CMS ENERGY CORP

New Accounting Standards Not Yet Effective

ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses: This standard requires public companies to provide disaggregated information about certain expense categories presented on the income statement. The guidance calls for annual and interim disclosures that separate specified components, such as employee compensation, depreciation, and amortization, within relevant expense line items in the notes to the financial statements. The standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. CMS Energy and Consumers will adopt the guidance upon the effective date. The standard will not have an impact on CMS Energy’s or Consumers’ consolidated net income, cash flows, or financial position.

ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software: This standard updates guidance for capitalizing costs related to internal-use software development. The amendments remove references to the previous “project stage” model and clarify the threshold for when capitalization should begin, focusing on whether completion of the project is probable. The amendments are effective for annual and interim reporting periods beginning after December 15, 2027. The guidance may be applied on a prospective, retrospective, or modified transition basis. Early adoption is permitted. CMS Energy and Consumers are currently evaluating the new standard.

ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818): This standard establishes a comprehensive accounting model for environmental credits based on the intended use of those credits and requires recognition of certain environmental credit obligations arising from regulatory compliance programs. The guidance also expands disclosure related to environmental credit activities, obligations, and significant estimates and judgments. The amendments are effective for annual and interim reporting periods beginning after December 15, 2027. The guidance is required to be applied on a retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the annual reporting period of adoption. Prior-period financial statement information will not be recast. Early adoption is permitted. CMS Energy and Consumers are currently evaluating the new standard.