管理層發言
Good morning, everyone, and welcome to the CMS Energy 2025 Year-end 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. Just as a reminder there will be a playback of this conference call today, beginning at 12:00 p.m. Eastern Time running through February 3. 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. Jason Shore, Treasurer and Vice President of Investor Relations.
Thank you, Adam. Good morning, everyone, and thank you for joining us today. With me are Garrick Rochow, 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. And now I'll turn the call over to Garrick.
Thank you, Jason, and good morning, everyone. Before we get into the financial results, I'm very proud of the team in 2025, as you see from the slide, and I want to highlight a few of the big wins the CMS Energy team delivered in 2025. First, I'm very pleased with our large load tariff, which was approved in November. The supply of energy for data centers is a national story, and I'm proud of the tariff that the team worked so hard on this year because it's strategic and thoughtful. It protects our customers and supports growth in the state. This tariff provides certainty for our data centers as we bring new load onto the system, ensuring existing customers won't pay a single cent for the investments. In some cases, they will see tangible benefits as this new load supports more affordable rates as we grow Michigan. Next, we received approval for our 20-year renewable energy plan, which the team worked hard on to assemble a plan that meets the requirements in our state's energy law. More importantly, this approval highlights the constructive regulatory environment in Michigan and provides visibility and certainty for our long-term investments in solar and wind, offering roughly $14 billion of customer investment opportunity over the next decade. Our gas business has also been prepared. It's been a cold start to the winter, and as always, we are prepared to serve our customers. That doesn't happen by luck; it’s a deliberate commitment from our team who works every day to buy gas at the lowest price, store it in some of the largest storage fields in the nation, and deliver it safely and reliably to our customers. This reflects our ongoing work to replace vital storage and delivery infrastructure, investing over $1 billion in the year so we can be there when our customers need us. At CMS Energy, we wake up every day committed to serve and deliver value for all our stakeholders. In 2025, we marked our 23rd year of industry-leading performance. As we prepare for these calls, we spend significant time on slides, and we all have our favorites. This next one is mine. It highlights the team's commitment to excellence and shows the results that provide proof points of the great regulatory construct in Michigan. We have a long history of constructive outcomes, adding unique mechanisms like incentives on energy waste reduction and on PPAs, all of which are built into the energy law. It's an outstanding construct. We've been successful in securing top-tier outcomes to support our long track record of performance, and this year was no different. Two rate orders for electric and gas were both approved with constructive outcomes, delivering significant wins for our customers and supporting critically important work to improve electric reliability and ensure gas safety across our system. Our 20-year renewable energy plan is approved, with over $14 billion of customer investment opportunity to achieve the state's energy law by 2040, ensuring visibility and certainty for the recovery of our investments. We also delivered on the first-ever storm deferral mechanism approved in June, and our large load tariff was approved in November, preparing for future growth. As I said, it's my favorite slide. These outcomes provide visibility and certainty around necessary customer investments in our electric and gas systems, reaffirming what the CMS Energy team can achieve and highlighting Michigan's top-tier regulatory environment. Looking forward, I am confident in our ongoing electric rate case. Given the reactions to our recent proposal for decision, I remind the investment community that this is a step in the process and is not reflective of our strong track record of performance. The MPSC staff has invested significant time with the testimony and merits of this case, and I argue their position is constructive and much closer to the expected outcome. The Commissioner's previous public comments support the need for an improved electric grid and constructive ROEs. This case is built on the fundamentals of our reliability roadmap, the MPSC Commission's Liberty distribution audit, and necessary customer investments to ensure electrical reliability while maintaining affordability. I expect a constructive outcome for our customers and investors. I also expect the ROE to be 9.9% or better. In our recently filed gas rate case, I am confident in the investments ensuring the gas system is safe, reliable, and clean, and the value of our proposed full gas decoupling. Our gas prices are on the decline, and our residential natural gas rate is 28% below the national average, striking the right balance between system investment and affordability for our customers. Now on to the financials. For 2025, we exceeded our adjusted earnings per share guidance and delivered $3.61 per share. This is up over 8% from 2024's actual results and confirms the compounding of earnings you have come to expect from CMS Energy. Throughout 2025, we continued to see strong performance at the utility, driven by constructive regulatory outcomes and robust performance at North Star driving full-year results. This performance allowed us to exceed or beat guidance at year-end, delivering better service for our customers and derisking the business for the coming year. For 2026, we are raising our annual guidance by $0.03 to $3.83 to $3.90, representing 6% to 8% growth over 2025 actual results, and we continue to guide toward the high end. Our practice of rebasing higher off of