consumers announced a retention incentive
program to ensure necessary staffing at the D.E. Karn generating complex through
the anticipated retirement of the coal-fueled generating units. Based on the
number of employees that have chosen to participate, the aggregate cost of the
program through 2023 is estimated to be $35 million. In its order in Consumers'
2020 electric rate case, the MPSC approved deferred accounting treatment for
these costs. Consumers expects to recognize $5 million of retention benefit
costs in 2022; this expense will be deferred as a regulatory asset. For
additional details on this program, see Notes to the Unaudited Consolidated
Financial Statements-Note 13, Exit Activities and Discontinued Operations.

Under the settlement agreement resolving the 2021 IRP, Consumers would retire
the J.H. Campbell coal-fueled generating units in 2025. Similar to the D.E. Karn
program, Consumers would provide a retention incentive program to ensure
necessary staffing at the J.H. Campbell generating complex through retirement.
No retention incentive costs related to this program will be recognized unless
the MPSC approves the settlement agreement, which provides deferred accounting
treatment for these costs.

Electric Environmental Outlook: Consumers' operations are subject to various
state and federal environmental laws and regulations. Consumers estimates that
it will incur capital expenditures of $255 million from 2022 through 2026 to
continue to comply with RCRA, the Clean Water Act, the Clean Air Act, and
numerous state and federal environmental regulations. Consumers expects to
recover these costs in customer rates, but cannot guarantee this result.
Consumers' primary environmental compliance focus includes, but is not limited
to, the following matters.

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Air Quality: Multiple air quality regulations apply, or may apply, to Consumers.


In 2012, the EPA published emission standards for electric generating units,
known as MATS, based on Section 112 of the Clean Air Act. Under MATS, all of
Consumers' existing coal-fueled electric generating units were required to add
additional controls for hazardous air pollutants. Consumers met the deadline for
five coal-fueled units and two oil/gas-fueled units it continues to operate and
retired its seven remaining coal-fueled units. In 2020, the EPA finalized
changes to the supporting analysis used to enact the MATS rule. However, in
January 2022, the EPA announced a proposed rule to revoke this 2020 finding and
reaffirm that it is appropriate and necessary to regulate emissions of hazardous
air pollutants from coal- and oil-fueled power plants. The EPA is also
considering whether more stringent protections for hazardous air pollution from
power plants are feasible and warranted. Consumers will continue to monitor the
MATS rule status and any pending litigation. Consumers does not expect any
changes to the MATS rule will have a significant impact on its current MATS
compliance strategy.

CSAPR, which initially became effective in 2015, 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 and fine particle
pollution in other downwind states. In 2016, the EPA finalized ozone season
standards for CSAPR, which became effective in 2017. In 2020, in response to a
court-ordered remand due to litigation, the EPA proposed a revised CSAPR rule to
reflect updated emission reductions from electric generating units in 12 states,
including Michigan. The EPA finalized this revised rule in March 2021, with
continued emission reductions through 2024. Consumers has evaluated its emission
compliance strategy for existing units based on the proposed number of
allowances allocated to Michigan for 2021 through 2024 and believes the impact
of this rule should be minimal. In March 2022, the EPA proposed another revision
to CSAPR with emission allowance allocations beginning in 2025. Consumers is
evaluating this proposed rule and any potential impact on its generating units.

In 2015, the EPA lowered the NAAQS for ozone. The 2015 ozone NAAQS made it more
difficult to construct or modify power plants and other emission sources in
areas of the country that have not met the 2015 ozone standard. In 2018, the EPA
designated certain areas of Michigan as not meeting the ozone standard.
Specifically, seven counties in southeastern Michigan and three counties in
western Michigan were not in attainment with the ozone standard by an
August 2021 regulatory deadline, and thus will have their nonattainment
designations increased from marginal to moderate. None of Consumers'
fossil-fuel-fired generating units are located in these areas. The State of
Michigan has convened industry workgroups to seek implementation and control
strategy ideas for statewide compliance of the 2015 ozone standard, which will
need to be in place by early 2023. In January 2022, EGLE submitted a request to
the EPA for redesignation of the seven counties in southeastern Michigan to be
in attainment with the 2015 ozone standard based on the most recent data. The
EPA has proposed rulemaking to approve the redesignation request for
southeastern Michigan and is expected to finalize the decision following a
public comment period, which closed in April 2022. Consumers will continue to
stay engaged with EGLE and the workgroups to assess potential impacts to its
generating assets.

