Variable Interest Entities

6 Months Ended

Jun. 30, 2026

Variable Interest Entity [Line Items]

Consolidated VIEs: In June 2026, NorthStar Clean Energy sold to a tax equity investor a Class A membership interest in HL Solar Holdings, the holding company of a 96‑MW solar generation project being constructed in St. Clair County, Michigan, and the future holding company of a 120‑MW solar generation project being constructed in Hart Township, Michigan. The nameplate capacity of both projects has been committed under long-term renewable energy purchase agreements. The tax equity investor contributed $9 million in June 2026 and will contribute additional amounts upon further completion of the projects. The tax equity financing will also incorporate the sale of investment tax credits once the projects are placed into service for tax purposes, expected later in 2026.

NorthStar Clean Energy consolidates this and other entities that it does not wholly own, but for which it manages and controls the entities’ operating activities. NorthStar Clean Energy is the primary beneficiary of these entities because it has the power to direct the activities that most significantly impact the economic performance of the companies, as well as the obligation to absorb losses or the right to receive benefits from the companies.

Presented in the following table is information about the VIEs NorthStar Clean Energy consolidates:


Consolidated VIE	NorthStar Clean Energy’s ownership interest	Description of VIE
Aviator Wind Equity Holdings	51-percent ownership interest1	Holds a Class B membership interest in Aviator Wind
Aviator Wind	Class B membership interest2	Holding company of a 525-MW wind generation project in Coke County, Texas
BG Solar Holdings3	Class B membership interest2	Holding company of a 200-MW solar generation project in Branch County, Michigan
Delta Solar Equity Holdings	50-percent ownership interest1	Holding company of a 24-MW solar generation project in Delta Township, Michigan
HL Solar Holdings	Class B membership interest2	Holding company of a 96‑MW solar generation project in St. Clair County, Michigan and future holding company of a 120‑MW solar generation project in Hart Township, Michigan
Newport Solar Holdings	Class B membership interest2	Holding company of a 180‑MW solar generation project in Jackson County, Arkansas
NWO Wind Equity Holdings	50 percent ownership interest1	Holds a Class B membership interest in NWO Holdco
NWO Holdco	Class B membership interest2	Holding company of a 100-MW wind generation project in Paulding County, Ohio

1The remaining ownership interest is presented as noncontrolling interest on CMS Energy’s consolidated balance sheets.

2The Class A membership interest in the entity is held by a tax equity investor and is presented as noncontrolling interest on CMS Energy’s consolidated balance sheets. Under the associated limited liability company agreement, the tax equity investor is guaranteed preferred returns from the entity.

3During 2025, the tax equity investor contributed $15 million and recognized a deemed contribution of $35 million associated with BG Solar Holdings’ sale of investment tax credits related to a portion of the project placed into service for tax purposes in 2025. The remaining portion of the project was placed into service for tax purposes during 2026, and the tax equity investor recognized a deemed contribution of $87 million. In June 2026, the project achieved commercial operation and the tax equity investor contributed an additional $56 million.

Earnings, tax attributes, and cash flows generated by the entities in which NorthStar Clean Energy holds a Class B membership are allocated among and distributed to the membership classes in accordance with the ratios specified in the associated limited liability company agreements; these ratios change over time and are not representative of the ownership interest percentages of each membership class. Since these entities’ income and cash flows are not distributed among their investors based on ownership interest percentages, NorthStar Clean Energy allocates the entities’ income (loss) among the investors by applying the hypothetical liquidation at book value method. This method calculates each investor’s earnings based on a hypothetical liquidation of the entities at the net book value of underlying assets as of the balance sheet date. The liquidation tax gain (loss) is allocated to each investor’s capital account, resulting in income (loss) equal to the period change in the investor’s capital account balance.

Presented in the following table are the carrying values of the VIEs’ assets and liabilities included on CMS Energy’s consolidated balance sheets:


In Millions
	June 30, 2026			December 31, 2025
Current
Cash and cash equivalents		$	29		$	20
Restricted cash and cash equivalents		18			19
Accounts receivable		12			42
Prepayments and other current assets		17			5
Non-current
Plant, property, and equipment, net		1,399			1,037
Construction work in progress		170			357
Other non-current assets		7			5
Total assets1		$	1,652		$	1,485
Current
Current portion of long-term debt and finance leases		$	38		$	65
Accounts payable		33			29

Other current liabilities		1			—
Non-current
Long-term debt		57			118
Non-current portion of finance leases		43			39
AROs		44			38
Other non-current liabilities		7			3
Total liabilities		$	223		$	292

1Assets may be used only to meet VIEs’ obligations and commitments.

NorthStar Clean Energy is obligated under certain indemnities that protect the tax equity investors against losses incurred as a result of breaches of representations and warranties under the associated limited liability company agreements. For additional details on these indemnity obligations, see Note 3, Contingencies and Commitments—Guarantees.

Consumers’ wholly-owned subsidiaries, Consumers 2014 Securitization Funding and Consumers 2023 Securitization Funding, are VIEs designed to collateralize Consumers’ securitization bonds. These entities are considered VIEs primarily because their equity capitalization is insufficient to support their operations. Consumers is the primary beneficiary of and consolidates these VIEs, as it has the power to direct the activities that most significantly impact the economic performance of the companies, as well as the obligation to absorb losses or the right to receive benefits from the companies. The VIEs’ primary assets and liabilities comprise non-current regulatory assets and long-term debt. The carrying value of the regulatory assets on Consumers’ consolidated balance sheets was $489 million at June 30, 2026 and $549 million at December 31, 2025. The carrying value of securitization bonds on Consumers’ consolidated balance sheets was $525 million at June 30, 2026 and $585 million at December 31, 2025.

Non-consolidated VIEs: NorthStar Clean Energy has variable interests in T.E.S. Filer City, Grayling, Genesee, and Craven. While NorthStar Clean Energy owns 50 percent of each partnership, it is not the primary beneficiary of any of these partnerships because decision making is shared among unrelated parties, and no one party has the ability to direct the activities that most significantly impact the entities’

economic performance, such as operations and maintenance, plant dispatch, and fuel strategy. The partners must agree on all major decisions for each of the partnerships.

Presented in the following table is information about these partnerships, which are accounted for using the equity method:


Name	Nature of the Entity	Nature of CMS Energy’s Involvement
T.E.S. Filer City	Coal-fueled power generator	Long-term PPA between partnership and Consumers
		Employee assignment agreement

Grayling	Wood waste-fueled power generator	Long-term PPA between partnership and Consumers
		Reduced dispatch agreement with Consumers1
		Operating and management contract

Genesee	Wood waste-fueled power generator	Long-term PPA between partnership and Consumers
		Reduced dispatch agreement with Consumers1
		Operating and management contract

Craven	Wood waste-fueled power generator	Operating and management contract

1Reduced dispatch agreements allow the facilities to be dispatched based on the market price of power compared with the cost of production of the plants. This results in fuel cost savings that each partnership shares with Consumers’ customers.

The creditors of these partnerships do not have recourse to the general credit of CMS Energy, NorthStar Clean Energy, or Consumers. NorthStar Clean Energy’s maximum risk exposure to these partnerships is generally limited to its investment in the partnerships, which is included in investments on CMS Energy’s consolidated balance sheets in the amount of $53 million at June 30, 2026 and $54 million at December 31, 2025.

Consumers Energy Company