actuals is a differentiator in this sector and provides higher quality earnings for our investors, year in and year out—easy, straightforward math. We are also reaffirming our long-term guidance range of 6% to 8% toward the high end. As part of our total shareholder return, we'll continue to grow the dividend as we have for over 20 years, targeting a dividend payout ratio of approximately 55% over time. We remain confident in our ability to manage and execute the business year in and year out, having delivered 23 years of consistent industry-leading performance. On Slide 6, we've highlighted our 5-year $24 billion utility customer investment plan, which is up $4 billion from our previous plan. These investments are necessary for better customer service through improved reliability, both in distribution and supply. I want to take a moment to connect the dots on why I'm excited and confident in our ability to execute this plan. First, we've increased our electric generation investment by approximately $2.5 billion over the previous plan. Most of this customer investment is already approved in the renewable energy plan, which offers the visibility and certainty I mentioned earlier. Another customer investment relates to the addition of natural gas generation and battery storage. Our integrated resource plan that we'll file in mid-2026 will detail additional capacity needed to replace retired plants and support future growth. This customer investment opportunity is not contingent on new data centers but is connected to the growth soon to be supported by our system. We are also well on our way in planning and preparation to deliver this capacity in this 5-year window. Second, we continue to incorporate more of our electric reliability road map into our 5-year plan to strengthen our electric distribution system, increasing investment by approximately $1.2 billion over the previous plan. This work aligns with the Michigan Public Service Commission and the results of the Liberty distribution audit. We've also seen constructive support for our investment recovery mechanism in the rate case process. Lastly, our gas investments also increased in this plan to approximately $400 million. This aligns with our 10-year natural gas delivery plan, as a result of greater demand across the gas transmission system for power generation and industrial growth. When I take a step back and objectively look at our 5-year customer investment plan, there is visibility and certainty around these investments. We have an efficient workforce to get the work done. The work provides significant value to our customers, and I am confident we can do it affordably. This plan supports 10.5% rate base growth through 2030. In addition to our robust customer investment plan, we have meaningful growth drivers outside traditional rate base, which are unique to Michigan and CMS Energy and are sometimes overlooked. The financial compensation mechanism allows us to earn on PPAs, growing over the 5-year period, offering nearly $50 million of incentives by the end of the decade. There are also approximately $65 million per year of incentives through our energy efficiency programs, enhanced by the 2023 energy law. We also expect incremental earnings from our nonutility business, North Star Clean Energy, as we continue to see attractive pricing from capacity and energy sold at Dearborn Industrial Generation, or DIG. We make all these investments with a strong focus on customer affordability. We have a proven track record of driving customer savings through the CE Way, digital automation, episodic cost-saving opportunities, and low growth energy waste reduction. This creates capital headroom, which maintains affordability while we make important and needed investments in our system. For example, in 2025, we had another great year leveraging the CE Way to deliver work more efficiently—over $100 million in savings. Our energy waste reduction program will save our customers approximately $1.2 billion, reducing our customers' bills, because when you use less, you pay less. Our efforts are making an impact. Today, our customers' utility bills are roughly 3% of their total expenses, often referred to as share of wallet. This is down 150 basis points from a decade ago while we've significantly invested in our system to the tune of roughly $24 billion. I’m pleased to share that our recent electric bill increases are among the lowest in the country. We are committed to keeping our residential bills below the national average, and the Midwest average, over the 5-year plan period. Every penny we spend on infrastructure investments is done with customer affordability at the center. Michigan is growing, and I continue to be positive and confident about the progress of the data center we announced on the Q2 call. The large low tariff was an important milestone to provide clarity for data centers and to protect our existing customers. I'm pleased to share that there has been great progress with the data centers considering locating in our service area. Regarding the data center reference on the Q2 call and depicted on the slide, we've reached commercial terms on the extraordinary facilities agreement, which is similar to an electric service agreement. We're also nearing final terms on our rate agreement. Our agreements have a path to serve their peak demand, and we know both the timing and incremental supply resources needed to serve this load. We also know the expected ramp timeline, which would have their data center online as early as 2028. Keep in mind, the data center is not yet reflected in our 5-year customer investment plan. Additionally, we are in advanced talks with the second data center that has made their expansion in Michigan public. While we can't provide more details at this point, we are working with them on their needs. We look forward to serving this prospective customer. Our pipeline for growth is exciting and robust in Michigan and in our service area. On that high note, let me hand the call over to Rejji to offer additional details.
