Presented in the following table are the detailed after-tax changes to the enterprises segment’s net income available to common stockholders for 20192021 versus 2018:2020:
For detailed after-tax changes to the enterprises segment’s net income available to common stockholders for 2018 versus 2017, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Enterprises Results of Operations, in the | | | | | | | (4)Form 10-K for the fiscal year ended December 31, 2018, filed February 5, 2019.EnerBank Results of Operations
Presented in the following table are the detailed after-tax changes to EnerBank’s net income available to common stockholders for 2019 versus 2018:
| | | | | | | | In Millions | | Year Ended December 31, 2018 | | | | $ | 38 |
| Reason for the change | | | | | Higher earnings based on growth in consumer lending | | | | $ | 11 |
| Year Ended December 31, 2019 | | | | $ | 49 |
|
Presented in the following table are the detailed after-tax changes to EnerBank’s net income available to common stockholders for 2018 versus 2017:
| | | | | | | | In Millions | | Year Ended December 31, 2017 | | | | $ | 28 |
| Reasons for the change | | | | |
| Reduction of corporate income tax rate due to the impacts of the TCJA1 | | | | $ | 7 |
| Deferred income tax adjustment due to the TCJA, primarily the absence of the 2017 adjustment1 | | | | 3 |
| Year Ended December 31, 2018 | | | | $ | 38 |
|
| | 1Year Ended December 31, 2021
| See Note 14, Income Taxes. | | | | | | | | $ | 23 | |
See Note 12, Income Taxes.
Corporate Interest and Other Results of Operations Presented in the following table are the detailed after-tax changes to corporate interest and other results for 20192021 versus 2018:2020: | | | | | | | | In Millions | | Year Ended December 31, 2018 | | | | $ | (119 | ) | Reasons for the change | | | | | Absence of 2018 loss on early extinguishment of debt | | | | $ | 12 |
| 2019 tax deductions primarily attributable to asset sales | | | | 4 |
| Accrual for legacy legal obligation1 | | | | (22 | ) | Higher fixed charges due to higher debt | | | | (18 | ) | Higher administrative and other expenses | | | | (1 | ) | Year Ended December 31, 2019 | | | | $ | (144 | ) |
| | | | | | | | | | | | | | | | | | | | | | In Millions | | | | | Year Ended December 31, 2020 | | | | | | | | | $ | (154) | | Reasons for the change | | | | | | | | | | Absence of loss on early extinguishment of debt | | | | | | | | | $ | 12 | | Reduction in state tax liabilities | | | | | | | | | 7 | | Absence of refund for alternative minimum tax credit sequestration1 | See Note 4, Contingencies and Commitments—CMS Energy Contingencies—Gas Index Price Reporting Litigation. | | | | | | | | (5) | | Preferred stock dividends | | | | | | | | | (5) | | Other | | | | | | | | | 1 | | Year Ended December 31, 2021 | | | | | | | | | $ | (144) | |
1See Note 12, Income Taxes. Results of Discontinued Operations On October 1, 2021, EnerBank was acquired by Regions Bank. As a result, EnerBank’s results of operations through the date of the sale are presented as income from discontinued operations on CMS Energy’s consolidated statements of income for 2021 and 2020. For additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 20, Exit Activities and Discontinued Operations. Presented in the following table are the detailed after-tax changes to corporate interest and other resultsdiscontinued operations for 20182021 versus 2017:2020: | | | | | | | | In Millions | | Year Ended December 31, 2017 | | | | $ | (169 | ) | Reasons for the change | | | | |
| Deferred income tax adjustment due to the TCJA, primarily the absence of the 2017 adjustment1 | | | | $ | 55 |
| 2017 elimination of an intercompany gain on the donation of CMS Energy stock2 | | | | 9 |
| Lower fixed charges and administrative and other expenses | | | | 2 |
| Lower tax benefit due to the impacts of the TCJA1 | | | | (16 | ) | Year Ended December 31, 2018 | | | | $ | (119 | ) |
| | | | | | | | | | | | | | | | | | | | | | 1In Millions
| | See Note 14, Income Taxes. |
| | 2Year Ended December 31, 2020
| Eliminated | | | | | | | | $ | 58 | | Reason for the change | | | | | | | | | | Gain on CMS Energy’s consolidated statementssale of income.EnerBank | | | | | | | | | $ | 514 | | Higher earnings at discontinued operations | | | | | | | | | 30 | | Year Ended December 31, 2021 | | | | | | | | | $ | 602 | |
63
Cash Position, Investing, and Financing At December 31, 2019,2021, CMS Energy had $157$476 million of consolidated cash and cash equivalents, which included $17$24 million of restricted cash and cash equivalents. At December 31, 2019,2021, Consumers had $28$44 million of consolidated cash and cash equivalents, which included $17$22 million of restricted cash and cash equivalents. For specific components of net cash provided by operating activities, net cash used in investing activities, and net cash used in investing activities for 2020 versus 2019, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Cash Position, Investing, and Financing, in the Form 10‑K for the fiscal year ended December 31, 2020, filed February 11, 2021. Operating Activities Presented in the following table are specific components of net cash provided by operating activities for 20192021 versus 2018:2020: | | | | | | In Millions | | CMS Energy, including Consumers | | | Year Ended December 31, 2018 | | $ | 1,703 |
| Reasons for the change | | | Higher net income | | $ | 23 |
| Non‑cash transactions1 | | (40 | ) | Lower postretirement benefits contributions | | 242 |
| Unfavorable impact of changes in core working capital,2 due primarily to lower accounts payable and lower AMT credit refunds,3 offset partially by higher customer collections and lower gas inventories | | (31 | ) | Unfavorable impact of changes in other assets and liabilities, due primarily to refunds to customers related to the TCJA and self-implemented electric rates | | (107 | ) | Year Ended December 31, 2019 | | $ | 1,790 |
| Consumers | | | Year Ended December 31, 2018 | | $ | 1,449 |
| Reasons for the change | | | Higher net income | | $ | 38 |
| Non‑cash transactions1 | | (77 | ) | Lower postretirement benefits contributions | | 235 |
| Unfavorable impact of changes in core working capital,2 due primarily to lower accounts payable, offset partially by higher customer collections and lower gas inventories | | (16 | ) | Unfavorable impact of changes in other assets and liabilities, due primarily to refunds to customers related to the TCJA and self-implemented electric rates | | (28 | ) | Year Ended December 31, 2019 | | $ | 1,601 |
|
| | | | | | | | | In Millions | CMS Energy, including Consumers | | | Year Ended December 31, 2020 | | $ | 1,276 | | Reasons for the change | | | Higher net income | | $ | 578 | | Non‑cash transactions1 | | Non87 ‑cash transactions comprise depreciation and amortization, changes in deferred income taxes and investment tax credits, bad debt expense, and other non‑cash operating activities and reconciling adjustments. | |
Absence of pension contributions | | 700 | | Gain from sale of EnerBank in 20212 | Core working capital comprises accounts receivable, notes receivable, accrued revenue, inventories, accounts payable, and accrued rate refunds. |
(657) | | 3Lower cash provided by discontinued operations2
| | (144) | | Unfavorable impact of changes in core working capital,3 due primarily to higher gas prices and the timing of collections on deliveries, offset partially by lower vendor payments | | (122) | | Favorable impact of changes in other assets and liabilities, due primarily to the absence of a payment to settle litigation and the timing of payments on higher property taxes | | 101 | | Year Ended December 31, 2021 | | $ | 1,819 | | Consumers | | | Year Ended December 31, 2020 | | $ | 1,218 | | Reasons for the change | | | Higher net income | | $ | 52 | | Non‑cash transactions1 | | (14) | | Lower postretirement benefits contributions, primarily absence of pension contributions | | 681 | | Unfavorable impact of changes in core working capital,3 due primarily to higher gas prices and the timing of collections on deliveries, offset partially by lower vendor payments | | (78) | | Favorable impact of changes in other assets and liabilities, due primarily to lower income tax payments to CMS Energy received alternative minimum tax (AMT) credit refundsand the timing of $68 million in 2019 and $125 million in 2018.payments on higher property taxes | | 123 | | Year Ended December 31, 2021 | | $ | 1,982 | |
For specific components of net 1Non‑cash provided bytransactions comprise depreciation and amortization, changes in deferred income taxes and investment tax credits, bad debt expense, and other non‑cash operating activities for 2018 versus 2017,and reconciling adjustments.
