CMS Energy's Q2 2026 EPS fell to $0.37 from $0.66 as a non-repeating $72M debt gain and $40M higher storm costs outweighed rate increases; 2026 guidance of $3.83–$3.90 was reaffirmed and CMS will exit non-utility renewables.
Revenue
$1.8B
-0.5% YoY
Net income
$117M
-40.9% YoY
Diluted EPS
$0.37
-43.9% YoY
Operating margin
14.4%
Overview
CMS Energy, the parent of Michigan utility Consumers Energy, earned $117 million for common shareholders in the second quarter of 2026, down from $198 million a year earlier. Diluted earnings per share (EPS — profit divided by the number of shares, counting shares that could be issued) fell to $0.37 from $0.66. Revenue was essentially flat at $1.83 billion.
Three things drove most of the drop, and none of them means the core utility shrank:
A one-time gain from last year did not repeat. In Q2 2025 the parent company booked a $72 million (pre-tax) gain on retiring debt early. Its absence is the largest single item in the quarter's earnings bridge.
Storm repair costs jumped. The electric utility spent $40 million more on "service restoration" (fixing storm damage to the grid) than in Q2 2025, and $70 million more over the first half.
Electric sales were weaker. Revenue that was lower "due primarily to weather and sales mix" cut electric utility earnings by $30 million in the quarter, even though total electric deliveries were unchanged at 8.9 billion kWh.
Against that, electric and gas rate increases approved by the Michigan Public Service Commission (MPSC — the state regulator that sets what the utility can charge) added $63 million to the quarter's earnings ($38 million electric; $25 million gas, net of an expired one-time credit).
The quarter also brought a strategic decision: in July 2026 CMS's board approved exiting the non-utility renewables business, selling mainly out-of-state renewable projects held by NorthStar Clean Energy, its non-utility arm. That could bring a write-down in Q3 (see Risks below).
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Operating revenue
$1,829M
$1,838M
Read 0 community reports on CMS Energy, or write your own.Write a report
Operating margin is the share of revenue left after running the business (fuel, purchased power, maintenance, depreciation, property taxes), before interest and income tax. Adjusted EPS and diluted share counts are from CMS's July 28, 2026 earnings release (Exhibit 99.1 to its 8-K); everything else is from the 10-Q.
First half of 2026: revenue rose 6.4% to $4,559M (from $4,285M), but much of that was higher fuel and power costs that are largely passed through to customers (cost of gas sold rose to $618M from $507M; purchased and interchange power to $906M from $819M). But operating income fell to $754M from $811M (operating margin 16.5% vs. 18.9%), net income available to common stockholders fell 9.0% to $455M, and diluted EPS fell to $1.47 from $1.67. Adjusted EPS was $1.50 vs. $1.73 (company figures from the earnings release).
A note on adjusted EPS: CMS's adjusted figure did not remove last year's $72 million debt gain, so the adjusted comparison (-48%) is even weaker than the GAAP one. The main item CMS excluded in Q2 2025 was a $12 million tax charge from an Illinois tax-policy change — which is why Q2 2025 adjusted EPS ($0.71) sits above GAAP ($0.66).
Where the earnings came from (by segment)
Segment (net income to common)
Q2 2026
Q2 2025
Change
H1 2026
H1 2025
Electric utility
$137M
$167M
-$30M
$247M
$291M
Gas utility
$27M
$25M
+$2M
$247M
$238M
NorthStar Clean Energy
$18M
$22M
-$4M
$59M
$4M
Corporate interest and other
-$65M
-$16M
-$49M
-$98M
-$33M
Total
$117M
$198M
-$81M
$455M
$500M
Electric utility (-$30M). The rate increase, including a return on money spent building renewable generation, added $38 million. That was more than cancelled by $40 million of higher storm-restoration costs, the $30 million weather/sales-mix revenue hit, $14 million of higher depreciation and $5 million of higher property taxes (both the direct cost of a bigger asset base), and $7 million each of higher IT spending (partly an early-stage ERP, or company-wide software, rollout) and tree-trimming. Partial offsets: $15 million more AFUDC (allowance for funds used during construction — an accounting credit that lets the utility record a return on projects still being built; the MPSC allowed it for renewable-plan construction starting in 2026), $5 million of avoided coal-plant costs, and $21 million lower income taxes, partly because Q2 2025 carried $8 million of the Illinois deferred-tax charge.
Gas utility (+$2M). A $29 million rate increase was mostly absorbed by the end of a credit from the 2024 sale of an unregulated business ($4 million), higher operating costs ($5 million), $7 million more interest, and higher depreciation and property taxes. Gas is seasonal — the business earns most of its money in winter, so the second quarter is small and the half-year figure ($247M) matters more.
NorthStar Clean Energy (-$4M in Q2, +$55M in H1). Earnings from renewable projects rose $15 million in the quarter and $69 million in the half, which the 10-Q attributes to the "timing of tax benefits" rather than operations; $23 million of higher tax expense offset it in Q2. Treat the half-year jump as timing, not a new earnings level.
Corporate (-$49M). This is where the absent $72 million debt gain sits, plus $3 million more interest, partly offset by $29 million of lower tax expense.