Thank you, Garrick, and good morning, everyone. To elaborate on the strength of our financial performance in 2025, on Slide 9, you'll note that we met or exceeded all of our key financial objectives for the year, most notably our adjusted earnings per share. To avoid being repetitive, I'll just mention that we successfully invested $3.8 billion, largely in line with our original guidance, to make our electric and gas systems safer, more reliable, and cleaner on behalf of our 3 million utility customers. We did this while funding the business in a cost-efficient manner, largely through operating cash flow, well-priced bond and equity financings, and tax credit transfers. This prudent funding strategy allowed us to maintain our solid investment-grade credit metrics and associated ratings, affirmed by each of the rating agencies over the course of the year, most recently by S&P for our parent company, CMS Energy, in December. Moving on to our 2026 EPS guidance on Slide 10, you'll note the rebasing of the range higher off of our 2025 adjusted EPS actuals as per our historical practice. Our 2026 adjusted EPS guidance range has increased by $0.03 per share on both ends to $3.83 to $3.90 per share. Our increased 2026 EPS guidance implies 6% to 8% growth, with continued confidence toward the high end of the range—as Garrick mentioned, effectively 7% to 8% given our historical performance. In the segment details, our EPS will primarily be driven by the utility, providing $4.28 to $4.33 of adjusted earnings as we plan for normal weather, constructive regulatory outcomes, and earn returns at or near authorized levels. At North Star, we assume an EPS contribution of $0.25 to $0.30, benefiting from an increasingly favorable mix of capacity contracts and the completion of select renewable projects. Lastly, our financing assumptions remain conservative at the parent segment, with expected equity issuances of approximately $700 million to support the increased capital plan at the utility. Our guidance in the parent segment also factors in a full year of interest expense from last year's successful convertible debt offering in the fourth quarter and assumes the absence of liability management transactions. To elaborate on the glide path to achieve our 2026 adjusted EPS guidance range, you'll see the usual waterfall chart on Slide 11. For clarification purposes, all of the variance analysis herein is measured on a full-year basis and is relative to 2025. From left to right, we plan for normal weather, which translates to $0.22 per share of negative variance given the absence of favorable temperatures experienced in 2025, largely in our electric business. Additionally, we anticipate $0.37 per share of pickup attributable to rate relief driven by the residual benefits of last year's gas and electric rate cases, in addition to expected constructive outcomes in our pending electric and gas rate cases. Outside the general rate cases, we also expect to see earnings contributions from our investments in renewable generation assets in accordance with our recently approved renewable energy plan. Our rate relief figures are stated net of investment-related costs, such as depreciation, property taxes, and utility interest expense. In examining the cost structure for 2026, you'll see a $0.12 per share positive variance due to anticipated productivity stemming from the CE Way and more normalized storm activity in our service territory. It’s worth noting that our projected operating expenses reflect the benefits of operational pull-aheads executed in 2025. As always, we will adjust our cost assumptions in accordance with rate case outcomes, maintaining financial flexibility inherent in the forward-looking test year. Lastly, in the penultimate bar on the right-hand side, you'll see a modest variance, which includes North Star growth, as I mentioned earlier. This bucket also encompasses the roll-off of 2025 liability management transactions and the usual conservative assumptions regarding parent financing costs and taxes, among other items. In aggregate, these assumptions equate to a variance of negative $0.05 to positive $0.02 per share. As always, we'll adapt to changing conditions throughout the year to capitalize on opportunities and mitigate risks, delivering on our operational and financial objectives for the benefit of customers and investors. On Slide 12, we summarize our near- and long-term financial objectives. From a dividend policy perspective, we're targeting a payout ratio of approximately 60% in 2026 and roughly 55% over the course of our 5-year plan. Given the elevated cost of capital environment and the substantial customer investment opportunities before us, we believe it is prudent to retain more