CMS Energy (CMS) risk factors, FY2024 10-K

Other

1. 01CMS Energy depends on dividends from its subsidiaries to meet its debt service obligations
2. 02Due to its holding company structure, CMS Energy depends on dividends from its subsidiaries to meet its debt service and other payment obligations. If sufficient dividends were not paid to CMS Energy by its subsidiaries, CMS Energy might not be able to generate the funds necessary to fulfill its payment obligations
3. 03CMS Energy has indebtedness that could limit its financial flexibility and its ability to meet its debt service obligations
4. 04CMS Energy and Consumers rely on the capital markets, as well as on bank syndications, to meet their financial commitments and short-term liquidity needs not otherwise funded internally
5. 05Market performance and other changes could decrease the value of employee benefit plan assets, which then could require substantial funding

Industry/Regulatory Risks

1. 06Changes to ROA could have a material adverse effect on CMS Energy’s and Consumers’ businesses
2. 07The creation of utilities by municipalities in Consumers’ service territory, or the impairment of Consumers’ franchise rights to serve customers in municipalities, could have a material adverse effect on CMS Energy’s and Consumers’ businesses
3. 08Distributed energy resources could have a material adverse effect on CMS Energy’s and Consumers’ businesses
4. 09CMS Energy and Consumers are subject to rate regulation, which could have a material adverse effect on financial results
5. 10Utility regulation, state or federal legislation, and compliance could have a material adverse effect on CMS Energy’s and Consumers’ businesses
6. 11CMS Energy and Consumers have announced ambitious plans to reduce their impact on climate change and increase the reliability of their electric distribution system. Achieving these plans depends on numerous factors, many of which are outside of their control
7. 12of the associated capital investments. Consumers’ ability to implement its plan may be affected by global supply chain disruptions and/or workforce availability
8. 13Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact CMS Energy and Consumers
9. 14CMS Energy and its subsidiaries, including Consumers, must comply with the Dodd-Frank Act and its related regulations
10. 15CMS Energy and Consumers could incur substantial costs to comply with environmental requirements
11. 16CMS Energy’s and Consumers’ businesses could be affected adversely by any delay in meeting environmental requirements
12. 17CMS Energy and Consumers expect to incur additional substantial costs related to environmental remediation of former sites

Business/Operations Risks

1. 18There are risks associated with Consumers’ substantial capital investment program planned for the next five years
2. 19CMS Energy and Consumers could be affected adversely by legacy litigation and retained liabilities
3. 20Consumers is exposed to risks related to general economic conditions in its service territories
4. 21Technology advances, government incentives and subsidies, and regulatory decisions could increase the cost effectiveness of customer-owned methods of producing electricity and managing energy use resulting in reduced load, cross subsidization, and increased costs
5. 22CMS Energy’s and Consumers’ energy sales and operations are affected by seasonal factors and varying weather conditions from year to year
6. 23Demand for electricity associated with data center expansion could have a material effect on CMS Energy and Consumers
7. 24CMS Energy and Consumers are subject to information security risks, risks of unauthorized access to their systems, and technology failures
8. 25CMS Energy’s and Consumers’ businesses have liability risks
9. 26CMS Energy and Consumers are subject to risks that are beyond their control, including but not limited to natural disasters, civil unrest, terrorist attacks and related acts of war, cyber incidents, vandalism, and other catastrophic events
10. 27Energy risk management strategies might not be effective in managing fuel and electricity pricing risks, which could result in unanticipated liabilities to CMS Energy and Consumers or increased volatility in their earnings
11. 28CMS Energy’s and Consumers’ risk or that they will not result in net liabilities to CMS Energy or Consumers as a result of future volatility
12. 29CMS Energy and Consumers might not be able to obtain an adequate supply of natural gas or coal, which could limit their ability to operate electric generation facilities or serve Consumers’ natural gas customers
13. 30Unplanned outages or maintenance could be costly for CMS Energy or Consumers
14. 31CMS Energy and Consumers are exposed to counterparty risk
15. 32CMS Energy and Consumers are exposed to significant reputational risks
16. 33A work interruption or other union actions could adversely affect Consumers
17. 34Failure to attract and retain an appropriately qualified workforce could adversely impact CMS Energy’s and Consumers’ results of operations