In 2020, the EPA decided to retain the 2015 NAAQS for ozone without revision. In
October 2021, the EPA provided notice that it was going to reconsider the
2020 ozone NAAQS decision. The EPA believes it will complete this
reconsideration by December 2023. This action may ultimately result in more
ozone nonattainment areas in Michigan. Consumers will evaluate the impacts of
the proposed NAAQS for ozone on its operations when the EPA releases its
proposal.

In February 2022, the EPA proposed a federal implementation plan to address the
"good neighbor" obligations of the Clean Air Act to reduce interstate transport
issues that contribute to downwind states attaining or maintaining compliance
with the 2015 NAAQS for ozone. The EPA has included 26 states within the federal
implementation plan, including Michigan. The EPA is proposing a combination of
compliance approaches by reducing allowance budgets under the CSAPR program as
well as potentially

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addressing non-electric generating unit emission sources. The prior CSAPR
regulations have primarily focused on electric generating units, but this latest
proposal also includes other emission sources. Consumers is currently evaluating
the proposal and will evaluate the applicability and potential impacts to its
electric operations.

In June 2021, the EPA announced that it would reconsider its previous decision
to retain the current standard of NAAQS for particulate matter. In
December 2021, the EPA indicated that the new NAAQS for particulate matter would
be proposed in the summer of 2022. The new standard is expected to be
significantly lower. Consumers will evaluate the impact of the proposed NAAQS
for particulate matter on its operations when the EPA releases its proposal.

Consumers' strategy to comply with air quality regulations, including CSAPR,
MATS, and NAAQS, as well as its legal obligations, involved the installation and
operation of emission control equipment at some facilities and the suspension of
operations at others; however, Consumers continues to evaluate these rules in
conjunction with other EPA and EGLE rulemakings, litigation, executive orders,
treaties, and congressional action. This evaluation could result in:

•a change in Consumers' fuel mix
•changes in the types of generating units Consumers may purchase or build in the
future
•changes in how certain units are operated
•the retirement, mothballing, or repowering with an alternative fuel of some of
Consumers' generating units
•changes in Consumers' environmental compliance costs

Greenhouse Gases: There have been numerous legislative and regulatory
initiatives at the state, regional, national, and international levels that
involve the potential regulation of greenhouse gases. Consumers continues to
monitor and comment on these initiatives and to follow litigation involving
greenhouse gases.


In 2015, the EPA finalized new rules pursuant to Section 111(b) of the Clean Air
Act to limit carbon dioxide emissions from new electric generating units, as
well as modified or reconstructed electric generating units. New coal-fueled
units would not be able to meet this limit without installing carbon dioxide
control equipment using such methods as carbon capture and sequestration.

In 2019, the EPA finalized the Affordable Clean Energy rule, which required
individual states to evaluate coalfueled power plants for heatrate
improvements that could increase overall plant efficiency. In January 2021, the
D.C. Circuit Court of Appeals vacated and remanded this rule to the EPA, which,
in turn, appealed the rule to the U.S. Supreme Court. In October 2021, the
U.S. Supreme Court agreed to hear an appeal of this case, and oral arguments
were held in February 2022. A decision is expected by June 2022. Consumers
cannot evaluate the potential impact of the rule until any appeals and EPA
actions are resolved. It is anticipated that the EPA will propose a new
regulation in 2022 addressing greenhouse gas emissions from existing
fossil-fueled electric generating units, potentially under the Clean Air Act;
however, Consumers cannot predict the form and extent of such potential
regulation as it is likely to be impacted by the U.S. Supreme Court's decision
on the Affordable Clean Energy rule.

In 2015, a group of 195 countries, including the U.S., finalized the Paris
Agreement, which addresses carbon dioxide reduction measures beginning in 2020.
While the U.S. had withdrawn from the Paris Agreement, it rejoined the Paris
Agreement in 2021. In April 2021, the U.S. announced it is committing to a
nationally determined contribution under the Paris Agreement. Nationally
determined contributions are the efforts by each country to reduce national
greenhouse gas emissions. The commitment made by the U.S. is to reduce
greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. The
settlement agreement resolving Consumers' 2021 IRP, which is pending MPSC
approval, proposes a 60-percent reduction in its carbon emissions from 2005
levels by 2025. At this time, Consumers does not

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expect any adverse changes to its environmental strategy as a result of these
events, as the nationally determined contribution is not binding without new
Congressional legislation.