3Core working capital comprises accounts receivable, accrued revenue, inventories, accounts payable, and accrued rate refunds.
Investing Activities Presented in the following table are specific components of net cash used in investing activities for 20192021 versus 2018:2020: | | | | | | In Millions | | CMS Energy, including Consumers | | | Year Ended December 31, 2018 | | $ | (2,606 | ) | Reasons for the change | | | Higher capital expenditures at Consumers, offset partially by the absence of the 2018 purchase of a wind generation project | | $ | (30 | ) | Changes in EnerBank notes receivable, reflecting growth in consumer lending | | (94 | ) | Higher purchases of notes receivable by EnerBank | | (118 | ) | Absence of 2018 proceeds from DB SERP investments1 | | (146 | ) | Proceeds from sale of EnerBank notes receivable | | 67 |
| Proceeds from sale of transmission equipment in 20192 | | 97 |
| Other investing activities, primarily lower costs to retire property | | 14 |
| Year Ended December 31, 2019 | | $ | (2,816 | ) | Consumers | | | Year Ended December 31, 2018 | | $ | (1,971 | ) | Reasons for the change | | | Higher capital expenditures | | $ | (263 | ) | Proceeds from sale of transmission equipment in 20192 | | 77 |
| Other investing activities, primarily lower costs to retire property | | 20 |
| Year Ended December 31, 2019 | | $ | (2,137 | ) |
| | | | | | | | | In Millions | CMS Energy, including Consumers | | | Year Ended December 31, 2020 | | $ | (2,867) | | Reasons for the change | | | Lower capital expenditures | | $ | 235 | | | | | | | | | | | | | | Proceeds from sale of EnerBank in 20211, net of cash and cash equivalents sold and transaction costs | See Note 7, Financial Instruments. | 898 | |
Absence of proceeds from sale of transmission equipment in 2020 | | (58) | | 2Higher cash provided by discontinued operations1
| | See Note 22, Asset Sales and Exit Activities563 | | Other investing activities | | (4) | | Year Ended December 31, 2021 | | $ | (1,233) | | Consumers | | | Year Ended December 31, 2020 | | $ | (2,246) | | Reasons for the change | | | Lower capital expenditures | | $ | 118 | | Absence of proceeds from sale of transmission equipment in 2020 | | (58) | | Other investing activities | | 1 | | Year Ended December 31, 2021 | | $ | (2,185) | |
1For specific componentsinformation regarding the sale of net cash used in investing activities for 2018 versus 2017,EnerBank, see Item 7. Management’s DiscussionNote 20, Exit Activities and Analysis of Financial Condition and Results of Operations—Cash Position, Investing, and Financing—Investing Activities, in the Form 10-K for the fiscal year ended December 31, 2018, filed February 5, 2019.Discontinued Operations.
Financing Activities Presented in the following table are specific components of net cash provided by financing activities for 2019 versus 2018: | | | | | | In Millions | | CMS Energy, including Consumers | | | Year Ended December 31, 2018 | | $ | 874 |
| Reasons for the change | | | Lower debt issuances | | $ | (616 | ) | Lower debt retirements | | 585 |
| Increases in EnerBank certificates of deposit, reflecting higher borrowings | | 118 |
| Lower repayments under Consumers’ commercial paper program | | 66 |
| Lower issuances of common stock under the continuous equity offering program | | (29 | ) | Higher payments of dividends on common and preferred stock | | (29 | ) | Lower debt prepayment costs | | 28 |
| Other financing activities, primarily lower debt issuance costs and higher customer advances for construction | | 11 |
| Year Ended December 31, 2019 | | $ | 1,008 |
| Consumers | | | Year Ended December 31, 2018 | | $ | 513 |
| Reasons for the change | | | Lower debt issuances | | $ | (1,113 | ) | Lower debt retirements | | 652 |
| Lower repayments under Consumers’ commercial paper program | | 66 |
| Higher stockholder contribution from CMS Energy | | 425 |
| Higher payments of dividends on common and preferred stock | | (61 | ) | Lower debt prepayment costs | | 12 |
| Other financing activities, primarily lower debt issuance costs and higher customer advances for construction | | 14 |
| Year Ended December 31, 2019 | | $ | 508 |
|
For specific components of net cash provided by (used in) financing activities for 20182021 versus 2017,2020:
| | | | | | | | | In Millions | CMS Energy, including Consumers | | | Year Ended December 31, 2020 | | $ | 1,619 | | Reasons for the change | | | Lower debt issuances | | $ | (2,844) | | Lower debt retirements | | 1,775 | | | | | Absence of repayments under Consumers’ commercial paper program in 2020 | | 90 | | Lower issuances of common stock | | (227) | | Issuance of preferred stock in 2021 | | 224 | | Higher payments of dividends on common stock | | (42) | | Absence of debt prepayment costs in 2020 | | 59 | | Absence of 2020 proceeds from the sale of membership interest in VIE to tax equity investor | | (417) | | Lower contributions from noncontrolling interest | | (30) | | Lower cash provided by discontinued operations1 | | (500) | | Other financing activities, primarily the use of customer advances for construction, offset largely by lower debt issuance costs | | (2) | | Year Ended December 31, 2021 | | $ | (295) | | Consumers | | | Year Ended December 31, 2020 | | $ | 1,035 | | Reasons for the change | | | Lower debt issuances | | $ | (1,619) | | Lower debt retirements | | 1,059 | | Absence of repayments under Consumers’ commercial paper program in 2020 | | 90 | | Higher repayments of borrowings from CMS Energy | | (222) | | Lower stockholder contribution from CMS Energy | | (75) | | Higher payments of dividends on common stock | | (85) | | Absence of debt prepayment costs in 2020 | | 43 | | Other financing activities, primarily the use of customer advances for construction, offset partially by lower debt issuance costs | | (14) | | Year Ended December 31, 2021 | | $ | 212 | |
Capital Resources and Liquidity CMS Energy and Consumers expect to have sufficient liquidity to fund their present and future commitments. CMS Energy uses dividends and tax-sharing payments from its subsidiaries and external financing and capital transactions to invest in its utility and non‑utility businesses, retire debt, pay dividends, and fund its other obligations. The ability of CMS Energy’s subsidiaries, including Consumers, to pay dividends to CMS Energy depends upon each subsidiary’s revenues, earnings, cash needs, and other factors. In addition, Consumers’ ability to pay dividends is restricted by certain terms included in its debt covenants and articles of incorporation and potentially by FERC requirements and provisions under the Federal Power Act and the Natural Gas Act. For additional details on Consumers’ dividend restrictions, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5,4, Financings and Capitalization—Dividend Restrictions. ForDuring the year ended December 31, 2019,2021, Consumers paid $592$722 million in dividends on its common stock to CMS Energy. As a result of a provision in the TCJA,On October 1, 2021, EnerBank was acquired by Regions Bank. CMS Energy is required to recover all alternative minimum tax creditsreceived proceeds of over four years through offsets of regular tax and through cash refunds.$1 billion. CMS Energy expectsintends to be ableuse the proceeds from the sale to offset regular tax primarily throughfund key initiatives in its core energy business related to safety, reliability, and its clean energy transformation. For information regarding EnerBank, see Item 8. Financial Statements and Supplementary Data—Notes to the use of federal net operating loss carryforwardsConsolidated Financial Statements—Note 20, Exit Activities and accordingly, receive alternative minimum tax credit refunds through 2021. Another provision in the TCJA excludes rate-regulated utilitiesDiscontinued Operations.
