Good morning everyone and welcome to the CMS Energy 2020 First Quarter Results. The earnings news release issued earlier today and the presentation used in this webcast are available on CMS Energy's website in the Investor Relations section. This call is being recorded. (Operator provided instructions regarding conference controls and the Q&A process.) Just a reminder, there will be a rebroadcast of this conference call today beginning at 12:00 p.m. Eastern Time running through May 4. This presentation is also being webcast and is available on CMS Energy's website in the Investor Relations section. At this time, I would like to turn the call over to Mr. Sri Maddipati, Vice President of Treasury and Investor Relations.

Thank you, Alison. Good morning everyone, and thank you for joining us today. With me are Patti Poppe, President and Chief Executive Officer; and Rejji Hayes, Executive Vice President and Chief Financial Officer. This presentation contains forward-looking statements, which are subject to risks and uncertainties. Please refer to our SEC filings for more information regarding the risks and other factors that could cause our actual results to differ materially. This presentation also includes non-GAAP measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in the appendix and posted on our website. Now, I'll turn the call over to Patti.

Thank you Sri, and thank you everyone for joining us today for our first quarter earnings call. We hope that you're staying safe and healthy during these extraordinary times. This morning, I'll discuss our first quarter results and long-term outlook, as well as provide an update on our response to the COVID-19 pandemic. Rejji will add more details on our financial results later and discuss sensitivities related to COVID-19. And as always, we'll close with Q&A. I'd like to start by acknowledging that this health crisis is affecting scores of people in really unimaginable ways. My heart is with each of you, and I know that there will be a post-COVID. May your family and friends be stronger, closer and at peace when all of this is behind us. What always keeps my team and I anchored is our focus on the long-term, and our commitment to the triple bottom line of people, planet and profit. We have a track record of delivering industry-leading financial performance and we have solid fundamentals in our favor that have served us well in years past and will enable us to navigate today and in the future. Now, let's get to the numbers. We delivered adjusted earnings per share of $0.86 in the first quarter, despite challenging weather conditions and the onset of this unprecedented global pandemic. Our first quarter results were $0.11 better than 2019 results for the same period, mostly driven by cost management, regulatory outcomes and our ability to adapt to changing conditions, whether it be the temperatures outside or adjusting to life under a stay-at-home order. As a stay-home, stay-safe order is still in place for Michigan and the situation is continuing to evolve, it's too soon to provide an update on our guidance we issued on January 30. So, given the fluidity of the situation, at this time, we're not changing our guidance for the year of $2.64 to $2.68. Though the current circumstance is certainly challenging, our investment thesis remains intact and our business model resilient, both of which will support our long-term operational and financial objectives, as we continue to target long-term annual earnings and dividend per share growth of 6% to 8%. Let's take a moment to get everyone up to speed on what we're seeing here in Michigan and what we're doing to lessen COVID-related impacts on the communities that we serve. On March 23, Governor Whitmer issued a stay-at-home order requiring all non-essential businesses to close until April 13, which has now been extended until mid-May with some loosening of retail and recreational restrictions previously in place. Schools are closed for the remainder of the academic year. Prior to the Governor's order, we established our Incident Command Structure or ICS. So, we were already functioning in our emergency response mode as conditions worsened, particularly in the southeast portion of the state. Early on, we retained a Chief Medical Officer to help guide our operational decision-making and ensure we could perform our necessary work safely. We instituted a travel ban for business activities and the necessary self-quarantining for employees after any personal travel. We quickly transitioned to a remote workforce, and I'm pleased that the team responded with great agility. For team members in critical on-site operational roles, including those working in control rooms, generating plants and natural gas compression stations, we've implemented numerous safety protocols following all CDC guidelines, including and in some cases sequestration. For the remaining workforce, our coworkers are either working from home or reporting directly to the jobsite from their homes to continue operations in the field and ensure their safety. At this time, we've experienced zero fatalities, and 11 of our over 8,000 coworkers, our work family, have tested positive for COVID-19. We're thankful that seven of those coworkers have been able to return to work, and each identified case has yielded fewer and fewer ancillary cases of contact, which means our social distancing is working. Our COVID-19 case rate is three times less than the broader Michigan rate. We believe that our safe work practices have been essential in protecting our coworkers from exposure to this virus. We're taking bi-weekly pulse surveys of our coworkers to see how they're doing during this time. And I'm very proud to report that over 90% of our team is satisfied with how we're handling the COVID-19 pandemic as a company. Our safety culture and commitment to our people has been a source of strength for all of us, and we'll remain deliberate in our efforts to keep our coworkers and our customers safe. Beyond safety, we know our customers are facing economic challenges and we've stepped up to support them. Some of the most deeply impacted at this time are our small business customers, who are the heart of Michigan's economic engine. When we get on the other side of this current crisis, and there will be another side, our small businesses will serve an essential role in fueling the economy once again. We know and love these customers and understand the hardships they’re going through, and we have tailored our services accordingly. We've redeployed our business customer care team to help our customers navigate the state and federal assistance programs. We trained our team on the federal and state funding available and created scripts and content specifically tailored to our small business customers. On a personal level some of you may have seen, my husband Eric and I set up the Dream Maker Fund at the onset of the crisis with a personal contribution, which has provided emergency relief to our small businesses in Jackson, Michigan, where we live and where the company is headquartered. This has given us a front row seat on the small business impact of COVID-19 here in Michigan. The company and Consumers Energy Foundation have also taken a number of actions to help our vulnerable residential customers, including extending our payment protection plans through June 1, disbursing over $1 million in grants and donations to facilitate the needs of our healthcare workers, supporting our local food banks and charities, as well as matching our coworkers donations to local charities. Needless to say, we haven't lost track of you, our investors. We're mindful of the COVID-related risks on our business. And we're always on the job identifying those risks and managing the work every day in every aspect of the business. We operate both in natural gas and electric business, and natural gas represents one-third of our revenues at the utility and is the fastest growing segment. The bulk of our gas business margin comes from our residential customers and is earned in the heating season which ended in March, and we expect residential gas sales to be normal in the fourth quarter. While our electric deliveries are certainly down year-over-year, we will remind you that we have a track record of mitigating financial risks given the inherent volatility in our business which I will cover on the next slide. We're grateful for the leadership and partnership our Public Service Commission has demonstrated. We're working together to make sure our coworkers are safe and our customers are cared for. The Commission is collecting and reviewing costs related to COVID-19, including uncollectible accounts and sequestration and quarantine related costs. The Commission established deferred accounting for uncollectible expense above what's currently approved in rates, which Rejji will elaborate on later and speaks to the constructive regulatory environment here in Michigan. As we turn to slide six, we’ll remind you that we've seen significant unforeseen challenges and double-digit EPS downside in previous years. In fact, in 2016 and 2017, we had as much as $0.13 and $0.16 of negative variance. And through conservative planning and a bottoms-up approach to cost management, we were able to deliver on our operational and financial objectives. With that said, as a result of anticipated COVID-related financial risks this year, like most, we've implemented several cost control measures, such as a hiring freeze, reduced overtime, and minimized travel and training expenses. Plus more sustainably, we’ll rely on our ability to accelerate cost savings and waste elimination through our Consumers Energy Way to pursue our financial objectives without compromising customer service. Rejji will provide some of the sensitivities for the risks we've highlighted and potential offsets. As we gain more visibility in Q2 and beyond, we'll adjust our plan accordingly to remain agile and make choices that mitigate the impact in 2020 and protect our long-term operational and financial performance. While we don't know the ultimate impact of COVID-19, we do know how to manage and operate a world-class business that delivers over the long-term. And that brings us full circle as we talk to you today. Our long-term investment thesis remains unchanged, despite the near-term uncertainty presented by COVID-19. Over the years, we've been good stewards of the balance sheet, maintaining a healthy level of liquidity and we plan conservatively. We still have a large and aging system and need a significant investment. We still have a constructive regulatory environment and we still have the CE Way that enables us to serve our customers, while keeping their energy costs affordable. With that, I'll hand the call over to Rejji.