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 and previously announced a goal of
achieving net-zero carbon emissions from its electric business by 2040. The
order directs EGLE to develop and oversee an action plan for achieving these
goals. In addition, the Governor established the Council on Climate Solutions,
an advisory group of key stakeholders to be appointed by the Governor that will
assist EGLE in implementing the plan. These goals are aspirational in nature and
any changes in law or regulation to achieve these goals would need to be
approved by the Michigan Legislature or the relevant regulatory agency. The MPSC
has requested comments from utilities and other stakeholders on how the
Governor's goal should be incorporated into future IRP filings, which Consumers
has provided. Consumers does not expect any adverse changes to its environmental
strategy as a result of these events.

While Consumers cannot predict the outcome of changes in U.S. policy or of other
legislative or regulatory initiatives involving the potential regulation of
greenhouse gases, it intends to continue to move forward with its Clean Energy
Plan, its present net-zero carbon reduction goal, and its emphasis on reliable
and resilient supply. Consumers will continue to monitor regulatory and
legislative activity and related litigation regarding greenhouse gas emissions
standards that may affect electric generating units.

Increased frequency of severe 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 or their financial
impact; however, Consumers evaluates the potential physical impacts of climate
change on its operations, including increased temperature, increased storm
activity, increased rainfall, and higher lake and river levels. Consumers
released a report addressing the physical risks of climate change on its
infrastructure in February 2022. Consumers is taking steps to mitigate these
risks as appropriate.

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. Consumers may be
required to replace equipment; install additional emission control equipment;
purchase emission allowances or credits (including potential greenhouse gas
offset credits); curtail operations; arrange for alternative sources of supply;
purchase facilities that generate fewer emissions; mothball or retire facilities
that generate certain emissions; pursue energy efficiency or demand response
measures more swiftly; or take other steps to manage or lower the emission of
greenhouse gases. Although associated capital or operating costs relating to
greenhouse gas regulation or legislation could be material and cost recovery
cannot be assured, Consumers expects to recover these costs in rates consistent
with the recovery of other reasonable costs of complying with environmental laws
and regulations.

CCRs: In 2015, the EPA published a rule regulating CCRs under RCRA. This
2015 rule adopts minimum standards for beneficially reusing and disposing of
nonhazardous CCRs. The rule establishes new minimum requirements for CCR unit
location, design, structural stability, groundwater monitoring and correction
action, flood protection, fugitive dust control, recordkeeping, and public
disclosure of certain records, including any groundwater protection standard
exceedances. The 2015 rule also sets out conditions under which some CCR units
would be forced to cease receiving CCR and nonCCR wastewater and initiate
closure based on the inability to achieve minimum safety standards, meet a
location standard, or meet minimum groundwater standards. Due to litigation,
many aspects of the 2015 CCR rule have been remanded to the EPA, which has
resulted in numerous proposed rules and three final rules. One of the final
rules is in litigation. Anticipated litigation related to remanded aspects that

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have not been addressed will add uncertainty around requirements for compliance
and state permit programs.

The EPA amended the conditions of forced closure in a rule published in 2020.
The 2020 rule required all unlined CCR units to initiate closure by
mid-April 2021, unless conditions that satisfied an alternate closure schedule
were approved by the EPA. Consumers, with agreement from EGLE, completed the
work necessary to initiate closure by excavating CCRs or placing a final cover
over each of its relevant CCR units prior to the April 2021 closure initiation
deadline.

Separate from the 2015 and 2020 rules, Congress passed legislation in 2016
allowing participating states to develop permitting programs for CCRs under RCRA
Subtitle D. In 2018, the Michigan Legislature adopted standards for a permitting
program, which requires the EPA's authorization. This program should reduce
costly, duplicative oversight over CCRs and provide local oversight to CCR
issues unique to Michigan. In 2020, EGLE submitted a regulatory package for
Michigan's permit program to the EPA for its review, which is still pending.
Federal rulemaking challenges may delay EPA approval of the Michigan permitting
program.

