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Good morning, everyone, and welcome to the CMS Energy 2026 Second 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. Just a reminder that there will be a rebroadcast of this conference call today beginning at 12:00 p.m. Eastern Time, running through August 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. Jason Shore, Treasurer and Vice President of Investor Relations.
Thank you, Abby. Good morning, everyone, and thank you for joining us today. With me are Garrick Rochow, President and Chief Executive Officer; and Sri Maddipati, 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 thank you, everyone, for joining us today. Our investment thesis remains consistent, focused and durable. It is a simple but powerful business model built on more than two decades of consistent performance, delivered execution, disciplined capital allocation and industry-leading results. With our long capital runway, top-tier regulatory environment, and our commitment to affordable customer bills through the CE Way plus digital and other cost savings, CMS Energy continues to deliver. This proven model drives a premium total shareholder return, made up of 6% to 8% adjusted EPS growth compounded annually and paired with an approximately 3% dividend yield. For you, our investors, it means predictable earnings growth, a competitive dividend and long-term shareholder value. Today, I'm going to share with you our plans to further simplify and strengthen our model as we plan to exit nonutility renewables development and focus on what we do best. Following a comprehensive strategic review of NorthStar, we are taking a deliberate step to simplify our business model and sharpen our focus on utility investment. We plan to exit nonutility renewable development while retaining a portfolio of Michigan-based assets, including Dearborn Industrial Generation, or DIG, several small gas peakers and four commercial solar projects, all of which generate strong cash flow and support our long-term growth strategy. Let me share a little more about how this plan benefits the company and our investors. First, we plan to reallocate capital away from NorthStar and exit nonutility renewables development. Our current five-year plan has approximately $1.7 billion dedicated primarily to nonutility renewables. This shift of capital will reduce parent funding needs. Second, the retained assets will not require significant capital investment, and they generate strong cash flow, further optimizing parent financing and supporting our large utility capital investment plan. Additionally, as we look to the future, proceeds from the sale of our non-Michigan assets and development projects will further reduce external funding needs at the parent, including equity. Collectively, these three items equate to a reduction of over $500 million of funding through 2030, optimizing parent financing. Beyond 2027, we expect NorthStar's earnings to be driven primarily by DIG and the peakers. On a consolidated basis, this means nearly 100% of our earnings and future growth will be rate-based driven within the utility, supporting higher quality growth while simplifying and strengthening our overall business strategy and outlook. We are targeting the restructuring to be complete by the end of this year and anticipate providing an interim update on future earnings calls as we execute the repositioning of this business. Now let's talk about our growth in Michigan. We continue to see momentum across multiple sectors of Michigan's economy. On the data center front, we have made meaningful progress and have taken an additional step reaching an agreement under our large load tariff. This includes both the extraordinary facilities agreement and the rate agreement. We have one of the most constructive frameworks in the country for data center growth. Our large load tariff ensures new large load customers bear all costs to serve them, supports economic growth and protects existing customers. In fact, our average residential electric customer could see approximately $7.50 per month of bill benefit with every gigawatt of new large load. Clear evidence of how disciplined growth supports customer affordability. The next step in the process is for the customer to receive local zoning approval and we will incorporate the load growth associated with the agreement into our Integrated Resource Plan, or IRP, which we'll file in September. I continue to be confident in the progress we see here and the future benefit realized for all our customers. In addition to the large load growth we're seeing, year-to-date, we've also contracted roughly 135 megawatts of manufacturing and industrial load. This consistent momentum is a reflection of Michigan's economic growth, and why Michigan for the fourth year in a row was ranked number six in CNBC's top states for business. We continue to see strong interest from technology, advanced manufacturing and supply chain companies looking to expand in Michigan. These opportunities create new jobs, strengthen our communities and continue to create long-term value for our customers and shareholders. Looking at our regulatory calendar. In June, we filed our electric rate case requesting a $456 million revenue increase, a 10.25% ROE and a 51.75% equity ratio. We've also requested a two-year investment recovery mechanism, or IRM, as we make needed customer investments to harden and strengthen our electric grid. In our gas business, in June, we revised our revenue request in our gas rate case to $232 million, well aligned with staff's position on our distribution spend. We also increased our equity ratio to 51.75% to align with our electric rate case and reflect the need for a higher equity ratio to support affordability and efficient financing. These investments are outlined with clear and deliberate plans focused on continuing to deliver safe, reliable and affordable energy for our customers. As I previously highlighted, we have moved our IRP filing to September to reflect the recent data center agreement and ensure we are putting the best plan forward for Michigan. Now on to the financials. For the first half, we reported adjusted earnings per share of $1.50 and are executing on our plan to deliver full year guidance. We are reaffirming our full year 2026 guidance of $3.83 to $3.90 per share with continued confidence toward the high end. We also have a clear line of sight on our 2027 guidance given the change in strategy at NorthStar and are introducing full year 2027 guidance of $4.08 to $4.17, which maintains growth within our long-term guidance range of 6% to 8% off of 2025 actuals. This guidance reinforces and demonstrates our confidence in the continued growth and earnings power of our business post-NorthStar restructuring. Longer term, we continue to guide towards the high end of our adjusted EPS growth range of 6% to 8%. With that, I'll hand the call over to Sri.