Thank you Patti, and good morning everyone. Let me first echo Patti's comments by wishing each of you and your loved ones safe passage through these trying times in which we live. As Patti highlighted, we're pleased to report our first quarter results for 2020. We delivered adjusted net income of $245 million or $0.86 per share. Our adjusted earnings excludes select nonrecurring items, primarily related to costs resulting from a voluntary coworker separation program which we commenced in the fourth quarter of 2019, and the favorable reversal of an accrued expense related to tax reform. For comparative purposes, our first quarter adjusted EPS was $0.11 above our Q1 2019 results, largely driven by rate relief, the net investment-related expenses of utility and solid cost performance throughout our business. Switching gears to the COVID-19 related financial risks, as Patti noted, we are ever mindful of the potential impacts of COVID-19 on our business and have begun to implement cost control measures to mitigate these risks. On slide nine, we've provided a summary of potential impacts, as well as several mitigating factors which should help reduce our exposure to some degree. First, I'll start with utility, which I'll remind you represents about 90% of our business. The effects of the pandemic in Michigan that Patti referenced have unsurprisingly reduced commercial industrial activity in the state, which has begun to materialize in our electric sales. Based on daily volumetric trends extracted from our smart meters over the past month or so, we've seen declines in weather normalized commercial industrial load of about 20% to 25%. The C&I load reduction has been partially offset by residential load, which is up over 5% over the same timeframe, presumably due to mass teleworking and self-quarantine measures. As noted in the past, the residential customer segment offers our highest margins and represents over 60% of our customer contribution for electric and gas combined, which I'll discuss in more detail later. The other noteworthy financial risk at the utility attributable to COVID-19 are potential increased costs and uncollectible accounts due to delays in customer payments and sequestration and quarantine related costs to ensure the safety of our coworkers. As mentioned, we are working hard to mitigate these risks with cost control measures and customer outreach programs. We also recently received an accounting order from the commission to apply deferred accounting to uncollectible account expenses in excess of rates as Patti noted. And we will soon file a response to this initial order seeking approval to defer other costs related to COVID-19, including sequestration and quarantine related costs. As for non-utility businesses, which collectively represent about 10% of the earnings, the potential risks are largely on the revenue side and broadly speaking are fairly well mitigated. Consumers Energy Enterprises' a vast majority of its revenue streams are contracted at fixed prices with creditworthy counterparties. It is also worth noting that the Supreme Court of Michigan recently issued an order upholding the MPSC's ability to enforce a local clearing requirement for all energy providers in the state. Longer term, this decision could create opportunities for DIG, given the favorable trends we've observed in the last two planning resource auctions in MISO for Zone 7 which just cleared the cost of new entry. With regards to EnerBank, the primary risk in the current environment are loan origination volume and a potential increase in charge-offs. But it's important to remember that the EnerBank business model is unique. We are not underwriting mortgages or making auto or small business loans. EnerBank underwrites home improvement loans primarily to premium credit quality borrowers whose average FICO scores are above 750. This borrower base has proven to be relatively more resilient during economic downturns. In fact, in 2008 EnerBank’s originations increased given the relative inelasticity of its core borrower base and through market share gains at the expense of weaker capitalized competitors. The final notable risk from an earnings perspective is in our parent and other segment, which is largely comprised of non-recoverable financing costs. I am pleased to report that due to proactive and cost effective liquidity management from our treasury team, we have no remaining maturities in 2020 and we fully priced our planned equity issuance needs for the year through forward contracts, which I'll elaborate on later. Circling back on the utility sales risk, which we've viewed as the most substantial risk to our business in the current environment, slide 10 highlights the relative contribution mix of our customer segments and the load reductions we've witnessed since late March. As you'll note, the residential segment represents approximately 60% and 75% of the customer contribution for the electric and gas business respectively and over 60% of the total customer contribution at the utilities I highlighted earlier. So, any uptick and growth in the residential segment should partially offset the expected declines we anticipate in the commercial and industrial segments. All-in, given the current sales trends we've observed since the public response to the pandemic, we estimate approximately $0.03 to $0.04 of EPS dilution per month. As Patti noted, at this point, it's too early to tell how long and to what extent social distancing measures will remain in place or how strong the economic recovery in Michigan will be upon its conclusion. As such, we have provided this monthly sensitivity for your modeling purposes and we'll keep you abreast of any material changes to our plan. On slide 11 in our waterfall chart you can see the key factors impacting our financial performance relative to 2019. Despite an unusually warm winter which offered $0.23 of negative variance versus Q1 of 2019, the absence of the substantial service restoration costs due to storms we experienced last year, coupled with last September's supportive gas rate order and cost performance throughout the business, delivered $0.11 of net positive variance versus the first quarter of 2019. Depending on the extent to which the financial risks of COVID-19 manifest, we believe the glide path illustrated on this slide could enable us to achieve our EPS guidance as we plan for normal weather and anticipate a constructive order in our pending gas case in mid-October. As mentioned, the ultimate impact of COVID-19 on Michigan's economy and our business remains uncertain, so we have referenced the estimated monthly EPS dilution of $0.03 to $0.04 in the event the level of sales degradation that we have witnessed to date persists. Further, we will closely monitor the potential risk to our business, some of which have been mitigated through regulatory support. We have also added the historical range of annual financial risks that we have successfully mitigated over the past several years, which equates to approximately $0.10 to $0.15 per share or $40 million to $70 million pre-tax. Clearly, we have a strong track record of managing the work and delivering cost reductions through our lean operating system the CE Way and other initiatives. And as Patti noted, we've already implemented an initial wave of cost control measures. Needless to say, we are not here to represent that any downside scenario can be overcome, particularly given the unprecedented nature of this global pandemic. However, we are confident that we can minimize the financial risk in 2020 without jeopardizing our long-term value proposition to our customers and investors. As we execute our risk mitigation strategies, you'll note on slide 12 that we have prioritized liquidity management and have over $2.3 billion of net liquidity available, which includes unrestricted cash and untapped revolving credit facility capacity as of March 31. We've always managed our balance sheet in a conservative manner and so whether there've been a lot of concerns regarding access to the commercial paper market, I'll remind everyone that we do not rely on CP as a permanent layer of funding, nor do we have any outstanding at this time. As part of our funding strategy for the year, we put in place term loans to the parent and the utility for $300 million each and those don't mature until 2021. And in mid-March we issued $575 million of first mortgage bonds at a rate of 3.5%, which addressed our sole maturity across our debt issuing entities in 2020 and funds our capital programs. From an equity financing perspective, we announced on our Q4 call our plans to issue up to $250 million of equity, all of which is priced under existing equity forward contracts and we drew down approximately $100 million of that capacity in late March. We expect future equity issuances can be completed through our ATM program, which we will likely refile in the coming months. All of our financings have been executed at terms favorable to our plan, which offer near-term savings and help de-risk the future. As we look forward, we'll continue to maintain flexibility and capitalize on accommodated market conditions when they emerge. Highlighting our credit metrics on slide 13 which remained well above the thresholds for investment grade ratings among all three credit rating agencies. Our focus on maintaining a strong financial position coupled with a supportive regulatory environment and predictable operating cash flow growth supports our strong ratings, and we'll look to maintain our strong credit quality with an eye toward the future to the benefit of customers and investors. And with that, I'll pass it back to Patti for some closing comments before we open up the lines for Q&A.

