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

MGP
Manufactured gas plant


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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

MW

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

NWO Holdco
NWO Holdco, L.L.C., a VIE in which NWO Holdco I, LLC, a wholly owned subsidiary of Grand
River Wind, LLC, holds a Class B membership interest

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

PCB
Polychlorinated biphenyl

PPA
Power purchase agreement


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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

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

SOFR

Secured overnight financing rate calculated and published by the Federal Reserve Bank of
New York and selected as the recommended alternative to replace LIBOR for
dollar-denominated financial contracts by the Alternative Reference Rates Committee

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


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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, Michigan
Electric Transmission Company, LLC (a non­affiliated company), 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 Wall Street Reform and Consumer Protection Act of 2010, 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 New Source Review, a
construction-permitting program under the Clean Air Act

•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 on the credit and capital markets of the future
transition from LIBOR to an alternative reference interest rate, including SOFR,
which may perform differently than LIBOR and could result in increased interest
rate expense

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•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

•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 implementation of the 2021 IRP, including any action by a regulatory
authority or other third party to prohibit, delay, or impair the implementation
of the 2021 IRP

•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                                                    48
  Consolidated Statements of Income (Unaudited)                                                   48
  Consolidated Statements of Comprehensive Income (Unaudited)                                     50
  Consolidated Statements of Cash Flows (Unaudited)                                               51
  Consolidated Balance Sheets (Unaudited)                                                         52
  Consolidated Statements of Changes in Equity (Unaudited)                                        54
  Consumers Consolidated Financial Statements                                                     56
  Consolidated Statements of Income (Unaudited)                                                   56
  Consolidated Statements of Comprehensive Income (Unaudited)                                     57
  Consolidated Statements of Cash Flows (Unaudited)                                               59
  Consolidated Balance Sheets (Unaudited)                                                         60
  Consolidated Statements of Changes in Equity (Unaudited)                                        62
  Notes to the Unaudited Consolidated Financial Statements                                        63

        1:     Regulatory Matters                                                                 63
        2:     Contingencies and Commitments                                                      65
        3:     Financings and Capitalization                                                      70
        4:     Fair Value Measurements                                                            72
        5:     Financial Instruments                                                              74

        6:     Retirement Benefits                                                                75
        7:     Income Taxes                                                                       77
        8:     Earnings Per Share-CMS Energy                                                      78
        9:     Revenue                                                                            79
       10:     Cash and Cash Equivalents                                                          83
       11:     Reportable Segments                                                                83
       12:     Variable Interest Entities                                                         85
       13:     Exit Activities and Discontinued Operations                                        87


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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. 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 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.

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-20220630_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' Occupational
Safety and Health Administration recordable incident rate has decreased by
40 percent.

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, less-costly dispatchable generation sources, and energy waste
reduction and demand response programs
•targeted infrastructure investment to reduce maintenance costs and improve
reliability and safety
•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

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

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

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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 through 2021, 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 oxides 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
15­percent 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
MPSC approved that settlement agreement in June 2022.

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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 through PPAs 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 2021 IRP, Consumers will 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 will 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 its 2021 IRP. This illustration includes
the effects of purchased capacity and energy waste reduction and uses the
nameplate capacity for all energy sources:

                     [[Image Removed: cms-20220630_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 through
PPAs from sources in Michigan's Lower Peninsula beginning in 2025.

In addition to its plan to eliminate its use of coal-fueled generation in 2025,
Consumers has set the net­zero emissions goals discussed below.

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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
targets in 2022:

•to enhance, restore, or protect 6,500 acres of land by 2026
•to increase the rate of waste diverted from landfills (through waste reduction,
recycling, and reuse) to 90 percent from a baseline of 88 percent

CMS Energy and Consumers are monitoring numerous legislative, policy, and
regulatory initiatives, including those to regulate and report greenhouse gases,
and related litigation. While CMS Energy and Consumers cannot predict the
outcome of these matters, which could affect them materially, they intend to
continue to move forward with their clean and lean strategy.

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 six months ended June 30, 2022, CMS Energy's net income available to
common stockholders was $496 million, and diluted EPS were $1.71. This compares
with net income available to common stockholders of $525 million and diluted EPS
of $1.82 for the six months ended June 30, 2021. In 2022, higher electric and
gas sales due primarily to favorable weather were more than offset by the
absence of 2021 earnings from discontinued operations; increased distribution,
transmission, generation, and compression expenses; increased depreciation and
property taxes, reflecting higher capital spending; and voluntary separation
plan expenses. A more detailed discussion of the factors affecting CMS Energy's
and Consumers' performance can be found in the Results of Operations section
that follows this Executive Overview.

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.

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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 2021 IRP will potentially 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-20220630_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
10.25­percent 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 10.5­percent
authorized return on equity and a projected

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twelve-month period ending September 30, 2023. In April 2022, Consumers reduced
its requested annual rate increase to $233 million, based on a 10.25­percent
authorized return on equity. In July 2022, the MPSC approved a settlement
agreement authorizing an annual rate increase of $170 million, based on a
9.9­percent authorized return on equity, effective October 1, 2022. The MPSC
also approved the continuation of a revenue decoupling mechanism, which annually
reconciles Consumers' actual weather-normalized non-fuel revenues with the
revenues approved.

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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