Consumers uses cash flows generated from 100 percent cost expensing of certain property. This provision will cause Consumers to make higher tax-sharing payments to CMS Energy, which in turn might permitoperations and external financing transactions, as well as stockholder contributions from CMS Energy, to maintain lower levels offund capital expenditures, retire debt, in order to invest in its businesses, pay dividends, and fund its generalother obligations. Consumers expectsalso uses these sources of funding to contribute to its employee benefit plans. Financing and Capital Resources: CMS Energy and Consumers rely on the capital markets to fund their robust capital plan. Barring any sustained market dislocations or disruptions, CMS Energy and Consumers expect to continue to have sufficientready access to the financial and capital markets and will continue to explore possibilities to take advantage of market opportunities as they arise with respect to future funding sources availableneeds. If access to issue creditsthese markets were to customers for all impacts of the TCJA.diminish or otherwise become restricted, CMS Energy and Consumers would implement contingency plans to address debt maturities, which could include reduced capital spending. In 2018,2020, CMS Energy entered into an equity offering program under which it may sell from time to time, shares of CMS Energyits common stock having an aggregate sales price of up to $250 million. Under this program, CMS Energy may sell its common stock$500 million in privately negotiated transactions, in “at the market” offerings, through forward sales transactions, or otherwise. CMS Energy has entered into forward sales contracts having an aggregate sales price of $250 million. These contractstransactions under this program, which allow CMS Energy to either physically settle the contracts by issuing shares of its common stock at the then-applicable forward sale price specified by the agreement or net settle the contracts through the delivery or receipt of cash or shares. CMS Energy may settle the contracts at any time through their maturity dates, and presently intends to physically settle the contracts by delivering shares of its common stock. As of December 31, 2021, these contracts have an aggregate sales price of $56 million, maturing through 2022. For more information on thethese forward sale contracts, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5,4, Financings and Capitalization—Issuance of Common Stock. Consumers uses cash flows generated from operations and external financing transactions, as well as stockholder contributions from CMS Energy, to fund capital expenditures, retire debt, pay dividends, contribute to its employee benefit plans, and fund its other obligations. Accelerated pension funding in prior years and several initiatives to reduce costs have helped improve cash flows from operating activities.
Access to the financial and capital markets depends on CMS Energy’s and Consumers’ credit ratings and on market conditions. As evidenced by past financing transactions, CMS Energy and Consumers have had ready access to these markets. Barring major market dislocations or disruptions, CMS Energy and Consumers expect to continue to have ready access to the financial and capital markets. If access to these markets were to diminish or otherwise become restricted, CMS Energy and Consumers would implement contingency plans to address debt maturities, which could include reduced capital spending.
At December 31, 2019,2021, CMS Energy had $544$526 million of its revolving credit facility available and Consumers had $1.1 billion available under its revolving credit facilities. CMS Energy and Consumers use these credit facilities for general working capital purposes and to issue letters of credit. An additional source of liquidity is Consumers’ commercial paper program, which allows Consumers to issue, in one or
more placements, up to $500 million in the aggregate in commercial paper notes with maturities of up to
365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities. While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At December 31, 2019,2021, there were $90 millionno commercial paper notes outstanding under this program. For additional details on CMS Energy’s and Consumers’ secured revolving credit facilities and commercial paper program, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5,4, Financings and Capitalization. Certain of CMS Energy’s and Consumers’ credit agreements debt indentures, and other facilities contain covenants that require CMS Energy and Consumers to maintain certain financial ratios, as defined therein. At December 31, 2019,2021, no default had occurred with respect to any financial covenants contained in CMS Energy’s and Consumers’ credit agreements, debt indentures, or other facilities.agreements. CMS Energy and Consumers were each in compliance with these covenants as of December 31, 2019,2021, as presented in the following table: | | | | | | | | | Credit Agreement, Indenture, or Facility | Limit | Actual | CMS Energy, parent only | | | | Debt to EBITDA¹ | < | 6.25 to 1.0 | 4.6 to 1.0 | Consumers | | | | Debt to Capital² | < | 0.65 to 1.0 | 0.48 to 1.0 |
| | Debt to Capital1 | Applies< 0.70 to CMS Energy’s $550 million revolving credit agreement.1.0 | 0.54 to 1.0 |
Consumers | | | Debt to Capital2 | Applies< 0.65 to Consumers’ $850 million and $250 million revolving credit agreements and its $30 million and $35 million reimbursement agreements.1.0 | 0.48 to 1.0 |
1Applies to CMS Energy’s revolving credit agreement and letter of credit reimbursement agreement. 2Applies to Consumers’ revolving credit agreements and letter of credit agreement. Material Cash Requirements: Based on the present investment plan, during 2022, Consumers projects capital expenditures of $2.6 billion. Additionally, CMS Energy’s other material cash requirements for 2022 include $2.3 billion of purchase obligations and $843 million of principal and interest payments on long-term debt. Consumers’ other material cash requirements for 2022 comprise $2.2 billion of purchase obligations and $653 million of principal and interest payments on long-term debt. Components of CMS Energy’s and Consumers’ cash management plan include controlling operating expenses and capital expenditures and evaluating market conditions for financing and refinancing opportunities. CMS Energy’s and Consumers’ present level of cash and expected cash flows from operating activities, together with access to sources of liquidity, are anticipated to be sufficient to fund the companies’ contractual obligations and other material cash requirements for 20202022 and beyond.