Thanks, Rejji. My coworkers and I remain on the job every day for our customers and for you, our owners. We're focused on delivering an essential service to nearly 6.7 million of our fellow Michiganders. The capital you all provide is critical and our long-term track record of managing that capital speaks to that commitment. As I mentioned, we've been good stewards of our balance sheet, with prudent planning and our conservative liquidity management continues. Already for 2020 we executed financings at attractive rates that enable us to fund our capital programs. Our operational excellence shines through during times like these. As we continue to rely on the CE Way and lean in on that lean operating system we have in place, we improve each and every day. We put to work efficiencies that drive down costs and eliminate waste. And I can tell you that system is in overdrive right now, which speaks to our agility as we shift accordingly depending on how this current environment evolves. Since the 2008 energy law was established and updated again in 2016, Michigan has remained a top tier regulatory jurisdiction. With forward-looking test years and 10-month rate cases, we're fortunate to have such a constructive regulatory framework in statute. We also have a supportive commission. As you can see by the recent order responding to the pandemic for the protection of vulnerable customers while being mindful of utilities being able to fund their operations and attract low cost long-term capital. Our system remains in great need of replacements and upgrades and that won't go away as a result of the current pandemic. Again, we're fortunate that our plans have embedded structural cost reductions in the form of retiring coal plants and PPAs expiring. Finally, none of this comes at a price to our planet and the great state of Michigan we all love so dearly. Our net zero carbon and methane goals remain as important today as the day we established them. Our model holds together well. That's why this thesis remains intact and that's why we can rely on our triple bottom line to get us through this current crisis just as it has in the past and will do so in the future. With that, Alison, will you please open the lines for Q&A?