earnings to fund growth. From a balance sheet perspective, we continue to target solid investment-grade credit ratings and will manage our key credit metrics accordingly, balancing the needs of the business. We intend to continue our at-the-market equity issuance program of approximately $700 million in 2026, as mentioned earlier. Throughout the 5-year plan, our aggregate equity needs will align with our historical ratio of $0.40 of equity for every dollar of incremental CapEx, averaging about $750 million per year in light of the substantial increase in our customer investment plan. While we have some capacity remaining with our existing ATM program, you can expect us to file a new prospectus supplement reflecting our updated needs later this year. Lastly, we anticipate select large multiyear economic development projects ramping up in 2026, yielding roughly 3% weather-normalized load growth for the year with run rate assumptions of 2% to 3% in the outer years of our plan. Slide 13 provides more details on the funding requirements in 2026 at the utility and parent segments. At the utility, we're planning to issue just over $1.7 billion in aggregate. At the parent, you'll note that our debt financing needs were pulled ahead in November 2025, leaving the aforementioned equity issuance needs of roughly $700 million. We'll remain opportunistic throughout the year and will continue to monitor the market for attractive issuance windows. On Slide 14, we have refreshed our sensitivity analysis on key variables for your planning assumptions. With reasonable planning assumptions and our historical track record of risk mitigation, the probability of significant variances from our plan is minimized. Our model has served all stakeholders well, ensuring our customers receive safe, reliable, and clean energy at affordable prices, our diverse and battle-tested workforce remains committed to our purpose-driven organization, and our investors benefit from consistent industry-leading financial performance. And with that, I'll hand it back to Garrick for final remarks before the Q&A session.
Thanks, Rejji. At CMS Energy, we deliver. 23 years of consistent industry-leading performance regardless of changing circumstances, year in and year out. You can count on CMS Energy to deliver for all its stakeholders. With that, Adam, please open the lines for Q&A.
分析師問答
Our first question comes from Julien Dumoulin-Smith from Jefferies.
As always, appreciate your infectious energy you convey on these calls. If I can kick it off here as it pertains to the data center opportunity you alluded to, obviously, you're in advanced talks as you characterized it here. Can you give us a little bit more insight on the status of data centers in Michigan? There's been a lot of discussion in the state more broadly, but how are you thinking about that opportunity? And how would you set expectations on the timeline? Obviously, you can't give too many details, but at least from a financial update and, frankly, in terms of a roll forward of your overall plan, you've made considerable progress with the 10.5% rate base CAGR. Just want to see how you would align the timing of a second data center with your broader financial plan.
Yes, Julien. I'm very pleased with the progress from a data center perspective. You look at the entire funnel, and it has actually grown. We've had, just in the last month, another two data centers join the group, and they're at the top of the funnel, so they haven't worked their way through. Even in broader economic development, we've also encountered two large manufacturing customers that are part of that funnel. Michigan's economic development story looks very strong from my perspective. While they're continuing to move through that funnel, we've blown a couple of them out in my prepared remarks. Referencing the one we announced in Q2 with a tentative agreement, that's continued to move forward. The first step is getting that data center tariff in place; that really paves the way for these opportunities. They know the terms and conditions, and getting the extraordinary facilities agreement in place was a significant win. Again, that's comparable to a service agreement or electric service agreement in other utilities. The rate contract is nearing finalization, necessary for the regulatory approval process. I feel good about that as it should be a short process due to the pre-approvals we've done. We continue to work with these customers to finalize zoning and everything is headed in the right direction, which gives me a lot of confidence about our ability to secure a couple of data centers, but I'm especially focused on the one we’re closest to finalizing terms and conditions. Is that helpful, Julien?
