CMS Energy Corp.

We view Michigan's regulatory construct as above average compared to peers due to the benefit of forward-looking test years, a stream-lined 10-month rate case process, and various other constructive rate mechanisms that allow the company to earn its allowed return on equity and minimize regulatory lag. We expect that the utility will continue to effectively manage regulatory risk through the use of various constructive rate mechanisms made available to the company through the Michigan Public Service Commission (MPSC). We expect that its nonutility subsidiary, CMS Enterprises, will continue to invest in the development of renewable generation. Most recently, CMS Enterprises purchased a 51% ownership interest in the 525-MW Aviator wind generation project in Coke County, Texas, as well as the

...The above-average regulatory environment in Michigan should continue to allow for consistent and constructive regulatory outcomes. The utility's most recent gas rate case order led to an increase in revenue by $144 million and maintained a consistent return on equity (ROE) of 9.9% and equity ratio of 52.05%. However, this outcome was partially offset by a stay-out agreement that restricts the company from filing another gas rate case before December 2021. We believe this outcome, while overall supportive of credit quality, may eventually lead to some regulatory lag because of the stay-out provision. We view Michigan's regulatory construct as above average compared to peers due to the benefit of forward-looking test years, a stream-lined 10-month rate case process, and various other constructive rate mechanisms that allow the company to earn its allowed return on equity and minimize regulatory lag. We expect that the utility will continue to effectively manage regulatory risk through the...

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