Thank you, Garrick, and good morning, everyone. I want to thank those of you who have reached out over the last few weeks with kind words of support as I've stepped into the CFO role. I've enjoyed getting to reconnect with many of you and look forward to seeing those I haven't over the remainder of the year. Today, I'll focus on three things: first half results, the path to delivering our 2026 guidance and how our investment and financing plans support durable long-term growth. I'll start on Slide 8, where we have the standard waterfall chart which illustrates the key drivers of our financial performance through the first six months of 2026 and our year-to-go assumptions for meeting our expected guidance range. Through the first half of 2026, the company delivered adjusted net income of $464 million or $1.50 per share. The $0.23 year-over-year unfavorable variance is primarily due to benefits realized in the first half of 2025 from liability management that were already contemplated in our 2026 plan and do not impact our full year guidance. Relative to our planned assumptions so far this year, the primary headwind has been the impact of storms, which we have identified actions to offset, including, but not limited to, the pending storm deferral filed with the commission. From a top line perspective, an unfavorable weather comparison from last year and slightly lower cooling and heating degree days in Q2 versus normal, resulted in an unfavorable variance of $0.08 for year-to-date results. New rates net of investment costs drove a positive $0.20 of earnings, which continue to move up year-to-date with the benefits of last year's gas rate order, new electric rates, which commenced in May and continued investments in renewable projects at the utility. The $0.19 of unfavorable O&M variance was primarily driven by the previously mentioned storm activity. The $0.16 of unfavorable parent and other includes items planned in our full year guidance as well as positive sales trends year-to-date. For the remaining six months to go, we'll continue to plan for normal weather; the unfavorable variance of $0.18 reflects the absence of weather upside in 2025. July temperatures have been helpful; we don't count on weather upside as part of our planning. However, it does mitigate potential headwinds or allow reinvestment to benefit customers and strengthen the plan for the future. As I mentioned, we continue to see ongoing benefits from the previously mentioned rate orders and renewable investments. We are also planning a constructive outcome in our pending gas case. In total, we see rates, net of investment costs driving $0.22 of positive earnings in the second half. We expect a positive $0.25 of O&M driven earnings in part by a constructive outcome in the pending storm deferral docket as well as normalized storm activity through the balance of the year. The last piece of the to-go portion of the walk results in a positive variance of $0.16 to $0.23 and has several components, including one, the absence of pull-aheads from last year that were funded by favorable weather in 2025; second, the continued performance of NorthStar, including DIG's higher contribution since last year's outage and new contracts this year; and third, a conservative assumption for non-weather sales, which, as I mentioned, are trending positively year-to-date. While Garrick has already affirmed our financial objectives, I'll reiterate my confidence in our ability to deliver on this year's EPS guidance, our 2027 guidance that we have initiated today and our long-term EPS growth. Turning to Slide 9. The foundation of our long-term growth is the robust $24 billion utility investment plan, which drives 10.5% compounded rate base growth. Our decision to reposition NorthStar enables us to efficiently fund the current five-year plan and over time, allocate incremental capital to the utility, providing high-quality durable earnings with strong long-term value. You'll note, we are highlighting a $2 billion capital opportunity for utility renewables related to the already approved renewable energy plan, or REP, and an additional $1 billion of electric distribution reliability opportunity represented in the road map we've already filed with the commission. These investments are opportunities in the back half of the plan as we continue to improve distribution reliability and meet Michigan's energy law requirements. As we have highlighted in the past, non-rate base earnings differentiate our model from a typical utility and have future growth potential. Energy efficiency incentives and the financial compensation mechanism, or FCM on power purchase agreements are key parts of Michigan's legislative framework and benefit customers and investors. While energy efficiency remains a component of our long-term plan, it's a relatively mature program. The FCM has the potential to drive additional opportunity through this decade and the next as we continue to procure electric supply resources that ensure reliability as well as meet the renewable energy, clean energy and battery storage requirements of Michigan's energy law. Let's move to Slide 10, where I'll cover the company's funding needs and progress in 2026. We remain