Yes, absolutely. And then perhaps a follow-up. You gave a significant update on the plan here and would like to review a bit around it regarding what’s encompassed to really understand how to think about the pieces. You've mentioned a 10.5% against a 6% to 8%; you talked about a $50 million pretax FCM, $65 million of energy efficiency incentives. If you were to take the rate base plus some of these other items, how do you feel about the 6% to 8%, and what's in and what's not reflected in the formal plan today?
Yes. Just to confirm, the data center piece is not included, which would lead to incremental investments. Rejji will walk you through the math behind the 6% to 8%.
Yes, Julien, we expected that question early on. You have the components right, where the 10.5% rate base CAGR over this 5-year window, and if you add North Star opportunities and the FCM, which have grown versus the prior estimate, that adds about another point on top of that 10.5%. There are other factors that can certainly be discussed offline. So this leads to a low double-digit CAGR. The downside adjustment to reach our guide of 6% to 8%, with confidence towards the high end, say 7% to 8%, hinges primarily on the funding costs, because we are issuing more equity in this plan versus the previous one. This has been quantified as about 3.5% given our current market cap and equity quantum. The other downward pressure comes from approximately $1.7 billion of parent refinancings expected during the 5-year plan. Unlike the first part of this century, money is no longer free, so we'll be refinancing those parent bonds at levels higher than initially funded, leading to some negative arbitrage. This will impact our sector overall. However, it's essential to recognize that those financing costs at the parent company level are non-recoverable. Hence, it is a combination of equity needs and parent refinancings that will cause the down adjustment to around 7.5% to 8% growth aspirations. Even after calculating this out, remember we are compounding off actuals each year. This generates a higher quality of earnings, and we must incorporate contingencies to maintain this performance consistent with our history of 23 years. Also noteworthy is that we do not have full decoupling on gas, and certainly not on electric, so we must accommodate for weather risks as well. Hence, we feel confident about today's guidance and how to manage this transition from the historical high teens down to the adjusted guidance.
I want to add further clarity to Rejji's insights. Reflecting on 2025, we enjoyed constructive regulatory outcomes and outperformance at North Star, allowing us to reinvest back into the business. This year, we were able to provide additional services for our customers through extra tree trimming work on the gas system and also derisk future years. This confidence also allowed us to adjust guidance upwards with an additional $0.03. This fortifies both the strength of our plan and our faith in its success, so keep in mind our ongoing compound growth strategy.
The next question comes from Nick Campanella from Barclays.
Thanks for the detailed answer on the rate base to earnings walk. That was very enlightening. The rate base growth is a significant component of the plan. While I hear your expectation of something closer to 9.9%, I find the PSD's output concerning with an 8% ROE notably below the national average. How have stakeholders responded since this outcome, and what are you viewing in the decision-making process as we look towards March, particularly aiming for a constructive outcome?
I'm not concerned about the ALJ PFD at all. Just to be clear, this team, the CMS Energy team, has delivered, and we have a strong track record. Credit goes to our team and the constructive regulatory framework we navigate. As I stated, we forecast a constructive outcome, and I anticipate an ROE of 9.9% or better, which is squarely within the case context. The current 8.2% is an outlier; it lacks robust support and doesn't reflect the current environment, and I believe it will be discounted in this case. To emphasize, if we apply the revenue deficiency presented in the ALJ offer, $168 million, with a prevailing ROE of 9.9%, the outcome is significantly higher, which correlates closely with the staff's position. This speaks to the merits of our case; there's solid justification for capital investment, justified operational efficiencies, and necessary improvements in O&M procedures. Regarding staff's revenue deficiencies, their position is constructive as well. The professionals at the MPSC, including public servants dedicated to understanding this industry, have managed to deliver results, evidenced by our high REPs and reliable road maps. Our approach ensures ongoing improvements and a strong foundation for future cases. We aim to demonstrate our performance during these rate cases and believe we can obtain favorable outcomes in this current one with an ROE of 9.9% or better.