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

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


The EPA regulates cooling water intake systems of existing electric generating
plants under Section 316(b) of the Clean Water Act and the corresponding rules
that were revised in 2014. The rules seek to reduce alleged harmful impacts on
aquatic organisms, such as fish. In 2018, Consumers submitted to EGLE for
approval all required studies and recommended plans to comply with
Section 316(b), but has not yet received final approval.

In 2015, the EPA released its final effluent limitation guidelines for steam
electric generating plants. These guidelines, which are presently being
litigated, set stringent new requirements for the discharge from electric
generating units into surface waters. The EPA published a final rule in
October 2020, with an effective date of December 2020, revising the
2015 guidelines related to the discharge of certain wastewater streams from
electric generating units. The rule also allows 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 to 2025 for
its Campbell generating facility in 2021. Consumers does not expect any adverse
changes to its environmental strategy as a result of these revisions to the rule
or any litigation of the guidelines.

The EPA recently stated its intent to issue a proposed rule in 2022 revising its
effluent limitation guidelines for certain wastewater streams, including bottom
ash transport water, combustion residual leachate, and legacy wastewater.
Consumers cannot evaluate the impact the potential rule will have on its
facilities until the proposed rule is released.

In 2020, the EPA and the U.S. Army Corps of Engineers finalized a rule under the
Clean Water Act that repealed a 2015 definition of "Waters of the United
States," narrowed the scope of federal jurisdiction, and reduced the frequency
of dual jurisdiction in states with authority to regulate the same waters;
Michigan is one such state. In November 2021, the EPA and the U.S. Army Corps of
Engineers proposed to revise the 2020 "Waters of the United States" definition
to revert to the 2015 "Waters of the United States" definition, with changes
reflecting the EPA's interpretation of intervening U.S. Supreme Court decisions.
The proposed November 2021 rulemaking may change how Consumers interacts with
federal jurisdictional waters within Michigan, which may add additional
requirements to existing compliance programs, or may require additional
permitting for infrastructure projects. However, Consumers does not

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expect adverse changes to its environmental strategy as a result of the current
interpretations. The "Waters of the United States" definition continues to be
litigated in multiple jurisdictions.

Many of Consumers' facilities maintain NPDES permits, which are renewed every
five years and are vital to the facilities' operations. 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.

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


Statutes like the Endangered Species Act, the Migratory Bird Treaty Act, and the
Bald and Golden Eagle Protection Act may impact operations at Consumers'
facilities. In May 2021, the U.S. Fish and Wildlife Service proposed to repeal a
January 2021 rule related to incidental take of migratory birds. In
November 2021, the U.S. Fish and Wildlife Service published an advanced notice
of proposed rulemaking outlining its intent to regulate incidental take under
the Migratory Bird Treaty Act. Permitting and monitoring fees and restrictions
on operations associated with the rules could impact Consumers' existing and
future operations, including wind and solar generation facilities.

Additionally, Consumers is monitoring proposed changes to the listing status of
several species within its operational area due to an increase in
wildlife-related regulatory activity. A change in species listed under the
Endangered Species Act may impact Consumers' costs to mitigate its impact on
protected species and habitats at certain existing facilities as well as siting
choices for new facilities.

Other Matters: Other electric environmental matters could have a material impact
on Consumers' outlook. For additional details on other electric environmental
matters, see Notes to the Unaudited Consolidated Financial Statements-Note 2,
Contingencies and Commitments-Consumers Electric Utility Contingencies-Electric
Environmental Matters.

Consumers Gas Utility Outlook and Uncertainties


Gas Deliveries: Consumers' gas customer deliveries are seasonal. The peak demand
for natural gas typically occurs in the winter due to colder temperatures and
the resulting use of natural gas as heating fuel.

Over the next five years, Consumers expects weather-normalized gas deliveries to
remain stable relative to 2021. This outlook reflects the effects of energy
waste reduction programs offset largely by modest growth in gas demand. Actual
delivery levels will depend on:

•weather fluctuations
•use by power producers
•availability and development of renewable energy sources
•gas price changes
•Michigan's economic conditions, including population trends and housing
activity
•the price or demand of competing energy sources or fuels
•energy efficiency and conservation impacts

Gas Rate Matters: Rate matters are critical to Consumers' gas utility business.
For additional details on rate matters, see Notes to the Unaudited Consolidated
Financial Statements-Note 1, Regulatory Matters and Note 2, Contingencies and
Commitments.