on track to complete our 2026 financing plan, including planned debt issuances at the utility, and the remainder of our common equity issuance under our established ATM program. While we don't typically update our long-term financing plans during the year, in the context of the NorthStar decision, I would like to provide direction as to when and how future financings will likely be impacted. Our current five-year plan assumes a total of $3.75 billion of new equity. This year, we plan to issue $700 million and have already completed nearly $500 million at attractive prices. This leaves approximately $3 billion over the remainder of the plan. As we redeploy cash from NorthStar, we would anticipate reducing at least $350 million of equity from the current plan. We'll provide an update on our financing plan during the Q4 call as part of our normal annual planning process. Turning to Slide 10. I want to spend a moment describing what gives us confidence in our investment thesis and how it delivers customer value and maintains affordability. This slide depicts how growth and affordability reinforce one another and do so year in and year out, delivering 6% to 8% earnings growth for investors, while keeping customer bill growth below inflation. Our utility investments drive 10.5% rate base growth, and those investments help reduce customer costs and drive earnings growth. Long-term investments in electric supply and natural gas storage allow us to deliver significant cost savings as well as resiliency and reliability benefits to customers during the hottest days of the summer and the coldest days of the winter. We have demonstrated the ability to manage operating costs through our lean operating system, the CE Way. This relentless focus on eliminating waste and driving efficiency through better process and automation enables us to deliver savings year after year, creating the headroom to make needed investments in distribution reliability and gas safety. Support for financially healthy utilities in both legislation and regulation means we can use our balance sheet to make long-term investments and leverage efficient financing to lower costs for our customers. Finally, with 2% to 3% sales growth anticipated, and the ongoing customer benefits of energy efficiency, which is up to 2% on the electric side, we see lower customer bills as individual customer consumption is reduced and fixed costs are spread across increasing load. This proven and durable business model allows us to provide safe, reliable and affordable service to our customers and deliver consistent financial performance for you, our investors. While I'm new to my role, I'm not new to CMS. The foundation of our business model is strong. And in the 12 years I've been with the company, the opportunities to serve our customers, grow our state and drive long-term value for our investors have never been better. I'm confident in the strategy we are executing in the years and decades to come. Now I'll turn it back to Garrick before we take your questions.
Thanks, Sri. At CMS Energy, we deliver. Twenty-three years now of consistent industry-leading performance regardless of circumstances, year in and year out. You can count on CMS Energy to deliver for all of its stakeholders. With that, Abby, please open the lines for Q&A.
分析師問答
Our first question comes from the line of Richard Sunderland with Truist Securities.
Starting with NorthStar, to throw out the first question: why now? Is this all with an eye to higher utility growth and are you thinking about other opportunities related or outside of that business any differently, whether it's DIG recontracting or the progress on the data center efforts? Just looking to get the big picture here. Can you speak a little bit more to the process and timing?
Yes. Let me walk a little bit through the process leading up to this, and Sri will also add to the conversation. You would expect, as good fiduciaries of the business, that we're always looking on a regular basis at our businesses, and we do that. We look at it from all stakeholder perspectives, from customers all the way to investors. From an investor standpoint, we're looking at how we deploy capital to bring the highest value back to our owners. The decision we're sharing here today does just that. We talked about reallocation of capital, the capital assets we're going to maintain with light capital investment and bring cash back to the parent, the disposition of assets. We walked through all that, and Sri will go into some additional details. But I would also point out the guidance we've provided, long term, 6% to 8% toward the high end. We were deliberate about 2027 guidance because we're giving you the visibility but also sharing our confidence in the growth and earnings power of this business. What you should read through that is no rebase. That's what you should see in there. And then the bigger picture: we are simplifying. That is the key message, and we are improving the financials of our overall business and are focused on the utility. Nearly 100% of the earnings after '27 come right out of the regulated utility. That is high-quality earnings and high-quality growth. That's what our investors expect. Sri?