Capital Expenditures: Over the next five years, Consumers expects to make substantial capital investments. Consumers may revise its forecast of capital expenditures periodically due to a number of factors, including environmental regulations, MPSC approval or disapproval, business opportunities, market volatility, economic trends, and the ability to access capital. Presented in the following table are Consumers’ estimated capital expenditures, including lease commitments, for 2022 through 2026: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Billions | | 2022 | 2023 | 2024 | 2025 | 2026 | Total | Consumers | | | | | | | | | | | | | Electric utility operations | | $ | 1.5 | | | $ | 1.7 | | | $ | 1.7 | | | $ | 1.5 | | | $ | 1.5 | | | $ | 7.9 | | Gas utility operations | | 1.1 | | | 1.2 | | | 1.3 | | | 1.4 | | | 1.4 | | | 6.4 | | Total Consumers | | $ | 2.6 | | | $ | 2.9 | | | $ | 3.0 | | | $ | 2.9 | | | $ | 2.9 | | | $ | 14.3 | |
68
Contractual Obligations:Other Material Cash Requirements: Presented in the following table are CMS Energy’s and Consumers’ material cash obligations from known contractual obligations.and other legal obligations:
| | | | | | | | | | | | | | | In Billions | | Payments Due | December 31, 2021 | Less Than One Year | Total | CMS Energy, including Consumers | | | | | Long-term debt | | $ | 0.4 | | | $ | 12.6 | | Interest payments on long-term debt | | 0.5 | | | 12.3 | | Purchase obligations | | 2.3 | | | 12.5 | | AROs | | — | | | 2.2 | | Total obligations | | $ | 3.2 | | | $ | 39.6 | | Consumers | | | | | Long-term debt | | $ | 0.4 | | | $ | 8.5 | | Interest payments on long-term debt | | 0.3 | | | 6.6 | | Purchase obligations | | 2.2 | | | 12.0 | | AROs | | — | | | 2.2 | | Total obligations | | $ | 2.9 | | | $ | 29.3 | |
Purchase obligations arise from long-term contracts for the purchase of commodities and related services, plant purchase commitments, and construction and service agreements. The table excludes all amounts classified as current liabilitiescommodities and related services include long-term PPAs, natural gas and associated transportation, and coal and associated transportation. For more information on CMS Energy’s and Consumers’ consolidated balance sheets, other than the current portion of long-term debt, leases, and other financing. | | | | | | | | | | | | | | | | | | | | | | In Millions | | | Payments Due | December 31, 2019 | Total | | Less Than One Year | | One to Three Years | | Three to Five Years | | More Than Five Years | | CMS Energy, including Consumers | | | | | | | | | | | Long-term debt | | $ | 13,188 |
| | $ | 1,111 |
| | $ | 1,892 |
| | $ | 1,477 |
| | $ | 8,708 |
| Interest payments on long-term debt | | 10,863 |
| | 480 |
| | 897 |
| | 777 |
| | 8,709 |
| Finance leases and other financing | | 220 |
| | 37 |
| | 59 |
| | 34 |
| | 90 |
| Operating leases | | 67 |
| | 11 |
| | 16 |
| | 5 |
| | 35 |
| AROs | | 1,652 |
| | 75 |
| | 50 |
| | 53 |
| | 1,474 |
| Deferred investment tax credit | | 120 |
| | 5 |
| | 10 |
| | 10 |
| | 95 |
| Environmental liabilities | | 131 |
| | 17 |
| | 36 |
| | 21 |
| | 57 |
| Long-term payables | | 34 |
| | 3 |
| | 22 |
| | 3 |
| | 6 |
| Purchase obligations | | | | | | | | | | | Total PPAs | | 9,336 |
| | 1,030 |
| | 1,785 |
| | 1,213 |
| | 5,308 |
| Other¹ | | 3,244 |
| | 1,685 |
| | 971 |
| | 409 |
| | 179 |
| Total contractual obligations | | $ | 38,855 |
| | $ | 4,454 |
| | $ | 5,738 |
| | $ | 4,002 |
| | $ | 24,661 |
| Consumers | | | | | | | | | | | Long-term debt | | $ | 7,322 |
| | $ | 202 |
| | $ | 680 |
| | $ | 686 |
| | $ | 5,754 |
| Interest payments on long-term debt | | 5,919 |
| | 276 |
| | 538 |
| | 482 |
| | 4,623 |
| Finance leases and other financing | | 220 |
| | 37 |
| | 59 |
| | 34 |
| | 90 |
| Operating leases | | 56 |
| | 9 |
| | 13 |
| | 5 |
| | 29 |
| AROs | | 1,638 |
| | 75 |
| | 50 |
| | 53 |
| | 1,460 |
| Deferred investment tax credit | | 120 |
| | 5 |
| | 10 |
| | 10 |
| | 95 |
| Environmental liabilities | | 73 |
| | 12 |
| | 28 |
| | 13 |
| | 20 |
| Purchase obligations | | | | | | | | | | | PPAs | | | | | | | | | | | MCV PPA | | 3,295 |
| | 313 |
| | 559 |
| | 426 |
| | 1,997 |
| Palisades PPA | | 899 |
| | 388 |
| | 511 |
| | — |
| | — |
| Related-party PPAs² | | 472 |
| | 71 |
| | 146 |
| | 149 |
| | 106 |
| Other PPAs | | 4,670 |
| | 258 |
| | 569 |
| | 638 |
| | 3,205 |
| Total PPAs | | 9,336 |
| | 1,030 |
| | 1,785 |
| | 1,213 |
| | 5,308 |
| Other¹ | | 2,865 |
| | 1,638 |
| | 890 |
| | 336 |
| | 1 |
| Total contractual obligations | | $ | 27,549 |
| | $ | 3,284 |
| | $ | 4,053 |
| | $ | 2,832 |
| | $ | 17,380 |
|
| | 1
| Long-term contracts for the purchase of commodities and related services, and construction and service agreements. The commodities and related services include natural gas and coal and associated transportation. |
| | 2
| Long-term PPAs from certain affiliates of CMS Enterprises. |
CMS Energy and Consumers also have recognized non‑current liabilities for which the timing of payments cannot be reasonably estimated. These items, which are excluded from the table above, include regulatory liabilities, deferred income taxes, workers’ compensation liabilities, accrued liabilities under renewable energy programs, and other liabilities. Retirement benefits are also excluded from the table
above. For details related to benefit payments,purchase obligations, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 12, Retirement Benefits.3, Contingencies and Commitments—Contractual Commitments.
Off-Balance-Sheet Arrangements:
CMS Energy, Consumers, and certain of their subsidiaries enter into various arrangements in the normal course of business to facilitate commercial transactions with third parties. These arrangements include indemnities, surety bonds, letters of credit, and financial and performance guarantees. Additionally, CMS Energy has entered into forward sales contracts to sell its common stock in order to invest in its utility and non-utility businesses; these contracts have an aggregate sales price of $250 million and mature in 2020. For additional details on the companies’ indemnity and guarantee arrangements, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4,3, Contingencies and Commitments—Guarantees. For additional details on letters of credit and CMS Energy’s forward sales contracts, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5,4, Financings and Capitalization. Capital Expenditures: Over the next five years, Consumers expect to make substantial capital investments. Consumers may revise its forecasts of capital expenditures periodically due to a number of factors, including environmental regulations, business opportunities, market volatility, economic trends, and the ability to access capital. Presented in the following table are Consumers’ estimated capital expenditures, including lease commitments, for 2020 through 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | In Billions | | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | Total | | Consumers | | | | | | | | | | | | | Electric utility operations | | $ | 1.3 |
| | $ | 1.6 |
| | $ | 1.4 |
| | $ | 1.4 |
| | $ | 1.5 |
| | $ | 7.2 |
| Gas utility operations | | 0.9 |
| | 1.1 |
| | 0.9 |
| | 1.1 |
| | 1.0 |
| | 5.0 |
| Total Consumers | | $ | 2.2 |
| | $ | 2.7 |
| | $ | 2.3 |
| | $ | 2.5 |
| | $ | 2.5 |
| | $ | 12.2 |
|
Outlook Several business trends and uncertainties may affect CMS Energy’s and Consumers’ financial condition and results of operations. These trends and uncertainties could have a material impact on CMS Energy’s and Consumers’ consolidated income, cash flows, or financial position. For additional details regarding these and other uncertainties, see Forward-Looking Statements and Information; Item 1A. Risk Factors; and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3,2, Regulatory Matters;Matters and Note 4,3, Contingencies and Commitments. Consumers Electric Utility Outlook and Uncertainties Clean Energy Plan: While Consumers continuesConsumers’ Clean Energy Plan details its strategy to experience modest growthmeet customers’ long-term energy needs. The Clean Energy Plan was originally outlined in demand for electricity due to Michigan’s growing economy and increased use of air conditioning, consumer electronics, and other electric devices, it expects that increase in demand to be offsetConsumers’ 2018 IRP, which was approved by the effects of energy efficiency and conservation. MPSC in 2019. In June 2018,2021, Consumers filed anits 2021 IRP with the MPSC, detailing itsproposing
updates to the Clean Energy Plan. Under its 2021 IRP, Consumers proposes to eliminate the use of coal-fueled generation in 2025 and expects to meet 90 percent of its customers’ needs with clean energy sources by 2040. Specifically, the 2021 IRP provides for a full transition away from coal-fueled generation by the end of 2025 and includes: •the retirement of the D.E. Karn oil/gas-fueled and coal-fueled generating units, totaling 1,734 MW of nameplate capacity, in 2023 •the retirement of the J.H. Campbell coal-fueled generating units, totaling 1,407 MW of nameplate capacity, in 2025 The MPSC has authorized Consumers to issue securitization bonds to finance the recovery of and return on the D.E. Karn coal-fueled generating units. In March 2019,the 2021 IRP, Consumers has requested regulatory asset treatment to recover the remaining book value of and a broad coalition of key stakeholders, including business customers, environmental groups,return on the MPSC Staff,other D.E. Karn units and the J.H. Campbell coal-fueled generating units. To bridge the transition away from coal generation, the 2021 IRP proposes: •the purchase of the New Covert Generating Facility, a natural gas-fueled generating unit with 1,176 MW of nameplate capacity in Van Buren County, Michigan, Attorney General, filed an agreement settling in 2023 •the purchase, in 2025, of the enterprises segment’s three natural gas-fueled generating units, totaling 1,001 MW of nameplate capacity: ◦the 770-MW DIG plant located in Dearborn, Michigan ◦a 156-MW peaking generating unit located in Gaylord, Michigan ◦a 75-MW peaking generating unit located in Comstock, Michigan These investments are expected to allow Consumers to continue providing controllable sources of electricity to customers while expanding its investment in renewable energy. The 2021 IRP forecasts renewable energy capacity levels of 35 percent in 2025, 47 percent in 2030, and 63 percent in 2040, including the addition of nearly 8,000 MW of solar generation. Under its 2021 IRP, Consumers will continue to bid new capacity competitively. The updated plan proposes that Consumers will own and operate at least 50 percent of new capacity, with the MPSCremainder being built and owned by third parties. Consumers’ Clean Energy Plan provides the MPSC approvedfoundation for its goal to achieve net-zero carbon emissions from its electric business by 2040. Under this net-zero goal, Consumers plans to eliminate the impact of carbon emissions created by the electricity it in June 2019.
