CMS Energy (CMS) risk factors, FY2025 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’ businesses58% rewritten
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 results31% rewritten
5. 10Utility regulation, state or federal legislation, regulation, 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 control36% rewritten
7. 12Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact CMS Energy and Consumers42% rewritten
8. 13CMS Energy and its subsidiaries, including Consumers, must comply with the Dodd-Frank Act and its related regulations
9. 14CMS Energy and Consumers could incur substantial costs to comply with environmental requirements21% rewritten
10. 15CMS Energy’s and Consumers’ businesses could be affected adversely by any delay in meeting environmental requirements
11. 16CMS Energy and Consumers expect to incur additional substantial costs related to environmental remediation of former sites

Business/Operations Risks

1. 17There are risks associated with Consumers’ substantial capital investment program planned for the next five years
2. 18CMS Energy and Consumers could be affected adversely by legacy litigation and retained liabilities
3. 19Consumers is exposed to risks related to general economic conditions in its service territories
4. 20Technology 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. 21CMS Energy’s and Consumers’ energy sales and operations are affected by seasonal factors and varying weather conditions from year to year
6. 22Demand for electricity associated with data center expansion could have a material effect on CMS Energy and Consumers49% rewritten
7. 23CMS Energy and Consumers are subject to information security risks, risks of unauthorized access to their systems, and technology failures
8. 24CMS Energy’s and Consumers’ businesses have liability risks
9. 25CMS 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. 26Energy 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 earnings80% rewritten
11. 27CMS 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
12. 28Unplanned outages or maintenance could be costly for CMS Energy or Consumers
13. 29CMS Energy and Consumers are exposed to counterparty risk45% rewritten
14. 30as contractual obligations by third parties to purchase utility services, perform work, supply equipment, provide services, and meet related specifications or requirements), could have a material adverse effect on CMS Energy and ConsumersNew
15. 31CMS Energy and Consumers are exposed to significant reputational risks
16. 32A work interruption or other union actions could adversely affect CMS Energy and Consumers75% rewritten
17. 33Failure to attract and retain an appropriately qualified workforce could adversely impact CMS Energy’s and Consumers’ results of operations