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2021 Gas Rate Case: In December 2021, Consumers filed an application with the
MPSC seeking an annual rate increase of $278 million, based on a 10.5 percent
authorized return on equity and a projected twelve-month period ending
September 30, 2023. The filing requests authority to recover new infrastructure
investment and related costs that are expected to allow Consumers to improve
system safety and reliability and reduce fugitive methane emissions. In
April 2022, Consumers reduced its requested annual rate increase to
$233 million, based on a 10.25 percent authorized return on equity.

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


                                                   In Millions

Projected Twelve-Month Period Ending September 30 2023
Components of the requested rate increase
Investment in rate base

                                $ 237
Operating and maintenance costs                          (22)
Cost of capital                                            5
Sales                                                     13
Total                                                  $ 233

The filing also seeks approval of a revenue decoupling mechanism that would
annually reconcile Consumers' actual weather-normalized non-fuel revenues with
the revenues approved by the MPSC.


Depreciation Rate Case: In December 2021, Consumers filed a depreciation case
related to its gas utility plant property. In this case, Consumers requested a
decrease in depreciation expense of $1 million annually based on
December 31, 2020 balances.

Gas Pipeline and Storage Integrity and Safety: The PHMSA has published various
rules that expand federal safety standards for gas transmission pipelines and
underground storage facilities. 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. The initial requirements in the regulation
took effect in 2020, with future regulation phases to be released over numerous
years.

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. Consumers will continue
to monitor gas safety regulations and continue implementation of the American
Petroleum Institute's Recommended Practice 1173, Pipeline Safety Management
Systems. This program minimizes gas system asset- and performance-related risks
by ensuring that there are policies, procedures, work instructions, forms, and
records in place to streamline adoption and deployment of any existing or future
regulations.

Gas Environmental Outlook: Consumers expects to incur response activity costs at
a number of sites, including 23 former MGP sites. For additional details, see
Notes to the Unaudited Consolidated Financial Statements-Note 2, Contingencies
and Commitments-Consumers Gas Utility Contingencies-Gas Environmental Matters.

Air Quality: In 2015, the EPA lowered the NAAQS for ozone. The 2015 ozone NAAQS
made it more difficult to construct or modify power plants and other emission
sources in areas of the country that have not met the 2015 ozone standard. In
2018, the EPA designated certain areas of Michigan as not meeting the ozone
standard. Specifically, seven counties in southeastern Michigan and three
counties in western Michigan were not in attainment with the ozone standard by
an August 2021 regulatory deadline, and thus

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will have their nonattainment designations increased from marginal to moderate.
Some of Consumers' compressor stations are located in these areas. The State of
Michigan has convened industry workgroups to seek implementation and control
strategy ideas for statewide compliance of the 2015 ozone standard, which will
need to be in place by early 2023. In January 2022, EGLE submitted a request to
the EPA for redesignation of the seven counties in southeastern Michigan to be
in attainment with the 2015 ozone standard based on the most recent data. The
EPA has proposed rulemaking to approve the redesignation request for
southeastern Michigan and is expected to finalize the decision following a
public comment period, which closed in April 2022.

In 2020, the EPA decided to retain the 2015 NAAQS for ozone without revision. In
October 2021, the EPA provided notice that it was going to reconsider the
2020 ozone NAAQS decision. The EPA believes it will complete this
reconsideration by December 2023. Consumers will continue to stay engaged with
EGLE and the workgroups to assess potential impacts to its compressor stations.

In February 2022, the EPA proposed a federal implementation plan to address the
"good neighbor" obligations of the Clean Air Act to reduce interstate transport
issues that contribute to downwind states attaining or maintaining compliance
with the 2015 NAAQS for ozone. The EPA has included 26 states within the federal
implementation plan, including Michigan. The EPA is proposing a combination of
compliance approaches by reducing allowance budgets under the CSAPR program as
well as potentially addressing non-electric generating unit emission sources.
The prior CSAPR regulations have primarily focused on electric generating units,
but this latest proposal also includes other emission sources, and may impact
the large auxiliary boilers and natural gas-fired engines at compressor
stations. Consumers is currently evaluating the proposal and will evaluate the
applicability and potential impacts to its gas operations.

