CMS ENERGY CORP

J.H. Campbell Retirement: The retirement of J.H. Campbell is subject to temporary extensions under emergency orders issued by the U.S. Secretary of Energy. As a result, Consumers has implemented retention measures to ensure appropriate staffing levels and expects to incur up to $4 million during each 90‑day emergency order period. Consumers will seek recovery of these retention costs from FERC, consistent with rate recovery sought for other costs of complying with the emergency orders. For additional information on the emergency orders associated with J.H. Campbell, see Note 2, Regulatory Matters.

Presented in the following table is a reconciliation of the retention benefit liability recorded in other current liabilities on Consumers’ consolidated balance sheets:

1 Includes amounts associated with a retention incentive program established under Consumers’ IRP in connection with the planned retirement of J.H. Campbell in May 2025. Final payments under this program were made in November 2025.

Sale of Hydroelectric Facilities: In September 2025, Consumers signed an agreement to sell its 13 river hydroelectric dams, which are located throughout Michigan, to a non-affiliated company. Additionally, Consumers signed an agreement to purchase power generated by the facilities for 30 years, at a price that reflects the counterparty’s acceptance of the risks and rewards of ownership of the facilities, including FERC licensing obligations. The agreements are contingent upon MPSC and FERC approval, for which Consumers filed in October 2025.

In July 2026, Consumers filed exceptions to the proposal for decision issued in the related regulatory proceeding. The filing proposed a state-administered fund that would be established using all financial compensation mechanism revenues received under the PPA, estimated to total approximately $270 million over the term of the agreement. Under the proposal, the fund would be controlled by the State of Michigan and used to support dam safety improvements, emergency response and remediation efforts, and future decommissioning or license surrender obligations associated with the hydroelectric facilities. The proposal is subject to regulatory review and approval.

An order from the MPSC is expected in September 2026. In Consumers’ most recent electric rate cases, the MPSC has approved deferred accounting treatment for costs of owning and operating the hydroelectric dams pending and until completion of the transaction. At June 30, 2026, the net book value of the hydroelectric facilities was immaterial.

To ensure necessary staffing at the hydroelectric facilities through the anticipated sale, Consumers has provided current employees at the facilities with a retention incentive program. Subsequently, to ensure continued safe operation of the facilities after the sale, the buyer will offer employment to the current hydroelectric employees for a period of at least a year. The retention incentive benefits are contingent upon MPSC and FERC approval of the sale transaction.

NorthStar Clean Energy Strategic Divestments: In July 2026, the CMS Energy Board of Directors approved a plan to divest certain renewable projects owned by NorthStar Clean Energy and to exit non-utility renewables development. The projects included in the planned divestiture are primarily non-Michigan-based renewable generation projects. CMS Energy has initiated a sales process for these renewable projects and is evaluating market information and potential indications of interest. CMS Energy expects to classify the related assets and liabilities as held for sale in the third quarter of 2026, as the held-for-sale criteria were not met as of June 30, 2026. CMS Energy could record a material impairment charge in the third quarter of 2026 if expected sale proceeds are insufficient to recover the carrying value of the assets. CMS Energy expects to complete the divestment within twelve months, subject to negotiating contractual terms with a third-party, which would then be subject to regulatory approvals and other customary closing conditions.