Tear Sheet: CMS Energy Corp.'s Recent Stranded Cost Securitization Is Consistent With Our Expectations

The securitization issuance was consistent with our base case and finalizes CMS' previously announced plans to securitize and recover the costs related to the retirement of its Karn coal plant units 1&2. We view this securitization as supportive of credit quality, allowing the utility to fully recover its costs associated with these coal plants. For our financial analysis of CMS, we deconsolidate securitization debt (and associated revenues and expenses), primarily reflecting the irrevocable non-bypassable charge on CMS' customer bills and the first-priority security interest in the transition property. Under our base-case scenario, we expect elevated capital spending averaging $3.0 billion-$3.5 billion annually over the forecast period and dividends averaging $700 million-$750 million annually. We also forecast limited growth

...December 15, 2023 On Dec. 12, 2023, CMS Energy Corp. announced that Consumers 2023 Securitization Funding LLC issued $646 million of securitization bonds. The securitization issuance was consistent with our base case and finalizes CMS' previously announced plans to securitize and recover the costs related to the retirement of its Karn coal plant units 1 & 2. We view this securitization as supportive of credit quality, allowing the utility to fully recover its costs associated with these coal plants. For our financial analysis of CMS, we deconsolidate securitization debt (and associated revenues and expenses), primarily reflecting the irrevocable non-bypassable charge on CMS' customer bills and the first-priority security interest in the transition property. Under our base case, we continue to assume CMS' funds from operations (FFO) to debt will remain consistently between 13% and 15%. Under our base-case scenario, we expect elevated capital spending averaging $3.0 billion-$3.5 billion annually...

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