Thank you very much, Patti. (Operator asked participants to press the appropriate keys to queue for questions.) Our first question will come from Shar Pourreza of Guggenheim Partners. One moment please. Thank you. Shar, your line is now open. Please proceed with your question.

Hey, good morning guys.

Good morning, Shar.

Morning.

Couple of questions here. First, you talked about the $0.03 to $0.04 impact per month based on the sales sensitivities you provided on slide 10. You're obviously levelizing this, but should we expect any peaks or troughs over the next two quarters? Some utilities assume business closures in Q2, some return in Q3 and there may be more of a mean reversion in Q4. We're only two months into this, but I'm trying to get a sense of the monthly profile of the sensitivities you assume in the plan or what the guidance can withstand. On slide four there seems to be cautious language about the uncertainty of duration and the full impact of COVID, so I know it's early, but what are your preliminary thoughts?

Shar, thanks for asking. We've tried to be really transparent here. We have a track record of offsetting negative impacts to EPS, as you mentioned, ranging in as much as $0.10 to $0.15. We also have a track record of transparency, which is why we've tried to be as direct and forthcoming as we can about the C&I sales that have dropped 20% to 25% versus expectations. With the offsetting residential sales up over 5%, the earnings impact, as you've mentioned and what we've said, is $0.03 to $0.04 per month under the current condition. Now, here's the variables. How fast will businesses bounce back? How soon will people gather in public spaces? How quickly will manufacturers be able to start making non-essential goods again? Our stay-at-home order is still in place till May 15. Will the government stimulus help so that the small businesses can come back after this? At this point, there's just too many unknowns, Shar. And so, while we'll continue to remain conservative, we don't feel that we know enough right now. One thing you can count on us to do is to call it straight. We've never overpromised and underdelivered, and nor have we underpromised and overdelivered. We do what we say. I'm comfortable in the fact that our long-term fundamentals are the same and our short-term actions will stand the test of time. One of the things I think about a lot is that our customers, our coworkers and our regulators will long remember how we handle these temporary times. I feel good about that because we're doing the right things and, as we always are, acting with the long-term in mind and the long-term outlook has not changed and our fundamentals remain sound. So, as we think about any adjustments we would make this year or any actions we would take this year, we're always thinking about the next year and the next. And so, we're balancing all of those factors and doing everything we can to serve the triple bottom line.

Got it. Let me just — let's assume this is a little bit more protracted. Can you talk about sort of the incremental levers as you mentioned $0.10 to $0.15 of historical flex range on slide 11, do you have more?

What I would say is our historical performance is a good indicator, but we've also — we're about four years into the CE Way and that thing is on overdrive. Our team is on the job. They're looking for waste elimination all across the organization. We have 1,254 projects already identified this year. Start-the-day time reduction. Some of the things that we're doing now as a result of the crisis, such as jobsite reporting, are actually saving money. And so, it's both the combination of current factors: there's current environmental things that allow us to save money plus our CE Way and the waste elimination and our ability to deploy our team to as much long-term capital work are the kinds of ways that we see tackling this challenge in a sustainable way. We're always thinking about the next year and the next. And so the cost savings that we would do would only be those that don't do damage to the future. The one thing we think about is we're not going to pull out all the stops and do damage to future years to hit some kind of unreasonable outcome this year. We're going to be in it for the long haul. And I think that's why people trust us and invest in us.

Got it. And then just lastly, the volume reductions on the C&I side, the 20% to 25% reduction that you've seen since March. Can — is that sort of auto, auto supplier related? What drove that?

We have a limited exposure to auto, less than 2% to tier one suppliers plus the automotive themselves to our margin. What we're seeing is more the stay-at-home order closed all restaurants, it closed all retail other than essential retail like grocery. And so that's where we're really seeing a lot — and small manufacturers that aren't making essential goods. As I mentioned, my husband and I did this fund and so we've had an opportunity to look at all of the applications just in Jackson County and it's a whole range of things: golf courses, restaurants, bakeries, retail, little manufacturing shops, welding shops. They're in a holding pattern right now, waiting for the order to be lifted. And some of those businesses, even after the order is lifted, will be affected by people's reticence to gather in groups. Others will get right back at it. And so, we see a balance between some of them purely waiting for May 15, and they'll be back on it full time, and there'll be others that may have a demand reduction because of people's fear. And so again, there's a lot of unknowns. Fortunately, our smart meter data is very accurate and we can see real-time what's happening and it helps us make better decisions and better choices.

Terrific. Thank you, guys. Stay safe and we'll see you soon.

Thanks, Shar.

Our next question will come from Steve Fleishman of Wolfe Research LLC. Please go ahead.

Great. Thank you. Patti, Rejji, Sri, hope you're all doing well and your families.

Thanks, Steve. Good morning.

Same to you Steve.

Yeah. Good. So, just the first on the sales. That March to April data, do you have just an overall number across the overall sales change?

Rejji, what's our total sales adjustment then?

Yeah, so, we don't have — if you're talking about post Q1 beyond March 31, we do not have a full read across all of our customers, because smart meter data for a good portion of our customers — select classes of large industrial and commercial customers do not have smart meter data available. We do get good anecdotal evidence from those customers and do get good visibility, but we don't get perfect information really until we get to the end of the quarter. So, there are some limitations in that. But I would say, Steve, going back to Patti's comments, the 20% to 25% we highlight here again that is not indicative of all of our customers, but it's a decent read for now for that monthly read that we've offered from late March through mid to late April. So that's a — again, it's not every single customer, but it's a decent portion of them.

Okay. Yeah, just curious because when we've looked at regions, we're not really seeing any region down more than 10% or so, but obviously that doesn't get to individual states or territories. So, I'm just kind of trying to compare it to some of the regional data we've seen —

Yeah, Steve, I would say 10% total is a decent bogey for our customer base as well. You're in the neighborhood for sure.