Thanks for that perspective. Could you talk about how the additional 1 to 2 gigawatts in the final stages impacts the capacity need? And when do you see it matching with your longer-term capacity outlook out to the early 2030s? When will this be included, and would this be truly incremental compared to the 10.5% CAGR outlined, considering the large low tariff structure should shield customers from rate impacts?
The data centers are not included in the plan. Any growth from these centers that appear in the funnel will need to be incremental investments. In terms of our integrated resource plan, we have a renewable energy clean law. Much of that already has been approved within the renewable energy plan. While you’ll see gaps filled with renewable inputs, the key here is filling those gaps with other resources because clean energy alone isn’t reliable. That requires a mix of batteries and natural gas. Furthermore, we anticipate consistent load growth in the state independent of the funnel discussions—450 megawatts of connected load last year, representing growth of around 3%. Looking ahead, we’ll also need to prepare for some retirements and capacity needs which will influence the next IRP and the $24 billion customer investment plan.
To add, we've mentioned sensitivity in the past; every gigawatt of extra load we bring on requires about $2.5 to $5 billion in investments across the distribution and supply landscape. This customer investment plan isn't reliant on landing large load opportunities, creating incremental CapEx that can push our rate base CAGR higher if these opportunities materialize as anticipated. We look forward to providing updates on this as they develop.
The next question comes from Shar Pourreza from Wells Fargo.
This is Marcelo Petrin on for Shar. You highlight growth compared to national averages, affordability concerns, and potential savings with the addition of the one-gigawatt data center. These topics are relevant in the context of the 2024 elections. How are you strategizing around affordability as we approach the election year?
Marcela, great question. The good news is this isn't our first rodeo. We've implemented affordability and cost savings for a long time, and this is not just a Michigan challenge—it's a broader national issue. Energy costs are being felt most strongly in PJM, but we are in MISO. As a regulated entity, we own generation which allows us to hedge costs. Just this year, we saved our customers $250 million by self-generating at a favorable rate rather than purchasing from the market. This strategy helped us avoid exposure to volatility. We share similar strategies in the gas business, leveraging our extensive storage to buy in summer and deliver low-cost gas in winter. Affordability remains a top priority; we've saved $100 million through the CE Way and reduced customer bills significantly, approximately down to 3% of total expenses. Despite overall investment of about $24 billion in our system, our recent electric bill increases are among the lowest nationally. We plan to keep residential rates below the national average, an important commitment as energy costs remain sensitive during the election season. Our strong precedent allows us to partner with candidates on affordability initiatives, providing pathways to enhance outcomes while ensuring sustainability and profitability. This narrative reflects how our investment strategy aligns and yields comprehensive results.
Next question comes from David Arcaro from Morgan Stanley.
Following up on affordability, I wanted you to elaborate on the data center segment in relation to the large load tariff. Are there strategies in place to ensure data centers contribute their appropriate share of all associated costs? Microsoft, for instance, has discussed the need for data centers to bear all network costs. How do you manage to insulate customers from large loads within this strategy?
The large load tariff is specifically designed to protect customers. We're actively communicating to dispel misinformation that this will not raise residential rates. In fact, there's a benefit associated with these data centers. Our contracts clearly detail how they will cover their respective costs including capacity and energy. We are confident they will pay for their transmission and distribution. Companies like Microsoft stepping in to support our tariff structure aligns directly with our plans to ensure residential customer protection. We seek regulatory approval for these contracts, and I am pleased we are progressing well. Rather than delve into specifics, I can confirm these data centers should be online by 2028. Overall, the pipeline of potential for growth from these data centers in Michigan is healthy.
Has there been support from data centers regarding the large load tariff, in terms of their continued interest in expanding to Michigan under these new provisions?
