CMS Energy CEO On Michigan's Election Risk: 'We Don't See The FCM Going Away'
The utility's CEO defended a capital-light earnings stream from regulator scrutiny, citing contracts already signed for 2031.
CMS Energy CEO Garrick Rochow told analysts on the company's third-quarter earnings call that "we don't see the FCM going away," pushing back on worries that Michigan regulators could erode a mechanism that lets the utility earn money on power purchase agreements without building the plants itself.
A mechanism worth $125 million by 2031
CMS Energy, the parent of Consumers, the Michigan electric and gas utility serving 1.9 million electric and 1.8 million gas customers in 2025, builds the financial compensation mechanism, or FCM, into its long-term resource plan. The plan assumes about $125 million a year beginning in 2031, growing to about $195 million by 2040, assuming a 50-50 ownership split. Rochow gave the 2040 figure as $190 million in a later answer.
Asked by a Wells Fargo analyst how durable the mechanism is after the election, Rochow called it "a differentiator in our story" and said it is one of the most underestimated pieces for investors. He said over 70% of the 2031 contracts are already signed or online.
He described the Michigan Public Service Commission's recent commentary as refinement, aimed at contracts tied to fully depreciated assets, not elimination. CFO Sri Maddipati said the projection leaves out the depreciated river hydro assets the commission highlighted, so the plan's figure is "within the law."
Rate base growth and the resource plan
Maddipati told a KeyBank analyst that the 10.5% rate-base growth rate remains supported by the capital plan and excludes any growth from the mechanism, which would be added on top. The filed resource plan, submitted in September, carries roughly $27 billion of investment in new clean energy, battery storage and gas generation. It also includes a recently signed 680-megawatt clean energy power purchase agreement, which Rochow said de-risks new renewables development.
The company reaffirmed 2026 adjusted earnings guidance of $3.83 to $3.90 a share, with continued confidence toward the high end. It also reaffirmed 2027 guidance of $4.08 to $4.17. Adjusted earnings for the first nine months were $2.95 a share, or $915 million.
Next steps on the calendar
Rochow said he will share more resource-plan detail at the Edison Electric Institute conference in November. Management will fold the plan's capital into its update on the fourth-quarter call. The company's market value was $21.8 billion in Tuesday morning trading.
Rochow's own framing of the stakes: regulators want refinement, he said, and the company intends to keep showing its work.
Sources
- CMS Energy Corporation (CMS) Stock Price, News, Quote & History - Yahoo Finance — Yahoo Finance
- CMS Energy (CMS) Surpasses Q3 Earnings and Revenue Estimates — Yahoo Finance
- CMS Energy Non-GAAP EPS of $1.44 beats by $0.09, revenue of $2.18B in-line (CMS:NYSE) | Seeking Alpha — seekingalpha.com
- What Is Drawing Attention To CMS Energy (CMS)? — Yahoo Finance
- CMS Energy Announces Third Quarter Results, Reaffirms 2026 and 2027 Adjusted EPS Guidance — Yahoo Finance
