CMS Energy beats quarterly profit estimates on higher power demand

By Katha Kalia

July 31 (Reuters) - U.S. electric and gas utility CMS Energy CMS.N on Thursday beat Wall Street estimates for second-quarter profit, driven by increased power demand, sending its shares up 1% in morning trade.

Utility companies in the U.S. are experiencing a surge in demand as increased AI usage drives the need for more power-guzzling data centers, along with residences and businesses consuming more electricity for heating and transportation.

The U.S. Energy Information Administration forecasts power demand to hit record highs in 2025 and 2026.

CMS Energy also announced an agreement with a new data center that is expected to add up to 1 gigawatt of load growth in its service territory, along with additional economic benefits for Michigan.

"This load is incremental to our plan and part of the 9 GW pipeline that we have been working to locate," said CEO Garrick Rochow in a post-earnings call.

He added they are seeing positive momentum with data centers within the pipeline and expect additional progress once data center tariff is finalized.

The company expects to file its Integrated Resource Plan - a roadmap to efficiently and sustainably meet future energy demand - in mid-2026, as they prepare to build legally mandated renewables.

Its revenue rose 14.4% to $1.84 billion in the second quarter from a year earlier.

However, the company's total quarterly operating expenses rose to $1.52 billion from $1.32 billion a year ago.

The Jackson, Michigan-based firm earned 71 cents per share on an adjusted basis in the quarter, compared with analysts' estimates of 69 cents per share, according to LSEG data.