CMS Energy Sues to Block Michigan Ban on Utility Political Contributions

CMS Energy, alongside DTE Energy subsidiaries and affiliated political action committees, has filed a federal lawsuit to block a newly passed Michigan campaign finance restriction. Voters approved the measure, known as Proposal 2, on Nov. 3. The lawsuit was submitted on Nov. 5 in the U.S. District Court for the Western District of Michigan.

The voter-approved initiative created Section 30a of the Michigan Campaign Finance Act, which bars electric and gas utilities, their key principals, and affiliated organizations from giving directly or indirectly to state party committees and candidates running for state legislature, attorney general, or governor. Violations can trigger civil penalties reaching up to ten times the amount of the prohibited contribution.

Plaintiffs contend the statute violates First Amendment free speech and equal protection guarantees by singling out utilities while exempting labor unions and other advocacy groups. The lawsuit notes that the restriction forbids nearly every category of contribution made by the CMS-affiliated PAC, Employees for Better Government, which is funded through voluntary donations from employees and shareholders. Because the measure could take effect around Dec. 3 following the official declaration of election results on Nov. 23, the companies are requesting preliminary and permanent injunctions to halt state enforcement.

The legal challenge comes alongside broader operational shifts at the Michigan utility. Portfolio manager Dan Rohinton of iA Global Asset Management recently highlighted CMS Energy as a favored pick, pointing out that the company beat third-quarter adjusted earnings estimates and maintained the high end of its 6% to 8% growth target. Rohinton also noted that winding down NorthStar Clean Energy transitions CMS closer to a pure regulated utility business.