That's exactly right.

Okay. Great. And then on this $0.03 to $0.04 per month thing data, a lot of utilities have different per — depending on the season, the earnings impacts of the same sales change can vary, like a summer month might be worth more than a shoulder month. So, could you just talk about the seasonality of that sensitivity and just thinking about it this year?

Well, we always deal with seasonality and the weather and that's what we certainly — weather and storms, we've done a good job overcoming. In this scenario, there are so many variables I would suggest the bigger drivers than just the weather that seasonality is obviously a variable, but not nearly as much as some of the unknowns associated with the rate businesses return to action. I don't know, Rejji, you might want to add something to that though. Go ahead.

The only thing I would add is that it's certainly the timing of this is somewhat fortunate because we do expect higher volumes as it starts to get a little warmer particularly in the residential class now. So, we'll see more industrial activity as you get past those shoulder months. And so, the timing of this — if you could pick a time, which you don't root for, this would be the time to have it. Certainly there are greater expectations for load once you get beyond the March/April timeframe.

Maybe I should have asked the question different.

Well, I'll just chime in. One last thing, Steve, that one of the points that we recognize is that even after an order is lifted, it's likely — and I'm hearing from a lot of businesses that they'll keep their staff, their people working from home if they can. And so that residential bump may continue into the summer months and obviously air conditioning load is a big driver in Michigan to sales in the summertime. And so, if a lot of people are still working from home that obviously has a favorable impact in the summer months.

Okay. Maybe I should have just asked, do you have a summer/winter kind of rate differential, or is it pretty much the same rate all year?

Generally the same rate all year.

Okay.

Next year we'll be implementing more of a summer peak rate, but it's generally about the same throughout the year.

Got it. Okay. And then one last question, just could you talk a little bit about the trends you're seeing so far on non-payments and kind of how notable that might be, any color there?

We are watching that. The uncollectible accounts do lag. So we can see to some degree, it's very early. There's at least a 30-day lag before we know if somebody didn't pay their bill. Sometimes the uncollectible accounts really take almost three to six months to show up and to really be accounted for. So, we're watching — we're seeing a slight uptick, but it's early. We haven't even crossed all of the cycles for some of the customers.

Okay. Great. Thank you.

Thank you.

Thanks, Steve. Stay well.

Our next question will come from Michael Weinstein of Credit Suisse. Please go ahead.

Hi. Good morning.

Good morning.

Hey, just to follow-up on some of those last questions. Can you speak to how some of this will be handled in the ongoing rate cases? So, I know you have an annual electric rate case and an ongoing gas case you filed in December. How does that case get updated for changes to load and changes in uncollectible and everything?

Yeah. The cases are filed. Our gas case we filed in December and our electric case we filed in February. So, there's not a clean way to have a significant substantive change to sales and frankly it would be hard to do it because we have forward test years. So what sales figure would we predict? We expect that our rate cases will continue as planned and because we do annual filings in the future, if there's a permanent degradation to sales, then we would reflect it. But it's pretty hard to capture a temporary degradation in sales like the one we're seeing in any kind of active filing. The good news is that our commission has been very supportive, just a shout out to the Michigan Public Service Commission and all their folks for adapting so quickly to this changing condition. They've already started holding their meetings and conducting business remotely through webcast. They too have had a significant impact. So thanks to all of them for acting so quickly and working with us on this new order for the COVID-19 costs as well as the uncollectible accounts and trying to make sure that we, as a utility, are in a position to serve our customers well, do what's right, care for our most vulnerable customers and know that we can still function in a strong financial position that reflects the capital attraction that we need to demonstrate. Great partnership with the commission and all their team, working so hard to just figure out these unknowables together.

Gotcha. And could you contemplate lower capital spending, if necessary things drag on long enough?

Right now, we're not seeing that in the plan. In fact, we're working hard to make sure that — for example, our power plants because energy load and demand is down, are an economic reserve, a couple of our coal plants. And so that gives us an opportunity to pull ahead of capital outage at that plant earlier in the year than we had originally planned. So, I don't — we don't have any plans in the near term to have any adjustment to our capital plan. In fact, we're going to really work hard to make sure we keep that plan on track.

Got it. And on DIG, I just wanted to ask about the local clearing requirement. It doesn't look like the impact of that Supreme Court decision would extend beyond that. I just wanted to make sure.

Because DIG is basically fully contracted, it doesn't have any certain impact on 2020, minimal in 2021, but there could be some out-year impact that could be beneficial. But again, just keep in mind the DIG is predominantly contracted as Rejji had mentioned with high-quality off takers. We are pleased with the outcome of that order though, and shout out to our legal team — they took it all the way to the Supreme Court of Michigan and did a great job advocating for the Public Service Commission and their authority to require a local clearing requirement. The law that we worked so hard to pass back in 2016 was a fundamental element of it to make sure that Michigan as a Peninsula Zone 7 has adequate supply to serve the load. With our hybrid retail open access at 10%, it does put at risk reliability in the state. So very happy with that outcome and very thankful and proud of my legal team for the great work that they did.

Yeah. It looks good. Hey, one last question on AMT credits and acceleration and the stimulus bill, have you guys quantified that at all?

Yeah. So, we've benefited — and remember it's just a cash benefit — about $30 million of AMT credits we'll pull forward in 2020 that would have originally been refunded in 2021. Again, that just affects cash, not earnings in any way.

And that’s all I have. Take care guys. Stay healthy.

Thank you, Michael. Thank you so much.

Our next question will come from Julien Dumoulin Smith of Bank of America Merrill Lynch. Please go ahead.

Hey, good morning to you. Hope you all are well.

Morning, Julien. You too.

