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 in connection with the planned retirement of J.H. Campbell in May 2025. Final payments under this program were made in November 2025.

2 Includes $4 million for the three months ended September 30, 2026 and $1 million for the three months ended September 30, 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.

In September 2026, Consumers extended its waiver of the statutory deadline applicable to the proceeding to provide additional time for discussions among the parties regarding potential resolution of outstanding matters, resulting in an anticipated MPSC order in November 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 September 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 divestment are primarily non‑Michigan-based renewable generation projects.

CMS Energy launched a sales process for these projects. Certain sales have been completed or are subject to definitive agreements, and CMS Energy is in various stages of negotiations with potential buyers for the remaining projects. At September 30, 2026, the criteria for classification as held for sale were met forfour individual disposal groups associated with the planned divestment. Accordingly, the related assets and liabilities were classified as held for sale on CMS Energy’s consolidated balance sheet at September 30, 2026.

Upon classification as held for sale, each disposal group was measured at the lower of its carrying amount or fair value less costs to sell. The determination of fair value less costs to sell required judgment and included definitive agreements, indicative bids received from prospective buyers, and other market information, adjusted as necessary for estimated costs to sell. CMS Energy recognized aggregate impairment charges of $454 million for the three and nine months ended September 30, 2026, of which $102 million was attributable to noncontrolling interests, that were recorded in NorthStar Clean Energy impairment, disposal, and exit costs on CMS Energy’s consolidated statements of income. The impairment charges reflected the amount by which the carrying amounts of the disposal groups exceeded their respective estimated fair values less costs to sell.

Additionally, CMS Energy completed the sale of a 24-MW solar facility located in Delta Township, Michigan, to an unrelated party during the third quarter of 2026. The sale resulted in a loss of $15 million, which was recorded in NorthStar Clean Energy impairment, disposal, and exit costs on CMS Energy’s consolidated statements of income.

At September 30, 2026, the assets and liabilities classified as held for sale consisted of the following:

Certain of the entities held for sale are not wholly owned by NorthStar Clean Energy and are VIEs. As the primary beneficiary of these entities, NorthStar Clean Energy consolidates these entities and the remaining ownership interest is presented as noncontrolling interest on CMS Energy’s consolidated balance sheet. The noncontrolling interest associated with these consolidated VIEs held for sale totaled $479 million at September 30, 2026, before the attribution of $102 million of the impairment loss to the noncontrolling interest. NorthStar Clean Energy is obligated under certain indemnities, with varying durations, that protect the noncontrolling interests against losses incurred as a result of breaches of representations and warranties under the associated membership agreements. At September 30, 2026, the maximum obligation associated with these indemnifications was $180 million, and no amount has been recorded.

CMS Energy expects to complete the divestment within 12 months of the date the disposal groups were classified as held for sale, subject to negotiating contractual terms with third parties, regulatory approvals, and other customary closing conditions. Because the sales process remains ongoing and is subject to market conditions and transaction-specific factors, the losses recognized upon completion of the sales could differ from the impairment charges recorded for the three and nine months ended September 30, 2026.

Presented in the following table are the expenses comprising NorthStar Clean Energy impairment, disposal, and exit costs on CMS Energy’s consolidated statements of income:

1 Includes $102 million attributable to noncontrolling interests.

2 Includes breakage fees associated with development and equipment purchase contracts. Breakage fees incurred were reported as other current liabilities on CMS Energy’s consolidated balance sheet at September 30, 2026. Additional contract termination costs associated with the divestment strategy are not expected to be significant.

3 The aggregate cost of the retention incentive and severance program is estimated to be $10 million and is expected to be substantially completed by December 31, 2026. Retention and severance amounts incurred to date were reported as other current liabilities on CMS Energy’s consolidated balance sheet at September 30, 2026.

As part of the divestment strategy, CMS Energy also plans to sell its non-consolidated VIEs, which are accounted for using the equity method and included in investments on CMS Energy’s consolidated balance sheets. CMS Energy determined that declines in the fair values of non-consolidated VIEs below their respective carrying amounts were other than temporary. Accordingly, CMS Energy recognized impairment charges of $33 million for the three and nine months ended September 30, 2026. The impairment charges reduced the carrying amounts of the affected investments to their estimated fair values and were recorded in NorthStar Clean Energy impairment of equity method investments on CMS Energy’s consolidated statements of income. The non-consolidated VIEs are reflected in investments on CMS Energy’s consolidated balance sheets in the amount of $18 million at September 30, 2026 and $54 million at December 31, 2025.