In June 2021, the EPA announced that it would reconsider its previous decision
to retain the current standard of NAAQS for particulate matter. In
December 2021, the EPA indicated that the new NAAQS for particulate matter would
be proposed in the summer of 2022. The new standard is expected to be
significantly lower. Consumers will evaluate the impact of the proposed NAAQS
for particulate matter on its operations when the EPA releases its proposal.

Greenhouse Gases: Consumers is making voluntary efforts to reduce its gas
utility's methane emissions. In 2019, Consumers released its Methane Reduction
Plan, which 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 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.

In March 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 20 percent
by 2030.

In November 2021, the EPA released a proposed rule to regulate methane for the
oil and gas sector. This proposed rule is not expected to have a material
adverse impact on Consumers' natural gas storage, compressor stations, and
distribution systems, as it applies upstream of Consumers' facilities.


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. These new goals could impact Consumers' gas business over
the long term. Consumers is evaluating decarbonization options for its gas
business including energy efficiency, renewable natural gas, carbon offsets, and
other decarbonization methods. As one strategy, which was

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recently approved by the MPSC, Consumers proposed a program that would allow gas
customers to purchase carbon offset credits on a voluntary basis. Similarly, in
December 2021, Consumers announced plans to begin development of a renewable
natural gas facility that will capture methane from manure generated at a
neighboring farm and convert it into renewable natural gas. For additional
details on the executive order, see Consumers Electric Utility Outlook and
Uncertainties-Electric Environmental Outlook.

In 2015, a group of 195 countries, including the U.S., finalized the Paris
Agreement, which addresses carbon dioxide reduction measures beginning in 2020.
While the U.S. had withdrawn from the Paris Agreement, it rejoined the Paris
Agreement in 2021. In April 2021, the U.S. announced it is committing to a
nationally determined contribution under the Paris Agreement. Nationally
determined contributions are the efforts by each country to reduce national
greenhouse gas emissions. The commitment made by the U.S. is to reduce
greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. The
settlement agreement resolving Consumers' 2021 IRP, which is pending MPSC
approval, proposes a 60-percent reduction in its carbon emissions from 2005
levels by 2025. At this time, Consumers does not expect any adverse changes to
its environmental strategy as a result of these events, as the nationally
determined contribution is not binding without new Congressional legislation.

There is increasing interest at the federal, state, and local levels involving
potential regulation of greenhouse gases or its sources. Such regulation, if
adopted, may involve requirements to reduce methane emissions from Consumers'
gas utility operations and carbon dioxide emissions from natural gas customer
use. No such measures apply to Consumers at this time. Consumers continues to
monitor these initiatives and comment as appropriate. Consumers cannot predict
the impact of any potential future legislation or regulation on its gas utility.

Consumers Electric Utility and Gas Utility Outlook and Uncertainties


Energy Waste Reduction Plan: The 2016 Energy Law authorized incentives for
demand response programs and energy efficiency programs, referring to the
combined initiatives as energy waste reduction programs. The law also set a
requirement to achieve annual reductions of 1.0 percent in customers'
electricity use through 2021 and 0.75 percent in customers' natural gas use
indefinitely and established a goal of 35 percent combined renewable energy and
energy waste reduction by 2025. Consumers achieved 30 percent combined renewable
energy and energy waste reduction through 2021.

Additionally, the MPSC has approved the recovery of demand response costs and an
associated financial incentive based on demand response target performance.


Under its energy waste reduction plan, Consumers provides its customers with
incentives to reduce usage by offering energy audits; rebates and discounts on
purchases of highly efficient appliances; and other incentives and programs.

Enterprises Outlook and Uncertainties

CMS Energy's primary focus with respect to its enterprises businesses is to
maximize the value of generating assets, its share of which represents 1,483 MW
of capacity, and to pursue opportunities for the development of renewable
generation projects.

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In June 2021, DIG, CMS Generation Michigan Power, and CMS ERM entered into an
agreement with Consumers to sell, for $515 million, subject to certain
adjustments, the enterprises segment's three natural gas-fueled generating
units, totaling 1,001 MW of nameplate capacity:

•the 770-MW DIG plant located in Dearborn, Michigan
•a 156-MW peaking generating unit located in Gaylord, Michigan
•a 75-MW peaking generating unit located in Comstock, Michigan

Consumers had proposed its purchase of these generating units as part of its
2021 IRP. In accordance with the terms of the pending settlement of the
2021 IRP, CMS Enterprises does not expect that this sale will occur.