Excellent. So, just wanted to follow-up. You all are maintaining your guidance. So when you think about the sales forecast that you're embedding in that, I understand the $0.03 to $0.04 here and sort of as a sensitivity, but what are you specifically thinking about in making that statement to reaffirm rather than withdraw? We've seen perhaps more so in other sectors. And to be even more specific about it, I think you've alluded to perhaps $0.15 or $0.16 of historical perhaps cost flexibility in your plans. Can you talk to that too as you think about what the latitude reaffirmed here?

So, Julien, I know everyone wants precision in these uncertain times. There's a reason why the word unprecedented is the number one word in use these days. We just haven't been here before. So, as we said, it's just too soon for us to update our guidance. And it would mean that we know exactly how the health crisis ends, how the economy will look afterwards, and frankly we don't know. There are reasons to believe in a bounce back. The federal stimulus may help small businesses, but can the businesses get access to it? Construction, manufacturing, agriculture can bounce back quickly and work safely, but will there be demand? I talked to an office furniture CEO — most of the office furniture in the world is made right here in Michigan — and they may be at all-time highs because workplaces need to be reorganized and new furniture may be required or maybe none of us are reporting to an office ever again. There's just a lot of changes. Will there be a drive in residential electricity demand? We've talked about that already. Maybe there will be. The shelter-in-place order can be lifted, but how long will people feel safe to congregate in a public gathering? I don't know. We don't know. But here's what we do know, Julien. We need our coworkers healthy and motivated to do our capital plan and it's a good infrastructure plan that serves the people of Michigan. We need our regulators to trust that we're doing what's right and taking care of both our coworkers and our customers. We need our customers to be with us and to survive this pandemic and be open for business when it's over, which is why we're working so hard to serve them with new information and help them navigate the circumstances. What we can do is continue to run this business and look to mitigate costs and risks as they come up and never lose focus. As I mentioned earlier, the long-term fundamentals are solid. That's why our thesis remains intact. The CE Way is a great source of comfort to me, because we've actually developed real capability across the organization and it's on overdrive as I mentioned. Given all that, it's too soon to say definitively, but trust me, we're not waiting on the sidelines to figure it out.

Got it. And then related question, super quick. You all are working proactively with the PSC here to address a recovery of certain items. How do you think about that being reflected again in numbers, specifically 2020 here as you continue to move through the course of the year? I just want to be clear about that given some differences in the sector.

We're going to have to see. We'll be filing our response. They've asked for comments, which is a very important and constructive step. We need to hear from a lot of people as we make these determinations. Once the accounting is clarified and we've got certainty about that, then we can account for it. There will be benefits obviously in 2020. They've been pretty clear about the uncollectible expenses as a result of a mandate to not shut off our most vulnerable customers, our seniors and low-income through June 1. They've been pretty clear about those uncollectible expenses and the accounting treatment thereof, but it's really some of the other expenses and exactly the timing of that uncollectible when it materializes, et cetera. Others will be weighing in, and certainly I can't speak for the MPSC, but I can just say that we're working together to make sure that we're able to serve the most vulnerable constructively.

All right. Well, I'll leave it there. Thank you all very much.

Thanks, Julien.

Our next question will come from Stephen Byrd of Morgan Stanley. Please go ahead.

Hi. Good morning. Wanted to give congrats on all the community outreach efforts that you all are making. It looks like a lot of great stuff going on.

Thanks.

Wanted to — a lot of my questions have been addressed, but just on the EnerBank side of things, could you just talk a little bit more about new business opportunities that you're seeing? I guess I'm certainly not a bank analyst, but I would have thought sort of home improvement activity would be going down a great deal, but I was just curious what you're seeing on certain new business.

Well, I've been doing all the talking, so I'm going to hand it over to Rejji. He is the Chairman of the EnerBank Board. I'll let him speak about the great work that the EnerBank team is up to. Go ahead, Rejji.

Thanks Patti. Good morning, Stephen. We did see a little bit of a slowdown in March on origination volume, but we've actually been encouraged with what we're seeing in April. It's important to note a couple of things. Every state has a different approach to the executive orders that have rolled out, but financial services is deemed an essential service and that's a federal mandate. And so, we've managed to continue our underwriting and also construction projects that are work in progress have been permitted to continue. We really haven't seen the type of slowdown you would anticipate for some of the loans that EnerBank has historically underwritten. I would say we're encouraged by what we're seeing in April. They started the year off pretty well, about a penny above the prior year. We're only asking for about a penny to two of growth year-over-year for them and they appear to be on track. The other opportunities as you think about origination volume is also on the gain-share side. What we've seen in the past, particularly in 2008/2009, is a lot of weaker capitalized competitors fell by the wayside. We've already seen anecdotally some large customers come our way, because they know that EnerBank is in it for the long haul. This is their primary focus. We've actually taken some share, which we also did in 2008/2009. So existing originations and continuing to execute on our plan as well as taking share create opportunities this year. We feel good about the road ahead at this point.

That's really helpful, Rejji. Thank you. And then just one other question on your 2020 EPS slide 11. More of a housekeeping item, but just you mentioned the historical flex range of $0.10 to $0.15 on that slide. And I just wondered what timeframe? Is that annual, is that for the nine months to go? I just want to make sure I understood that.

Rejji, you can go ahead.

Sure. We look at that range and it's based on what we've done historically over the last several years. We've seen that level of negative variance in a quarter and over the course of the year, but we've managed to overcome levels of flex of that magnitude. As I look at this year we certainly think that $0.10 to $0.15 year to go is within us. Let's think about what that math equates to. On the low end about $40 million pretax, on the high end call it $60 million to $65 million. When you think about our year-to-go spend, we've got about $1 billion of actionable opportunities between operating and non-operating cost pools. So that reduction equates to a little more than 5%, which is certainly within us. Not to suggest it's easy and to Patti's earlier point, we're not going to do anything rash or detrimental to the years to come. We do feel like it's within us, but at the end of the day we'll have to see how this situation in Michigan materializes, and we'll make prudent decisions as we always do.

