Increased Demand and CapEx
Q: Are you seeing higher demand and planning for increased CapEx?
A: Yes, we are experiencing strong economic growth in the state, leading to higher demand than projected in our 2021 Integrated Resource Plan (IRP). This increased demand will be reflected in our Renewable Energy Plan filing in November. We anticipate additional capital investment opportunities between 2026 and 2028, providing upside potential in terms of capital growth.

Financing Strategy
Q: What are your plans regarding financing and potential debt or equity issuance?
A: We plan to issue about $675 million in the second half of the year at the utility, slightly increased from the initial $500 million due to rate case outcomes with modestly lower equity levels. We're considering pulling forward some parent debt financing needs, such as senior notes or hybrids, to take advantage of favorable market conditions. However, we do not plan to issue equity in 2024, and our equity needs starting next year remain up to $350 million.

Performance-Based Ratemaking
Q: Can you provide an update on performance-based ratemaking legislation and its impact?
A: The dialogue on performance-based ratemaking has been constructive. We've narrowed down to four benchmarkable metrics, and while details are being finalized, we expect implementation over the next one to two years. The mechanism is intended to be symmetric, offering both upside and downside of approximately $10 million each, which is manageable in the context of the year.

Sales Trends and Outlook
Q: How are underlying sales trends and what is the near-term outlook?
A: Despite a slight pullback in Q2 weather-normalized sales—residential up 0.1%, commercial down 1%, industrial down 2%—year-to-date trends are positive. Residential sales are up about 1%, commercial up over 1%, and industrial down about 1%, with all-in sales up over 0.5%. Accounting for our 2% annual energy waste reduction, underlying economic conditions remain strong across all customer classes.

Data Center Load Growth
Q: How is data center growth impacting your operations and is legislation affecting it?
A: Data center projects are progressing regardless of state legislation on sales and use tax incentives. We've signed a 230-megawatt data center set to come online in 2025-2026. The primary focus for data centers is the speed of infrastructure deployment rather than tax legislation, and we're accommodating their needs within a two to three-year cycle.

Outperformance Drivers
Q: What is driving your current level of outperformance?
A: Outperformance is driven by rate relief net of investments, cost performance initiatives, and strong performance at our non-utility business, NorthStar. NorthStar has contributed an additional $0.05 year-over-year due to strong operations at DIG and benefits from solar projects. We continue to execute cost management initiatives through the CE Way, yielding annual savings greater than $50 million.

Electric Rate Case and Settlement
Q: What are your thoughts on the electric rate case settlement and potential rate design issues?
A: While we always look for settlement opportunities, electric cases are more complex with over 20 intervenors. Our case focuses on electric reliability investments, such as system hardening and tree trimming, aligning with customer and regulator expectations. Regarding rate design, data centers currently use an industrial rate, and we're exploring a specific data center rate to better balance capacity and energy costs.

Palisades Nuclear Plant Impact
Q: How does the potential return of the Palisades plant affect you?
A: The Palisades plant is making progress towards reopening, with an additional $150 million allocated by the state. A Power Purchase Agreement for its output has already been signed with co-ops in Michigan and Indiana, so it's already spoken for. We do not anticipate any adverse impact on CMS Energy as a result of Palisades returning.

Storm Restoration and Reliability
Q: How are you performing in terms of storm restoration and reliability improvements?
A: We've made significant improvements, reducing the size of outages and increasing the percentage of customers restored within 24 hours from 90% last year to 95% this year. Investments in tree trimming have led to more than 60% reduction in outages where trees are trimmed. Financially, we've avoided over $40 million in costs through efficient storm restoration efforts.

DIG Recontracting and Power Prices
Q: What's the outlook for DIG recontracting given power price trends?
A: The energy and capacity markets continue to present ripe opportunities. We are securing favorable bilateral contracts for capacity prices well above our plan, which strengthens and extends our financial performance.