generates or purchases for customers.
Through its Clean Energy Plan, Consumers expectscontinues to reduce carbon emissions ofmake progress on expanding its owned generation by more than 90 percent fromcustomer programs, namely its 2005 levels by 2040 and eliminate the use of coal to generate electricity by 2040. Specifically, the Clean Energy Plan provides for: the retirement of the D.E. Karn 1 & 2 coal-fueled generating units, totaling 503 MW, in 2023
the continued assessment in future IRP filings concerning the retirement of the J.H. Campbell 1 & 2 coal-fueled generating units, totaling 609 MW, in 2025 or earlier
Under the Clean Energy Plan, Consumers will replace the capacity to be retired with:
increased demand response, programs
increased energy efficiency,
increased and conservation voltage reduction programs, as well as increasing its renewable energy generation
conservation voltage reduction
increasedand pumped storage generation.
Consumers will competitively bid new capacity and at least 50 percent of the new capacity will be built and owned by third parties; the remainder will be owned and operated by Consumers. In support of its Clean Energy Plan, Consumers issued a requestrequests for proposals in September 2019 and 2020, each to acquire up to 300 MW of new capacity from projects to be operational in Michigan’s Lower Peninsula by May 2022.2023. Specifically, Consumers solicited offers to enter into PPAs with or purchase solar generation projects ranging in size from 20 MW to 150 MW and to enter into PPAs with PURPA qualifying facilities up to 20 MW. Any contracts entered into as a result of the requests for proposals would be subject to MPSC approval.
As a result of the requests for proposals, Consumers has entered into PPAs to purchase renewable capacity, energy, and RECs from solar generating facilities and build transfer agreements to purchase solar generating facilities, as presented in the following table: | | | | | | | | | | | | | | | | | | Type of Agreement | Capacity (MW) | Location of Facility | Expected Commercial Operation1 | Date of Agreement | Date of MPSC Approval | 2019 request | | | | | | PPA (25 years) | 140 | | Calhoun County, Michigan | 2022 | December 2020 | April 2021 | Build transfer agreement | 150 | | Southeastern Michigan | 2023/2024 | January 2021 | April 2021 | | | | | | | 2020 request | | | | | | PPA (20 years) | 30 | | Manistee, Michigan | 2022 | May 2021 | September 2021 | PPA (25 years)2 | 100 | | Calhoun County, Michigan | 2023 | October 2021 | November 2021 | PPA (20 years)2 | 125 | | Jackson County, Michigan | 2023 | October 2021 | November 2021 | Build transfer agreement | 150 | | Southeastern Michigan | 2023/2024 | October 2021 | November 2021 |
1 For build transfer agreements, represents the date Consumers expects to take full ownership and begin commercial operation. 2 This agreement provides Consumers the option to purchase the associated solar generating facility after ten years. In addition, Consumers issued a request for proposals in September 2021 to acquire up to 500 MW of new capacity from projects to be operational in Michigan’s Lower Peninsula by December 2024. Specifically, Consumers solicited offers to enter into PPAs with or purchase solar generation projects up to 300 MW in size and to enter into PPAs with PURPA qualifying facilities up to five MW in size. Consumers will acquire at least 250 MW through long-term PPAs. Any contracts entered into as a result of the request for proposals would be subject to MPSC approval. As approved by the MPSC, the IRP allows Consumers to earn a financial incentive on PPAs approved by the MPSC after January 1, 2019. Additionally, the IRP allows for recovery of significant increases in demand response costs. The MPSC separately approved an associated financial incentive for exceeding certain demand response targets. Consumers is required to file a new IRP by June 2021.
PURPA: PURPA requires Consumers to purchase power from qualifying cogeneration and small power production facilities at a price approved by the MPSC that is meant to represent Consumers’ “avoided cost” of generating power or purchasing power from another source. In 2017, the MPSC issued an order establishing an avoided-cost methodology for determining the price that Consumers must pay to purchase power under PURPA. Among other things, the MPSC’s order changed the basis of Consumers’ avoided cost from the cost of coal-fueled generating units to that of natural gas-fueled generating units.
In order to address various complaints raised concerning the 2017 order, Consumers and various PURPA developers filed a settlement agreement with the MPSC in August 2019. Under the settlement agreement, which the MPSC approved in September 2019, Consumers will enter into contracts to purchase 584 MW of power from qualifying solar generation projects by September 2023. Of this amount, 170 MW will be purchased at the full avoided-cost rates set in the 2017 order. The remaining 414 MW will be purchased at a capacity payment equal to the MISO planning resource auction price and a designated energy price previously approved by the MPSC.
In the approved IRP settlement agreement, Consumers agreed to a new method of calculating avoided cost going forward, based on a competitive bidding process that will enable Consumers to purchase energy from new generation at competitive prices and mitigate the risk of forced purchases of unneeded or uneconomical renewable generation.
In September 2019, FERC issued a notice of proposed rulemaking that could result in modifications to the present federal regulations implementing PURPA. Among other things, the proposal would change the rules for measuring the size of qualifying facilities and determining whether certain PURPA projects have
access to wholesale markets. The proposal would also provide states with more flexibility to set the prices paid to PURPA projects. Consumers does not anticipate the proposed rulemaking will affect the PURPA projects with which it has agreements. Consumers cannot predict the outcome of this proposed rulemaking.
Renewable Energy Plan: The 2016 Energy Law raised the renewable energy standard to 15 percent in 2021, with an interim target of 12.5 percent in 2019.2021. Consumers is required to submit RECs, which represent proof that the associated electricity was generated from a renewable energy resource, in an amount equal to at least the required percentage of Consumers’ electric sales volume each year. Under its renewable energy plan, Consumers met the 15-percent requirement in 2021 and expects to meet its renewable energythe requirement each yearin future years with a combination of newly generated RECs and previously generated RECs carried over from prior years. Consumers met the interim target of 12.5 percent for 2019 and will demonstrate its compliance by filing the 2019 renewable energy cost reconciliation with the MPSC in June 2020. In conjunction with itsUnder Consumers’ renewable energy plan, a third phase of Consumers’ Cross Winds® Energy Park, with nameplate capacity of 76 MW, began operations in December 2019. This project qualifies for certain federal production tax credits, generating cost savings that will be passed on to customers.