That's great. Thank you. That's all I have.

Thanks, Stephen.

Our next question will come from Jonathan Arnold of Vertical Research. Please go ahead.

My question was just answered. Thank you.

And our next question will come from Andrew Weisel of Scotiabank. Please go ahead. Mr. Weisel, your line is open.

Hi. Good morning everyone.

Good morning, Andrew.

To go back to this $0.03 to $0.04 monthly EPS impact from lower volumes, if I'm reading that correctly, that's only on the electric side. Do you have preliminary April data for gas demand? And what that might mean for a monthly run rate? It's a shoulder season, of course, but do you have any kind of ballpark rule of thumb for the gas side?

First of all, as I mentioned, Andrew, the bulk of our gas is certainly during the heating season and that is behind us. That ends in March. The $0.03 to $0.04 represents electric and gas for your sensitivity.

Okay. Good. Thank you. Then last question is for the two rate cases outstanding, have the conversations changed much given COVID-19? I know you're always laser focused on affordability. But are you hearing more concerns about things like the jump in unemployment and that we're presumably in a recession? And as part of that, do you see any potential for the timing to be elongated, whether that's due to logistics or affordability concerns?

Affordability is always factored into our filings to begin with. For example, gas customers' bills are down about 30%, because of commodity benefits. There's no time like now with the commodity prices where they are to make the system safer. The system safety and the priority of the infrastructure investments on that system don't change because of this. Thankfully the commodity price is so low, we can continue to keep our bills affordable both on the electric and the gas. Net-net, we're starting to really pay attention to the percent of household wallet that our bills play and they're in the 3% to 3.5% combined gas and electric. We feel like that's extremely affordable. So that's always been the focus in our cases and it will continue to be, but we feel good given the combination of the commodity price plus the value that the infrastructure investments have for customers.

Andrew, you also asked about process and timing. The commission has transitioned quite nicely to mass teleworking and they have not missed a beat to date. We've had very close communications with them. They have managed to keep up their adjudicated processes. They gave us a constructive order on the COVID-19 related costs on the 15th. So they are on track. It's also worth noting that per the statute, there is a 10-month stipulated period. In the event there are delays, we do have the legal right to self-implement at that 10-month period, which for gas is around mid-October and for electric it's in late December.

Got it. Okay. That's very helpful. And just to clarify though on affordability, I think that was a great recap of your side of it. My question was more from interveners or regulators themselves or staff, has there been any kind of heightened concern about it, given what's going on in the economy?

I think their concerns are consistent with concerns in the past that we will be concerned and they are too. We're pretty well aligned in that attention and focus.

Okay. Great. Thank you.

Andrew, one more thing, just to circle back — the gas case timing is mid-October, I had misspoken earlier with another date. Apologies.

Our next question will come from Travis Miller of Morningstar. Please go ahead.

Thank you. Good morning.

Good morning, Travis.

I wonder if you could talk a little bit about what you're seeing on the renewable side. How much were you expecting in terms of project completion or contracts to sign this year? And what are your thoughts? What are you seeing in terms of being able to get to those numbers plus or minus your expectations for the year?

Our big projects this year are a couple of wind projects that are scheduled to close by year-end. Both of those are on track. We have been issued force majeure letters, but that doesn't mean that work stops. It's just sort of a forewarning that there may be a shortage in access to equipment, whether it's turbines or some other equipment. We've been notified, but to date the projects have not been delayed. We have continued construction through this time period. As of now everything is on track.

Okay. What about contracts signed or other third-party projects? Are they also going along?

Everything's on track for this calendar year.

Okay. And then real quick on the dividends, obviously the board decided the dividends well before we knew the seriousness of the COVID situation. Any chance, any metrics that they might be looking at here in the next couple quarters in terms of making a dividend change given the raise last quarter?

I would suggest there's no planned change to dividend policy or strategy. Things would have to change very dramatically for there to be a change. We have a board meeting this week and we'll be reviewing a range of scenarios with them, but none of those scenarios at this time contemplate any change to the dividend policy.

Okay. Great. Thanks so much.

Our next question will come from Durgesh Chopra of Evercore ISI. Please go ahead.

Hey, good morning. Thanks for sneaking me in here. I appreciate the granularity in these slides as always. Just wanted to stay with a quick clarification. I think I am understanding this correctly, but in response to Steve's question, you mentioned a 10% decline. Is that across all classes? So the sensitivity of $0.03 to $0.04 EPS hit per month is based on the commercial industrial 20% to 25% that you're seeing in March, but the 10% is across all classes. Is that right?

Correct.

Okay. Perfect. Thank you. And then just a quick follow-up, you mentioned you previously have been able to offset double-digit EPS headwinds through cost mitigation efforts. Could you point to something in terms of what can you do? Are those things one-time in nature or could you take costs out of the business longer term? Any examples or color would be helpful.

Durgesh, thank you for asking. I've been waiting to share my story of the month. Even in these times, we've discovered that we can work remotely. Let me give you some numbers. In an annual period, we typically spend about $10 million a year reimbursing mileage. We have a large geographic service area and people have felt compelled to be in person for meetings and events. We've been forced to learn to use technology and it's working actually. It's a triple bottom line story: people are safer, minimizing mileage reduces the risk of vehicle accidents, it reduces emissions, and profits are better because the costs are lower. So, we can do video calls and they work. We set this big ambition that we come together by staying apart and we're finding our culture is getting activated. People actually are coming closer. On the cost side, $10 million in mileage — you can bet we'll be reimbursing less than that. There are other things on waste elimination. We've got a host of projects. We've been auto-dispatching storm crews. In the past we would wait for customers to call reporting outages, aggregate that data in a dispatch center and then a person would determine crew scheduling. Now we've automated much of that. It saves 30 minutes on an outage per customer and eliminates manual dispatch work because it's done by a system. It's more accurate and cheaper. These are the types of permanent waste eliminations we can deploy in years to come.