Yes, Rich, I appreciate the question. I'll reinforce Garrick's comment: we're focused on utility investment. We have a robust plan, which I referenced in my prepared remarks at $24 billion. This repositioning of NorthStar allows us to more efficiently finance that capital, both at the parent because we're reducing our financing needs, and it strengthens and lengthens our plan. It also improves our balance sheet flexibility as we continue to finance utility capital. So across financing and allocation of capital, we're strengthening the business and simplifying it.
Turning towards the utility, it looks like great progress in terms of the agreement with the data center. Could you speak a little more to what still has to go on the customer side, your thoughts on that in light of expected inclusion in your IRP filing, and progress overall relative to expectations earlier in the year? How do things currently stand on final agreements?
As I shared in the Q1 call, we'd continue to provide updates on progress, and I'm pleased with the progress. We executed both the rate construct and a rate agreement as well as the extraordinary facilities agreement. All that fits under the large load tariff, and I talked about the benefit of that in my prepared remarks. It ensures not only economic growth and capital investment but that existing customers don't pay for that. In fact, there's a benefit associated with it. The zoning is still underway; the customer is working through that. We want to be respectful of the locals, and they're doing their due diligence. So we're going to let that play out. What gives me optimism is the customer is working through multiple locations in the state. That tariff, because it's a tariff, can apply anywhere in our service territory, which is great. We'll incorporate that load growth into our IRP in September. Sri?
The only thing I'd add is that the capital plan we have today doesn't reflect that load growth. So there continues to be upside opportunity that will be reflected in the IRP and incorporated over time into our plans.
Our next question comes from the line of Jeremy Tonet with JPMorgan.
I wanted to dive in on the 2027 guide. Any preliminary thoughts at this point? Obviously, it depends on where full year 2026 falls, but how do you think you could land within the range there? I imagine renewables timing would also come into play, but any thoughts on how you could trend within that range?
Jeremy, thanks for the question. We're not biasing the range; we provided confidence in that range. It's really driven by utility growth. For 2027, we've already incorporated the repositioning of NorthStar into that guidance, so we're confident with the assumptions we've made. As we execute over the course of '26 and into '27, we'll update as part of our normal planning process.
Got it. I wanted to ask about cost efficiencies in the NorthStar restructuring. Could you discuss what categories these could look like and what type of magnitude?
As we exit renewables development, there are costs associated with having that platform, both from an engineering and development perspective. We expect to achieve cost efficiencies by exiting that business and redeploying capital elsewhere.
Our next question comes from the line of Nick Campanella with Barclays.
Thanks for all the information and the early look on '27. I'm trying to frame NorthStar: last year it was about $0.30, and our understanding is about half of that is renewables and there's some debt costs as well. What is the offset besides lower parent financing, or is that entirely it? When I think about the year to go, there is about $0.16 to $0.23 of benefit from parent, financing, tax and other. How much of that is one-time versus continuing? Will the parent continue to see a year-over-year benefit net of all these drivers as we look toward '27?
Nick, I'll break the question apart. For '27 and beyond, we are retaining DIG and a handful of renewables assets; those will continue to provide earnings into '27 and beyond. The incremental cash from assets no longer being deployed into renewables development will offset parent financing. Over time, as utility growth is financed more efficiently, you'll see a continuing benefit at the parent year-over-year.
Continued benefit year-over-year. Okay. And an update on how you're thinking about the storm deferrals in the plan given precedent and what's pending in front of the commission? What are your underlying assumptions there?
We are assuming a constructive order in that pending docket. As I noted in my prepared remarks, that's not the only area we're considering for offsets to storm costs over the course of the year. We have a good precedent from last year, and our performance continues to improve, so we expect a constructive outcome in that docket.
Our next question comes from the line of Julien Dumoulin-Smith with Jefferies.
On the announcement this morning: with respect to the outlook, how accretive is this transaction, as best you can estimate today? I know there are many moving pieces, but is there any way to give us a number by 2030 and how to think about the increment or decrement based on what you're announcing? I know it's early, but any color on the relative accretion would help.
Julien, our long-term growth trajectory hasn't changed: 6% to 8%. This plan doesn't change that growth outlook; it changes the composition of growth. We're reallocating capital away from NorthStar so more of the upside will come from the utility. Over time, we're financing that more efficiently by not allocating capital to renewable development at NorthStar. You'll see us strengthen and lengthen our plan over time as we have more efficient financing at the parent.