In February 2019, the MPSC issued an order ruling on amendments Consumers had requested to its renewable energy plan, andhas approved the acquisition of up to 525 MW of new wind generation projects. Under the renewable energy plan,projects and authorized Consumers is authorized to earn a 10.7 percent return on equity on any projects approved by the MPSC. AlsoSpecifically, the MPSC has approved the following:
•purchase and construction of a 150-MW wind generation project in Gratiot County, Michigan; the project became operational in December 2020 •purchase of a 166-MW wind generation project in Hillsdale, Michigan; the project became operational and Consumers took full ownership in February 2019, the MPSC approved an agreement under which Consumers purchased2021
•purchase of a wind generation project under development, with capacity of up to 150201 MW, in Gratiot County, Michigan. Consumers began on-site construction of this project during the fourth quarter of 2019 and expects that it will be complete and operational in 2020. In June 2019, Consumers entered into an agreement to purchase a wind generation project under development in Hillsdale, Michigan, with capacity of up to 166 MW. Under the agreement, which the MPSC unconditionally approved in December 2019,Michigan; Consumers expects to take full ownership and begin commercial operation of the project in 2020. Additionally, in September 2019,before 2024
The MPSC also approved the MPSC approvedexecution of a 20‑year agreement20-year PPA under which Consumers will purchase 100 MW of renewable capacity, energy, and RECs from a 149‑MW149-MW solar generating facility to be constructed in Calhoun County, Michigan. TheMichigan; the facility is expected to be operational in 2021. These agreements resulted from2022. Voluntary Large Customer Renewable Energy Program: Consumers provides service under a program that provides large full-service electric customers with the opportunity to advance the development of renewable energy beyond the requirements of the 2016 Energy Law. In September 2021, the MPSC approved Consumers’ request for proposals that Consumers issued in June 2018 to acquireamend its renewable energy plan to remove the annual subscription limit associated with this program. The MPSC also approved up to 4001,000 MW of new wind generation projects and up to 100 MW of solar generation projects in Michigan.between 2024 and 2027 to meet customer demand for the program. Consumers will competitively solicit for additional renewable energy assets based on customer applications and will construct the assets based on customer subscriptions to the program. Electric Customer Deliveries and Revenue: Consumers’ electric customer deliveries are seasonal and largely dependent on Michigan’s economy. The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment. In addition, Consumers’ electric rates, which follow a seasonal rate design, are higher in the summer months than in the remaining months of the year. Beginning inIn June 2020,2021, electric residential customers will transitiontransitioned to a summer peak time-of-use rate that will allowallows them to take advantage of lower-cost energy during off-peak times during the summer months. Thus, customers couldcan reduce their electric bills by shifting their consumption from on-peakon‑peak to off-peakoff‑peak times.
In response to the COVID‑19 pandemic, Michigan’s Governor and the Michigan Department of Health and Human Services have issued numerous orders throughout 2020 and 2021 restricting business, educational, and personal activities at varying levels. In June 2021, almost all restrictions were lifted and Consumers expects businesses and residents to continue resuming normal activities and for weather-normalized electric deliveries to stabilize.
Over the next five years, Consumers expects weather-normalized electric deliveries over the next five years to decrease slightly.remain stable relative to 2021. This outlook reflects the effects of energy waste reduction programs and appliance efficiency standards offset largely by modest growth in electric demand. Actual delivery levels will depend on: •energy conservation measures and results of energy waste reduction programs •weather fluctuations •Michigan’s economic conditions, including utilization, expansion, or contraction of manufacturing facilities, population trends, and housing activity Electric ROA: Michigan law allows electric customers in Consumers’ service territory to buy electric generation service from alternative electric suppliers in an aggregate amount capped at ten percent of Consumers’ sales, with certain exceptions. At December 31, 2019,2021, electric deliveries under the ROA program were at the ten‑percent limit. Of Consumers’ 1.81.9 million electric customers, 285 customers,fewer than 300, or 0.02 percent, purchased electric generation service under the ROA program. The 2016 Energy Law established a path to ensure that forward capacity is secured for all electric customers in Michigan, including customers served by alternative electric suppliers under ROA. The new law also authorized the MPSC to ensure that alternative electric suppliers have procured enough capacity to cover their anticipated capacity requirements for the four-year forward period. In 2017, the MPSC issued an order establishing a state reliability mechanism for Consumers. Under this mechanism, beginning June 1, 2018, if an alternative
electric supplier does not demonstrate that it has procured its capacity requirements for the four-year forward period, its customers will pay a set charge to the utility for capacity that is not provided by the alternative electric supplier. All alternative electric suppliers have demonstrated that they have procured their capacity requirements through the MISO planning year beginning June 1, 2022.2024. In June 2018,During 2017, the MPSC issued an order requiringorders finding that it has statutory authority to determine and implement a local clearing requirement, which requires all electric suppliers to demonstrate that a portion of the capacity procured to serve customers during peak demand times is located in the MISO footprint in Michigan’s Lower Peninsula. In July 2018,April 2020, the Michigan Supreme Court of Appeals issued a decision thataffirmed the MPSC does not haveMPSC’s statutory authority to implement such a local clearing requirement for alternativeon individual electric suppliers. Consumers believesproviders.
In September 2020, ABATE and another intervenor filed a complaint against the 2016 Energy Law does give such authorization to the MPSC. The MPSC and Consumers have filed applications for leave to appeal the Court of Appeals’ decision to the Michigan Supreme Court. In June 2019, the Michigan Supreme Court issued orders directing the filing of supplemental briefs and the scheduling of oral arguments in the U.S. District Court for the Eastern District of Michigan challenging the constitutionality of a local clearing requirement. The complaint requests the federal court to issue a permanent injunction prohibiting the MPSC from implementing a local clearing requirement on individual electric providers. In December 2020, Consumers filed a motion to intervene and defend the local clearing requirement in that federal litigation; this motion was granted in January 2021 and this case and will ultimately decide whether to consider and rule on the appeals. Oral arguments occurred in November 2019, and the Michigan Supreme Court will issue an order on the application for leave to appeal.remains pending. Electric Rate Matters: Rate matters are critical to Consumers’ electric utility business. For additional details on rate matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments. 2021 Electric Rate Case: In December 2021, the MPSC approved an annual rate increase of $27 million, based on a 9.9 percent authorized return on equity that will be reflected in rates beginning January 1, 2022. In its order, the MPSC disallowed cost recovery for certain categories of recently completed capital expenditures incurred by Consumers. For additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters. Depreciation Rate Case: In March 2021, Consumers filed a depreciation case related to its electric and common utility property. In this case, Consumers requested to increase depreciation expense, and its recovery of that expense by $43 million annually. In December 2021, the MPSC approved a settlement agreement that decreases depreciation expense by $27 million annually based on December 31, 2019 balances. The new depreciation rates will be reflected in rates beginning January 1, 2022, concurrent with rates to be implemented in accordance with Consumers’ recently approved electric rate case. PSCR Plan: Consumers submitted its 20202022 PSCR plan to the MPSC in September 20192021 and, in accordance with its proposed plan, self-implemented the 20202022 PSCR charge beginning in January 2020.2022. Retention Incentive Program: In 2019, Consumers announced a retention incentive program to ensure necessary staffing at the D.E. Karn generating complex through the anticipated retirement of the coal-fueled generating units. Based on the number of employees that have chosen to participate, the aggregate cost of the program through 2023 is estimated to be $35 million. In its order in Consumers’ 2020 electric rate case, the MPSC approved deferred accounting treatment for these costs. Consumers expects to recognize $5 million of retention benefit costs in 2022; this expense will be deferred as a regulatory asset. For additional details on this program, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 20, Exit Activities and Discontinued Operations. Within its 2021 IRP, Consumers proposes to retire the J.H. Campbell coal-fueled generating units. No retention incentive costs related to this retirement will be recognized unless Consumers’ 2021 IRP is approved by the MPSC.
Electric Environmental Outlook: Consumers’ operations are subject to various state and federal environmental laws and regulations. Consumers estimates that it will incur capital expenditures of $275$255 million from 20202022 through 20242026 to continue to comply with RCRA, the Clean Water Act, the Clean Air Act, and numerous state and federal environmental regulations. Consumers expects to recover these costs in customer rates, but cannot guarantee this result. Consumers’ primary environmental compliance focus includes, but is not limited to, the following matters.