Got it. Thank you. I appreciate it.

Our next question will come from Ryan Levine of Citi. Please go ahead.

Good morning.

Good morning, Ryan.

Do any of your O&M or CapEx contracts have force majeure contract provisions that are impacted by this pandemic?

We have had force majeure notices on some of our large renewable projects, but they're not affecting the timing or the outcome of those projects at this time.

So there was no impact on O&M contracts or any of the other contracts?

We've not had any notifications of that on our other contracts.

Okay. And then can you provide more color on the potential items included in the cost reduction initiative flex that you highlighted, and what portion are more temporary nature versus long-term?

A hiring freeze is obviously temporary, but things like adopting technology and process improvements are more structural. We've been deploying CE Way capabilities for several years. For example, auto-dispatching crews reduces non-premise time. When a crew goes to a service center, picks up materials and then reports to the jobsite, there can be an hour of non-premise time. Redesigning our supply chain so materials are available on site rather than requiring travel to service centers saves time and money. These are small line-item improvements across the company that are sustainable and improve customer experience as well as our cost structure.

Thanks. And then last question for me. What are you seeing in terms of working capital fluctuations in light of the approximate 10% decline post COVID-19, any meaningful fluctuations that impact your financing plan?

The quick answer is working capital has been fairly smooth and aligning with plan. We have no commercial paper outstanding and generally that would be a supplemental source of financing if we saw unpredictable working capital swings. We've been able to manage working capital volatility to date and haven't seen much. We're flush with cash from proactive financings we did at the end of the quarter — a little over $700 million in cash plus facility capacity gives us about $2.3 billion net liquidity. We feel like we have enough dry powder to manage future volatility, but we'll continue to keep an eye on receivables aging as there's a lag on uncollectibles.

Thank you.

Thanks.

Thanks, Ryan.

Our next question will come from David Fishman of Goldman Sachs. Please go ahead.

Hi, good morning.

Good morning, David.

Thanks for taking my question. Just wanting to go back to the C&I demand numbers again. I think I remember that there was a large customer pre-COVID that was sort of already a bit of a drag on your year-on-year comparables. Am I remembering that correctly? And how much of that 20% to 25% does that customer represent?

That is correct. We have one large customer who had some contracts bought out part way through last year. They're reflected in last year sales and this year sales. They're operating now, so they are essential, which is good, but they are at diminished load, so they are a portion of that 20% to 25%.

Okay. But some of that then would already have been planned for when you were thinking about the 2020 guidance?

That's true. We factored that into our plans for this year.

Okay. And then, on the flex range, when you achieve those levels those were more or less to meet your earnings targets specifically. Like you had a certain amount of negative in that year and then you flex to meet that. That's what you're illustrating for us here today?

That's right. It's been true on the other side as well. When we've had favorability, we've pulled in costs and prepared for the next year. We are always preparing, not just for this quarter or this year, but for years to come. That's what has made us so reliable at delivering and doing exactly what we said we're going to do. The flex has upside and downside. That's why slide 6 shows that range of up and down and obviously this is a down year and we are doing everything we can to leverage our skills and capability of adapting in that range.

Okay. Thank you Patti. Those are my questions. Hope everyone's family is safe and healthy.

Thank you, David. You too.

Our next question will come from Paul Patterson of Glenrock Associates. Please go ahead.

Very good morning.

Good morning, Paul.

First of all, congratulations on the Supreme Court victory. Assuming that's it for the state, is there any other appeal or anything going on at the federal level or where are we finally finished with this proceeding?

There's one other aspect of the local clearing requirement that is still being determined and it's a very procedural element, but fundamentally reconfirming that the Public Service Commission has the authority to establish a local clearing requirement was a very important outcome. The proceedings are being returned to the MPSC for implementation. So it still needs to be implemented, but the Supreme Court ruling was very important.

Yeah. Okay. Great. And then with respect to the bill payment trends that people have been asking about, in terms of not technically what's uncollectible or bad debt, but just in general at — do you have any numbers for what you're experiencing for April? For instance, we saw one statistic nationwide that one-third of people didn't pay their rent for April. Do you have any numbers like that on the ground for what you're experiencing?

Not yet, but we do have call volume from business and residential customers asking for grace and extensions of payment plans. We're doing that. As we talk to these businesses, they typically have three big concerns: rent, payroll and utilities. We've been able to be a source of support to them and we feel comfortable extending those payment plans, but that doesn't necessarily translate into uncollectibles, particularly for our business customers. We have community action agencies and support resources for residential customers that can help them make their payments on time in the short run. Our forecast isn't finalized yet. By Q2 we'll have a much better eye on quantifying that.

Okay. And then just finally on Enterprises, the $0.04 benefit — what drove that?

Paul, it was a combination of two things. One, it was the absence of an outage in Q1 this year that we had last year — we had a Filer City outage last year — so the absence of that cost, and then just good cost performance at Enterprises. That's what drove the $0.04 positive variance.

Okay. Great. Thanks so much. Hang in there.

This concludes our question and answer session. At this time, I'd like to turn the conference back over to Patti Poppe for any closing remarks.

Thank you, Allison. And again, thank you everyone for joining us today on our call. Please continue to stay safe and be well and we really look forward to seeing you face to face when we can. We miss you all. Thanks so much.

The conference has now concluded. We thank you for attending today's presentation and you may now disconnect your lines.