Is there a way to think about what the contribution would have been under the prior plan for 2030 from those assets versus now? If you had not repositioned NorthStar, what would the composition have been in 2030 from those assets?
We are exiting the renewable development piece, which generated development gains related to developing those assets. We are retaining DIG, so the earnings and cash from that are retained. That cash is offsetting parent drag over time. When modeling to 2030, the outlook for the utility remains the same — 10.5% rate base growth — but you'll see less drag at the parent, which offsets the renewables development earnings over time.
Right. So it was a positive earnings contribution in the 2030 time frame previously. What you're selling it and replacing it for...?
Yes. The way I think about it is 6% to 8% growth remains our objective. This action strengthens and lengthens the plan and creates more durable earnings as we go beyond the plan.
Our next question comes from the line of Shahriar Pourreza with Wells Fargo.
Congrats, Sri, on your first call in the new role. Garrick, we've seen some companies struggle with zoning in Michigan. Does the 20-year contract survive if zoning drags materially or fails outright? Is there a drop-dead date or ramp in the agreement? Also, you mentioned they could be looking at multiple locations in the state. Could that be outside your territory, maybe closer to Detroit?
I'll ask Sri to respond given his experience. But the tariff is flexible and can apply across our service territory. It supports certainty, affordability and credit. Sri?
Shar, it's more than one customer and more than one location, which gives us confidence. Our large load construct is strong: it protects customers, drives affordability and provides long-term investment certainty. We are well positioned to attract large loads in the near and long term.
To add, because it's a tariff, as the customer considers different locations in the state, the tariff can move with them within our service territory. That's the key benefit.
Got it. Lastly, on DIG recontracting, how should we think about timing of recontracting and the contracted merchant mix there?
Some recontracting will layer into the back half of this year and into next year. We prefer not to leave a lot of merchant exposure outstanding to provide predictable earnings. Think of recontracting contributing in the back half of the plan and into 2029, 2030 and beyond.
Our next question comes from the line of Travis Miller with Morningstar.
Just to be super clear on NorthStar: which assets are for sale? Is it the renewable assets not in Michigan — Ohio, Texas, etc.? And how does that compare with what you would save in future development? Trying to understand how it's earnings neutral or accretive, and the proceeds versus savings and capital over the next three to five years.
Travis, the assets for sale are the out-of-state renewable assets — some constructed, some in development — and there are also some Michigan assets being dispositioned. We will retain Dearborn Industrial Generation, a couple of small gas peakers (Kalamazoo and Livingston) and four commercial solar projects in Michigan. Those retained assets generate cash flow and require light capital. Sri?
Travis, a few points. First, you'll have lower capital allocation to NorthStar — that's the $1.7 billion of capital — which frees up capital efficiency at the parent. Second, cash flow from DIG, the peakers and the retained Michigan assets that otherwise would have gone to development will now fund and offset parent funding needs. Third, we can sell the non-Michigan assets, and we'll incorporate that into the disclosed $500 million plus of funding offsets. Those three items combined give about $500 million of funding offset over time.
Our next question comes from the line of Michael Sullivan with Wolfe Research.
Congrats, Sri. On the utility CapEx opportunity, is the $3 billion upside you mentioned part of the long-term growth rate reaffirmation? If not, how do you think about financing that incremental CapEx? You talked about reducing equity needs, but how would you fund incremental CapEx if it's not included today?
Michael, that $3 billion is not in the base plan; those are upside opportunities in the back half and beyond. The repositioning of NorthStar increases flexibility of the balance sheet, so we wouldn't necessarily take up equity immediately for incremental capital. We'll incorporate such capital into our plan and update financing as we go.
Understood. On NorthStar, is it fair to say that nearly 100% utility means the residual nonutility earnings in the plan will be around the $70 million a year pretax run rate you referenced?
Yes, that's the right way to think about it.
Last one: what would enable you to target the high end of 2027? Is it just getting through more of the year, or are there levers or opportunities to capture in coming months that could help get you there?
It's early for 2027. We're comfortable with the assumptions embedded today. As we execute through 2026 and gain more visibility, we'll incorporate that into our planning. Typically we don't provide guidance this early, but given the NorthStar change, we wanted to give investors visibility. We will update as part of our normal planning process over the course of the year and into early next year.
