CMS Energy announced on Tuesday that it will sell the renewable energy development business under its unregulated subsidiary NorthStar Clean Energy Services. NorthStar operates approximately 1.8 gigawatts of generating assets in Michigan, Ohio, Texas, and other states.

The Jackson, Michigan-based company said the move will simplify its corporate structure, generate net proceeds of about $500 million, and allow nearly all of its earnings after 2027 to come from regulated utilities. These utilities operate under the Consumers Energy brand, serving 1.8 million electric customers and 1.7 million natural gas customers in central and western Lower Michigan.

Under the plan, CMS Energy will retain key NorthStar assets in Michigan, including: Dearborn Industrial Generation, a 770-megawatt waste and natural gas combined-cycle cogeneration plant near Detroit; two natural gas peaking plants in south-central Michigan; and four Michigan solar facilities with a total capacity of about 500 megawatts.

"We are reallocating capital from NorthStar so that more of the upside and growth comes from the utility. Over time, we are funding this transition more efficiently by no longer allocating capital to NorthStar's renewable energy development," said CMS Energy's new Chief Financial Officer Srikanth Maddipati during the company's earnings call on Tuesday.

Key figures at a glance

CMS Energy disclosed the following key figures in its second-quarter 2026 earnings report:

  • 9 GW:Large-load customer pipeline, roughly flat compared with the first quarter of 2026.
  • $7.50:The amount by which the average residential customer's monthly bill could be reduced for each gigawatt of large load connected, according to company estimates.
  • $259 million:Net cost of keeping the J.H. Campbell coal plant operating from May 2025 through June 2026.
  • 10.25%：Return on equity requested in the latest electric rate case.

CMS Energy reported on Tuesday that its second-quarter adjusted earnings fell 48% year over year, to 37 cents per share from 71 cents per share in the same period of 2025.

The company said relatively mild winter and spring weather, along with damage to electric infrastructure from consecutive storms, were partly responsible for the weak earnings at its regulated utilities.

To address ongoing reliability concerns, CMS Energy President and CEO Garrick Rochow said Tuesday that Consumers has applied for a two-year investment recovery mechanism to cover grid hardening costs. This follows the Michigan Public Service Commission's approval in March of a one-year, $226 million extension of a previously authorized investment recovery mechanism for Consumers' electric distribution system.

The latest investment recovery mechanism is part of the electric rate case Consumers filed last month. That case seeks a $456 million revenue increase and requests a 10.25% return on equity. Consumers' previous rate case concluded in March, with the commission's final order approving a $276 million revenue increase and a 9.9% return on equity. The company called that order a "constructive outcome" on Tuesday, saying it received about 66% of the amount requested.

Data center uncertainty

The company said Consumers' potential large-load customer pipeline remains at about 9 GW, similar to recent quarters. About 135 MW have been connected this year, with another 1 to 2 GW in the "final stages" of contract signing.

A previously announced 20-year tariff agreement—intended to supply up to 1 GW of power to a Microsoft data center planned for a semi-rural area near Grand Rapids—has fallen into uncertainty amid strong local opposition. The township, after initially expressing support for the project, shelved Microsoft's rezoning request in April.

Rochow did not name Microsoft but acknowledged the rezoning difficulties and said "that customer" is looking at multiple sites within Consumers' service area. "We'll let things play out... but that contract applies to any location in our service territory, which is good," he said.

Nevertheless, some stock analysts say the delay puts Consumers at a disadvantage against its main in-state competitor, DTE Energy. DTE Energy, based in Detroit, whose electric utility is actively advancing an Oracle data center project in the state's southeastern corner. Jefferies senior analyst Julien Dumoulin-Smith noted in an investor report last week: "CMS's CEO expressed confidence in its ability to secure data center contracts, but the peer comparison is direct: DTE's Saline project broke ground in early June with the governor in attendance, while CMS's primary project site has no vote scheduled."

Rising costs at J.H. Campbell plant

Neither Rochow nor Maddipati mentioned the year-long U.S. Department of Energy campaign to delay the retirement of Consumers' J.H. Campbell generating complex. The 1,407-MW coal plant was originally scheduled to be permanently shut down in May 2025.

However, in a required filing with the U.S. Securities and Exchange Commission this week, the company disclosed that complying with five consecutive "emergency" extension orders under Section 202(c) of the Federal Power Act has cost it $259 million as of June 30 this year.

That latest figure is a significant increase from three months earlier, when Consumers said it had incurred $138 million in costs operating the Campbell plant as of March 31. In this week's filing, the company said the Federal Energy Regulatory Commission is still considering its request to recover $42 million in net costs from complying with the DOE's initial 90-day extension order, which ran from late May to late August 2025.

Consumers said it intends to file cost recovery applications with FERC for the subsequent four orders, despite ongoing legal challenges from environmental groups, consumer advocates, and other states within the Midcontinent Independent System Operator (MISO) region.