The enterprises segment's assets may be affected by environmental laws and
regulations. The 2015 ozone NAAQS made it more difficult to construct or modify
power plants and other emission sources in areas of the country that have not
met the 2015 ozone standard. In 2018, the EPA designated certain areas of
Michigan as not meeting the ozone standard. The DIG plant is in one such area
and, as a result, would be subject to additional permitting restrictions in the
event of any future modifications. For additional details regarding the new
ozone NAAQS, see Consumers Electric Utility Outlook and Uncertainties-Electric
Environmental Outlook.

Trends, uncertainties, and other matters related to the enterprises segment 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
•changes in energy and capacity prices
•severe weather events and climate change associated with increasing levels of
greenhouse gases
•changes in commodity prices and interest rates 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 and environmental remediation obligations at Bay Harbor
•indemnity obligations assumed in connection with the purchase or ownership of
an interest in one or more facilities that involve tax equity financing
•representations, warranties, and indemnities provided by CMS Energy in
connection with previous sales of assets

In March 2022, the U.S. Department of Commerce announced it is opening inquiries
into whether manufacturers of solar modules that are produced in certain
countries using supplies obtained from China are circumventing antidumping and
countervailing duties which apply to Chinese modules. The U.S. Department of
Commerce's inquiry process is expected to last until at least the second half of
2022 or early 2023. CMS Energy anticipates that the supply of solar modules into
the U.S. from affected countries will be substantially restricted until a final
decision is reached and any additional tariffs or duties that may apply are
known. CMS Energy is closely monitoring this situation and its impacts on
pending and planned solar projects.

For additional details regarding the enterprises segment's uncertainties, see
Notes to the Unaudited Consolidated Financial Statements-Note 2, Contingencies
and Commitments.

Other Outlook and Uncertainties

Litigation: 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

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  Table of Contents
agencies, arising in the ordinary course of business. For additional details
regarding these and other legal matters, see Notes to the Unaudited Consolidated
Financial Statements-Note 1, Regulatory Matters and Note 2, Contingencies and
Commitments.

Employee Separation Program: In April 2022, CMS Energy and Consumers announced a
voluntary separation program for salaried non-union employees. Under the
program, employees can elect to request separation, and management will decide
which requests to accept. In May 2022, management will communicate its decisions
to interested employees, who will have 45 days to decide whether to separate.
The program is expected to result in recognition of additional expense in the
second quarter of 2022; however, CMS Energy and Consumers expect to benefit from
future cost savings, as employee staffing levels will be better matched to
workload demand, which reflects the companies' ongoing workforce productivity
improvements.

As a result of this announcement, CMS Energy and Consumers determined it was
probable that 2022 lump-sum payments to participants under DB Pension Plan A
would exceed the plan's service cost and interest cost components of net
periodic cost for the year. These lump-sum payments constitute pension plan
liability settlements; once it is probable such settlements will meet the
service and interest cost threshold, recognition in earnings is required. As a
result, in accordance with GAAP, CMS Energy, including Consumers, performed a
remeasurement of DB Pension Plan A as of March 31, 2022. Depending on employee
participation in the separation program, curtailment of DB Pension Plan A and
the OPEB Plan may occur in 2022; CMS Energy and Consumers will continue to
monitor for potential curtailment. For additional details on the pension
settlement, see Notes to the Unaudited Consolidated Financial Statements-Note 6,
Retirement Benefits.

Presented in the following table are estimates of credits and cash contributions
through 2024 for the DB Pension Plans, reflecting the remeasurement as of
March 31, 2022. Actual future costs, credits, and contributions will depend on
future investment performance, discount rates, and various factors related to
the participants of the DB Pension Plans. CMS Energy and Consumers will, at a
minimum, contribute to the plans as needed to comply with federal funding
requirements.

                                                    In Millions

                                       Credit      Contribution
CMS Energy, including Consumers
2022                                  $ (26)              $ -
2023                                    (44)                -
2024                                    (58)                -
Consumers1
2022                                  $ (23)              $ -
2023                                    (40)                -
2024                                    (53)                -

1Consumers' pension costs are recoverable through its general ratemaking
process.

Management's Discussion and Analysis of Financial Condition and Results of Operations

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