Air Quality: Multiple air quality regulations apply, or may apply, to Consumers. CSAPR, which initially became effective in 2015, requires Michigan and many other states to improve air quality by reducing power plant emissions that, according to EPA computer models,modeling, contribute to ground-level ozone and fine particle pollution in other downwind states. In 2016, the EPA finalized new ozone season standards for CSAPR, which became effective in 2017. AnyIn 2020, in response to a court-ordered remand due to litigation, or remand to the EPA is not expectedproposed a revised CSAPR rule to impact Consumers’reflect updated emission reductions from electric generating units in 12 states, including Michigan. The EPA finalized this revised rule in March 2021, with continued emission reductions through 2024. Consumers has evaluated its emission compliance strategy as Consumers expects its emissionsfor existing units based on the proposed number of allowances allocated to Michigan for 2021 through 2024 and believes the impact of this rule should be within the CSAPR allowance allocations.minimal. In 2012, the EPA published emission standards for electric generating units, known as MATS, based on Section 112 of the Clean Air Act. Under MATS, all of Consumers’ existing coal-fueled electric generating units were required to add additional controls for hazardous air pollutants. Consumers met the extended deadline of April 2016 for five coal-fueled units and two oil/gas-fueled units it continues to operate and retired its seven remaining coal-fueled units. MATS is presently being litigated. In addition, in December 2018,May 2020, the EPA proposedfinalized changes to the supporting analysis used to justifyenact the MATS but didrule. However, in January 2022, the EPA announced a proposed rule to revoke this 2020 finding and reaffirm that it is appropriate and necessary to regulate emissions of hazardous air pollutants from coal- and oil-fueled power plants. The EPA is also considering whether more stringent protections for hazardous air pollution from power plants are feasible and warranted. Consumers will continue to monitor the MATS rule status and any pending litigation. Consumers does not proposeexpect any changes to the MATS regulations. Any changes resulting from litigation or rulemaking are expected to be minor and should notrule will have a significant impact Consumers’on its current MATS compliance strategy. If the MATS regulations were repealed, Consumers would then be required to comply with the Michigan Mercury Rule, which has similar requirements to MATS. In addition, Consumers must comply with its settlement agreement with the EPA entered into in 2014 concerning opacity and NSR, which has similar emission requirements to MATS. In 2015, the EPA lowered the NAAQS for ozone. The new2015 ozone NAAQS will makemade it more difficult to construct or modify power plants and other emission sources in areas of the country that have not met the new2015 ozone standard. In April 2018, the EPA designated certain areas of Michigan as not meeting the newozone standard. Specifically, seven counties in southeastern Michigan and three counties in western Michigan were not in attainment with the ozone standard withby an August 2018 effective date. 2021 regulatory deadline, and thus may have their nonattainment designations increased from marginal to moderate. None of Consumers’ fossil-fuel-fired generating units are located in these areas. SomeThe State of Consumers’ compressor stations are locatedMichigan has convened industry workgroups to seek implementation and control strategy ideas for statewide compliance of the 2015 ozone standard, which will need to be in place by early 2023. In January 2022, EGLE submitted a request to the EPA for redesignation of the seven counties in southeastern Michigan to be in attainment with the 2015 ozone standard based on the most recent data. EGLE is awaiting the EPA’s response to that request. Consumers will continue to stay engaged with EGLE and the workgroups to assess potential impacts to its generating assets. In August 2020, the EPA proposed to retain the 2015 NAAQS for ozone without revision and finalized this regulatory decision in December 2020. In October 2021, the EPA provided notice that it was going to reconsider the December 2020 ozone NAAQS decision. The EPA believes it will complete this reconsideration by December 2023. Although this action may ultimately result in more ozone nonattainment areas impacted by the rule, but Consumers expects only minor permitting impacts if those units are modified in the future.Michigan, Consumers does not expect that any litigation involving NAAQS for ozone or lowering of the ozone standard will have a material adverse impact on its generating assets.
Consumers’ strategy to comply with air quality regulations, including CSAPR, NAAQS,MATS, and MATS,NAAQS, as well as its legal obligations, involved the installation and operation of emission control equipment at some facilities and the suspension of operations at others; however, Consumers continues to evaluate these rules in conjunction with other EPA and EGLE rulemakings, litigation, executive orders, treaties, and congressional action. This evaluation could result in: •a change in Consumers’ fuel mix •changes in the types of generating units Consumers may purchase or build in the future •changes in how certain units are usedoperated •the retirement, mothballing, or repowering with an alternative fuel of some of Consumers’ generating units •changes in Consumers’ environmental compliance costs Greenhouse Gases: There have been numerous legislative and regulatory initiatives at the state, regional, national, and international levels that involve the potential regulation of greenhouse gases. Consumers continues to monitor and comment on these initiatives and to follow litigation involving greenhouse gases. In 2015, the EPA finalized new rules pursuant to Section 111(b) of the Clean Air Act to limit carbon dioxide emissions from new electric generating units, as well as modified or reconstructed electric
generating units. New coal-fueled units would not be able to meet this limit without installing carbon dioxide control equipment using such methods as carbon capture and sequestration. In December 2018, the EPA proposed a revised Section 111(b) regulation to replace the 2015 standard rule limiting carbon dioxide emissions from new electric generating units, citing limited availability and high costs of carbon capture and sequestration equipment as reasons to change the 2015 rule. The revised Section 111(b) regulation requireswould require new coal-fueled generating units to meet a highly efficient steam cycle performance standard. If finalized, Consumers does not expect this proposal to change its existing environmental strategy. The EPA has not formally indicated whether they intend to finalize this rulemaking or instead pursue a new set of regulations. In June 2019, the EPA finalized the Affordable Clean Energy rule. The rule, requireswhich required individual states to evaluate coal‑fueled power plants for heat‑rate improvements that could increase overall plant efficiency. The evaluationsIn January 2021, the D.C. Circuit Court of Appeals vacated and remanded this rule to be performedthe EPA which, in turn, appealed the rule to the U.S. Supreme Court. In October 2021, the U.S. Supreme Court agreed to hear an appeal of this case. A decision is expected by the State of Michigan under the final rule may require Consumers to make heat-rate improvements at its remaining coal-fueled units beginning in the mid‑2020s. This rule is presently being litigated.June 2022. Consumers cannot evaluate the potential impact of the rule until any appeals and EPA actions are resolved. It is anticipated that the StateEPA will propose a new regulation in 2022 addressing greenhouse gas emissions from existing fossil-fueled electric generating units, potentially under the Clean Air Act; however, Consumers cannot predict the form and extent of Michigan completes its evaluations.such potential regulation as it is likely to be impacted by the U.S. Supreme Court’s decision on the Affordable Clean Energy rule. In 2015, a group of 195 countries, including the U.S., finalized the Paris Agreement, which governsaddresses carbon dioxide reduction measures beginning in 2020. AlthoughWhile the U.S. has begun the process of withdrawinghad withdrawn from the Paris Agreement, it has statedrejoined the Paris Agreement in 2021. In April 2021, the U.S. announced it is committing to a desirenationally determined contribution under the Paris Agreement. Nationally determined contributions are the efforts by each country to renegotiatereduce national greenhouse gas emissions. The commitment made by the U.S. is to reduce greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. In its 2021 IRP, pending MPSC approval, Consumers proposed a new agreement60-percent reduction in the future.its carbon emissions from 2005 levels by 2025. At this time, Consumers does not expect any adverse changes to its environmental strategy as a result of these events, as the nationally determined contribution is not binding without new Congressional legislation.