Rate cases: what's decided and what's pending
Utility earnings growth depends on the regulator allowing higher rates to pay for new investment. The pipeline as of the filing:
Case
Status
Amount
Return on equity (ROE)
2025 electric
Decided March 2026; rates effective May 2026
$277M as ordered ($217M on a corrected basis, see below), plus $24M surcharge
9.90% authorized
2025 gas
Pending; final order due by October 2026
$232M requested (revised down from $240M in June 2026)
ROE is the profit rate on shareholders' invested capital that the regulator lets the utility build into customer prices.
Two details on the 2025 electric order are worth flagging. First, the 9.90% authorized ROE is below the 10.25% Consumers keeps asking for. Second, after the order Consumers found an error in its own calculation of the requested increase: on a corrected basis the increase reflected in the order is $217 million, not $277 million, with no change to the total revenue requirement, approved costs, or customer rates (the MPSC issued an errata in April 2026). The order also let Consumers defer $22 million of accelerated tree-trimming costs and $15 million of ERP costs for later recovery.
Coal, the Campbell plant and the supply plan
J.H. Campbell (1,407 MW coal plant) was approved for retirement in May 2025 but has been kept running by five consecutive 90-day U.S. Department of Energy emergency orders, currently through August 16, 2026. The net cost of complying through June 30, 2026 was $259 million, after $239 million of revenue from selling the plant's output into MISO (the regional power market). Consumers is seeking recovery through FERC (the federal energy regulator): FERC approved a cost-sharing mechanism in August 2025 but rejected MISO's first compliance filing in March 2026, and a revised filing is pending. A separate $42 million recovery request for the first order is also pending. Until those are resolved, this is a large unrecovered cost, not a settled one.
Integrated resource plan (IRP) due September 2026: over 13 GW of solar, battery storage and wind, plus two new natural-gas plants totaling about 1,500 MW on existing sites in Bay and Genesee Counties. Consumers has contracted 850 MW of battery capacity with operation dates through 2028, and its approved renewable plan allows up to 9,000 MW of solar and 4,000 MW of wind — aimed at 60% renewable energy by 2035 and 100% clean energy by 2040, as Michigan's 2023 energy law requires.
Hydro dam sale: the sale of 13 river hydroelectric dams, with a 30-year agreement to buy their power, awaits an MPSC order expected in September 2026.
Demand, data centers and capital spending
Consumers reached an agreement under its large-load tariff with a new data center expected to add more than 1 GW of load. The company expects weather-normalized electric deliveries (sales adjusted to strip out unusually hot or mild weather) to grow over the next five years, while gas deliveries stay roughly stable.
The capital plan through 2030 is $24.1 billion: $8.8 billion for generation (solar, wind, gas, storage), $8.6 billion for electric distribution and other projects, and $6.7 billion for gas infrastructure. Management expects this to grow rate base (the asset value on which the regulator lets it earn a return) by more than 10% a year.
Financing and cash
Operating cash flow was $1,327M in the first half vs. $1,414M a year earlier, hurt mainly by higher gas-cost under-collections (fuel costs paid but not yet billed to customers), more coal purchases and vendor payment timing.
Investing outflows rose to $2,093M from $1,880M on higher capital spending.
CMS used up its 2023 $1 billion equity program, issuing about 6.5 million shares for $495 million net in the first half, and in May 2026 launched a new program to sell up to $3 billion of stock. Diluted shares were 3.9% higher than a year earlier, which by itself holds back EPS growth.
Parent-company debt-to-capital was 0.55 against a 0.70 covenant limit; Consumers was at 0.50 against 0.65.
Risks to watch
NorthStar divestiture: CMS expects to classify the renewable projects it is selling as held for sale in Q3 2026 and "could record a material impairment charge" (a write-down of their book value) if expected proceeds fall short. It expects to complete the sale within 12 months.
State tax dispute: CMS lost at the Michigan Court of Appeals in February 2026 on how Consumers' electricity sales to MISO are apportioned for state tax, added $19 million to income tax expense in 2026 for the uncertain position (booked in the first half, none of it in Q2), and has asked the Michigan Supreme Court to hear the case. The 10-Q warns a final loss could have a material impact.
Campbell cost recovery at FERC, and third-party court challenges to the emergency orders.
Takeaway: The 44% EPS drop comes mostly from the absence of last year's $72 million debt gain plus $40 million of extra storm repair costs — not from a shrinking utility, since rate increases added $63 million. The real test is the second half: management reaffirmed full-year guidance even though first-half adjusted EPS ran 13% below 2025, so the gas rate order due by October and a return to normal storm costs have to come through.
Outlook
In its July 28 earnings release (8-K Exhibit 99.1), CMS reaffirmed 2026 adjusted EPS guidance of $3.83–$3.90, repeated its long-term 6–8% adjusted EPS growth target "with continued confidence toward the high end," and introduced 2027 guidance of $4.08–$4.17.
Our read: hitting 2026 guidance requires a much stronger second half than last year's. First-half adjusted EPS was $1.50, so the company needs roughly $2.33–$2.40 in the back half. The supports are visible in the filing — the electric rate increase in effect since May, a gas rate order due by October, AFUDC on renewable construction, and data-center load growth. The swing factors are storm costs, the timing of Campbell cost recovery, a possible NorthStar write-down (which would hit GAAP earnings and which CMS's adjustment policy lists impairments and asset sales as candidates to exclude from adjusted earnings), and dilution from continued share issuance under the $3 billion program. The strategic direction is clear: a simpler, almost purely regulated Michigan utility whose growth rests on getting a $24.1 billion capital plan into customer rates.