Yes, there has been backing for the data center tariff, and the pipeline has not only advanced but expanded in size. This supports positive indicators regarding this development.
The next question comes from Michael Sullivan from Wolfe Research.
Could you address how zoning discussions have impacted data center installations in your territory? Reports suggest this has been an obstacle; does it pose a significant gating issue to finalize these projects?
I do not view zoning obstacles as a significant impediment. We've been active in the state for 140 years and have strong community ties. We often direct data centers to community areas that embrace growth. The article from the Wall Street Journal mischaracterized our situation. Moratoriums in Michigan refer to short review periods; typically around 30, 60, or 90 days but progress continues, evidenced by recent zoning changes in different townships for accommodating data centers. It allows for workload balance allowing us to expedite zoning to meet commitments. I don't expect zoning to be a bottleneck in Michigan.
How do you perceive the timeline and process for regulatory approvals as you engage more explicitly with neighboring communities?
These processes allow us to strategize and develop outcomes, and we always look forward to being transparent as we continue to engage in these discussions. We're confident that approvals will be timely and constructive within the current framework.
Regarding the regulatory strategy in the upcoming electric case, are you open to a more frequent settlement discussions to minimize volatility with ALJs?
I'm always open to settlement discussions. The merits of our case and the historical outcomes from Michigan have created a favorable backdrop for negotiations. We've done well with annual rate cases as an approach to managing increases in customer bills. We're performing strongly in Michigan, with favorable and consistent outcomes, and our anecdotal evidence suggests this positions us well in the current rate case proceedings.
The next question comes from Jeremy Tonet from JPMorgan.
Following the state's election discussion recently, utilities have gained some attention. What expectations or considerations do you have concerning the future as it relates to upcoming discussions?
The takeaway here is our consistent 23 years of performance. Our experience enables us to navigate the uncertainties of elections and bolster our outcomes by being good stewards of the laws regulating us. We have established cooperative relationships on issues that offer mutual benefits, capitalizing on being one of Michigan's largest investors. Our aim is to provide timely solutions and initiate meaningful discussions that allow for constructive outcomes, working closely with all political entities.
The next question comes from Andrew Weisel from Scotiabank.
Your equity needs show an increase: progressing from $500 million last year to $700 million this year, with a long-term average of $750 million. Should we expect stable levels or an increase in equity in the future?
Andrew, you've correctly identified the pattern. Equity requirements usually rise with CapEx needs. This plan has about $4 billion higher in needs than its predecessor, so expect equity to cover that growth adequately. Our historical ratio remains consistent at about $0.40 of equity for every $1 of new CapEx, which keeps our credit metrics strong. The projected equity needs for this cycle reflect past spending patterns. It's tempting to drive all the issuance in the front end, so we're prepared to pull excessive financing as the market presents good opportunities. Our aim is to gradually allocate the $700 million throughout the year, adjusting if market conditions favor more aggressive moves.
Is the newly specified $24 billion CapEx plan being drawn from the previously discussed $25 billion in incremental opportunities? Is it a true four billion increase, or do you have additional opportunities beyond this forecast?
Yes, the $25 billion backlog encompasses prior plans, with $4 billion being drawn upon in the current estimate. Though we have incorporated some of those opportunities, we are also proactive about further demands which could arise from our integrated resource plan as we move forward. The aim is to transition some of the backlog into actionable investments while simultaneously tracking our larger economic opportunities that can impact the overall CapEx needs as we advance.
The next question comes from Anthony Crowdell from Mizuho.
You remain focused on decoupling in your gas cases and are asking if you plan to incorporate a similar strategy in the next electric case, or if heightened industrial load makes that unnecessary?
We're primarily seeking revenue decoupling for the gas business for now; no current intent to explore that option for electric, based on sales trends we’ve monitored.
Decoupling for electric is not allowed under current legislation.
This concludes today's Q&A session. I will hand the call back to Mr. Garrick Rochow for any closing comments.
Thank you for joining us today. I look forward to seeing you on the conference circuit. Take care and stay safe.
This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.