Our next question comes from the line of Sophie Karp with KeyBanc.
Congratulations on the first earnings call in the new role, Sri. Could you talk about the economics of the remaining peakers and the solar assets in Michigan? Are those long-term contracted similar to DIG? Is there upside from those? And related, would you consider eventually absorbing those into rate base?
When we think about DIG, the peakers and the capacity position, those are contracted in a similar fashion. The retained solar assets are on long-term contract as well. While we're not assuming significant earnings past '27 from these retained assets, they do generate cash flow that help the parent. Regarding rate base, it's too early; that is not being incorporated into the IRP now. It provides flexibility over time, but currently they are contracted outside of the utility.
Got it. On the data center topic, how are you thinking about demonstrating customer benefits from data centers under your contract? Is that through offsetting the rate cycle or reducing future rate asks, or more explicit such as a bill credit? If possible, is there a rule of thumb — for every gigawatt you sign, how much of the rate increase would be displaced or how to quantify that benefit?
We are making the benefits visible. As I referenced in my prepared remarks, for every new gigawatt of large load signed under the tariff, that equates to roughly $7.50 of bill benefit for the average residential electric customer. Those savings flow back to customers through the rate case process. We're being transparent with communities and customers and putting real dollars and cents to it.
To add, under that tariff, we spread fixed costs over a larger base while large load customers pay for the incremental resources they need. It's a proven and durable model where affordability and growth can reinforce each other.
Our next question comes from the line of Andrew Weisel with Scotiabank.
Sri, on the regulatory side, you mentioned moving the IRP to September related to the data center opportunity. Will that suggest you'll be including generation related to that data center customer? If so, would that look like baseload gas or something else?
We'll share more in the September IRP. We have foreshadowed that there's 13 gigawatts of renewables pre-approved that flow into the IRP, and battery storage is required by state law and necessary for reliability. We also need gas turbines and simple cycles — about 1.5 gigawatts — to ensure reliability during hours without solar and when batteries are depleted. This replaces older oil and gas-fired peakers of about 1.2 gigawatts and is a direct replacement in that sense. We're not equating gas specifically with data centers; there are integrated solutions, and we'll provide more detail in the IRP in September.
On the storm deferral, given another mid-summer storm, how do you think about the potential for another docket? Would you worry about overusing the mechanism versus traditional storm cost recovery, or will you wait to see how the first docket goes?
Our reliability performance and storm processes are improving. We were a fourth quartile company and are now solidly in third quartile approaching second quartile. In the first six months of the year, 92% of our customers were restored in 24 hours or less. We have a reliability road map filed with the commission that reflects the Liberty audit, and staff and the commission have been constructive on necessary investments. We're making those investments and measuring benefits. We're starting a five-year tree trimming cycle which will improve outcomes. We had storms in July, including a difficult July 4 event. There are things we did well and areas to improve. We incorporate lessons learned into our process. The bigger picture — our trajectory and investments — gives us confidence in the storm deferral mechanism. The Q1 ice storm performed better than the previous year, and that precedent supports our approach.
We have confidence because of last year's precedent around storm deferral. We also have the opportunity to wait through the summer before determining if there's a need for anything else. We're always managing headwinds and tailwinds during the year, so there's flexibility to act if needed.
One final clarification on NorthStar: does the 2027 guidance assume some assets will be sold so the contribution from NorthStar is less because you're assuming sales but not yet assuming cash proceeds lowering equity needs?
Think of it this way: we are retaining some assets and we've incorporated that into the '27 guide. We will not break down the different contributions at this point, but we have incorporated the assumption that we would sell some of the non-Michigan assets at NorthStar.
Our final question comes from the line of Anthony Crowdell with Mizuho.
Why not include DIG in the sale process? You are keeping DIG; is that because you think it's a rate base opportunity going forward or because it's optionality to offset equity needs in the future? Why keep DIG rather than sell all of NorthStar?
DIG generates significant cash flow and does not require significant incremental CapEx to produce that cash flow. It helps offset parent financing. You would have to pay significant value to acquire that cash flow, and DIG is a core asset for us from a capacity and energy perspective. We're comfortable holding it.
That concludes our question-and-answer session. I would now like to turn the call back over to Mr. Garrick Rochow for closing remarks.
Thanks, Abby. I'd like to thank you for joining us today. Take care and stay safe.
Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.