In 2020, Michigan’s Governor signed an executive order creating the Michigan Healthy Climate Plan, which outlines goals for Michigan to achieve economy-wide net-zero greenhouse gas emissions and to be carbon neutral by 2050. The executive order aims for a 28-percent reduction below 2005 levels of greenhouse gas emissions by 2025. Consumers has already surpassed the 28-percent reduction milestone for its owned electric generation and previously announced a goal of achieving net-zero carbon emissions from its electric business by 2040. The order directs EGLE to develop and oversee an action plan for achieving these goals. In addition, the Governor established the Council on Climate Solutions, an advisory group of key stakeholders to be appointed by the Governor that will assist EGLE in implementing the plan. These goals are aspirational in nature and any changes in law or regulation to achieve these goals would need to be approved by Michigan Legislature or the relevant regulatory agency. The MPSC has requested comments from utilities and other stakeholders on how the Governor’s goal should be incorporated into future IRP filings. Consumers does not expect any adverse changes to its environmental strategy as a result of these events. While Consumers cannot predict the outcome of changes in U.S. policy or of other legislative or regulatory initiatives involving the potential regulation of greenhouse gases, it intends to continue to move forward with its Clean Energy Plan, its present net-zero carbon reduction goal, and its emphasis on supply diversity.reliable and resilient supply. Consumers will continue to monitor regulatory and legislative activity and related litigation regarding greenhouse gas emissions standards that may affect electric generating units. SevereIncreased frequency of severe weather events, andincluding those due to climate change, associated with increasing levels of greenhouse gases could affectmaterially impact Consumers’ facilities, and energy sales, and could have a material impact on its future results of operations. Consumers is unable to predict these events or their financial impact; however, Consumers plans for adverse weatherevaluates the potential physical impacts of climate change on its operations, including increased temperature, increased storm activity, increased rainfall, and takeshigher lake and river levels. Consumers is taking steps to reduce its potential impact.mitigate these risks as appropriate.
Litigation, international treaties, executive orders, federal laws and regulations (including regulations by the EPA), and state laws and regulations, if enacted or ratified, could ultimately requireimpact Consumers. Consumers may be required to replace equipment,equipment; install additional emission control equipment,equipment; purchase emission allowances or credits,credits; curtail operations,operations; arrange for alternative sources of supply,supply; purchase facilities that generate fewer emissions; mothball or retire facilities that generate certain emissions,emissions; pursue energy efficiency or demand response measures more swiftly,swiftly; or take other steps to manage or lower the emission of greenhouse gases. Although associated capital or operating costs relating to greenhouse gas regulation or legislation could be material and cost recovery cannot be assured, Consumers expects to recover these costs and capital expenditures in rates consistent with the recovery of other reasonable costs of complying with environmental laws and regulations. CCRs: In 2015, the EPA published a final rule regulating CCRs under RCRA. The finalThis 2015 rule adopts minimum standards for beneficially reusing and disposing of non‑hazardous CCRs. The rule establishes new minimum requirements for siteCCR unit location, design, structural stability, groundwater monitoring and correction action, flood protection, storm water design, fugitive dust control, recordkeeping, and public disclosure of information,certain records, including any groundwater protection standard exceedances. The 2015 rule also sets out conditions under which some CCR units would be forced to cease receiving CCR and non‑CCR wastewater and initiate closure based on the inability to achieve minimum safety standards, meet a location standard, or meet minimum groundwater standards. Consumers has aligned with EGLE on closure plans for each of its unlined ash ponds to ensure coordination between federal and state requirements. The unlined ash ponds have ceased operation and have been replaced with
double-lined ash ponds or concrete tanks. Significant closure work has been completed at the remaining ash ponds.
Due to litigation, many aspects of the 2015 CCR rule have been remanded to the EPA, which has resulted in various new rulemakings. These new rulemakings are nownumerous proposed rules and three final rules. One of the final rules is in litigation. ContinuedAnticipated litigation related to remanded aspects that have not been addressed will add uncertainty around requirements for compliance and state permit programs. Separately,The EPA amended the conditions of forced closure in a rule published in August 2020. The August 2020 rule required all unlined CCR units to initiate closure by mid-April 2021, unless conditions that satisfied an alternate closure schedule were approved by the EPA. Consumers, with agreement from EGLE,
completed the work necessary to initiate closure by excavating CCRs or placing a final cover over each of its relevant CCR units prior to the April 2021 closure initiation deadline. Separate from the 2015 or 2020 rules, Congress passed legislation in 2016 allowing participating states to develop permitting programs for CCRs under RCRA.RCRA Subtitle D. In December 2018, the Michigan Legislature adopted standards for a permitting program, which requires the EPA’s authorization. This program should reduce costly, duplicative oversight over CCRs and provide local oversight to CCR issues unique to Michigan. In April 2020, EGLE submitted the state CCRa regulatory package for Michigan’s permit program application to Michigan’s Attorney General in June 2019the EPA for its review, and signature. The Attorney General’s officewhich is engaged in a detailed review of the program and application with EGLE.still pending. Federal rulemaking challenges may delay EPA approval of the Michigan permitting program. Consumers has aligned with EGLE on closure plans for all of its coal ash disposal sites, including those subject to the EPA’s 2015 CCR rule, and adjusted its recorded ARO accordingly. Consumers has historically been authorized to recover in electric rates costs related to coal ash disposal sites.
Water: Multiple water-related regulations apply, or may apply, to Consumers. The EPA regulates cooling water intake systems of existing electric generating plants under Section 316(b) of the Clean Water Act and the corresponding rules that were revised in 2014. The rules are aimed at reducingseek to reduce alleged harmful impacts on aquatic organisms, such as fish. In April 2018, Consumers submitted to EGLE for review and approval all required studies and recommended plans to comply with Section 316(b), but has not yet received final approval. In 2015, the EPA released its final effluent limitation guidelines for steam electric generating plants. These guidelines, which are presently being litigated, set stringent new requirements for the discharge from electric generating units into surface waters. The EPA published a final rule in October 2020, with an effective date of December 2020, revising the 2015 guidelines related to the discharge of certain wastewater streams. In 2017, the EPA announced that it will undertake a rulemaking to replace specific portionsstreams from electric generating units. The rule also allows for extension of the rule and proposed delayingcompliance deadline from the compliance start datesend of 2023 to the end of 2025, upon approval by EGLE through the NPDES permitting process. Consumers received such an extension to 2025 for two years, but maintained the compliance end dates. Additional rulemaking beganits Campbell generating facility in November 2019 and will continue in 2020.2021. Consumers does not expect any adverse changes to its environmental strategy as a result of anythese revisions to the rule.rule or any litigation of the guidelines. In recent years,January 2020, the EPA and the U.S. Army Corps of Engineers have proposed rules redefining “Waters of the United States,” which defines the scope of federal jurisdictionfinalized a rule under the Clean Water Act and other changes to the Clean Water Act regulations. For example, the EPA recently finalizedthat repealed a rule repealing the 2015 definition of “Waters of the United States” and, in January 2020, released a rule with its new definition. These rules are presently being, or are likely to be, litigated. A final definition would changeStates,” narrowed the scope of waterfederal jurisdiction, and wetlands regulations underreduced the Clean Water Act. The EPA has delegatedfrequency of dual jurisdiction in states with authority to manageregulate the same waters; Michigan wetlands program to EGLE for a large portion of Consumers’ service territory, but dual jurisdiction exists betweenis one such state. In November 2021, the EPA and the U.S. Army Corps of Engineers in some locations in Michigan. As a result, regardlessproposed to revise the 2020 “Waters of the ultimate outcomeUnited States” definition to revert to the 2015 “Waters of the United States” definition, with changes reflecting the EPA’s rules,interpretation of intervening U.S. Supreme Court decisions. The proposed November 2021 rulemaking may change how Consumers expectsinteracts with federal jurisdictional waters within Michigan, which may add additional requirements to continue to operate under Michigan’s wetlands regulations, and under the applicable state and federal water jurisdictional regulations. Thus,existing compliance programs, or may require additional permitting for infrastructure projects. However, Consumers does not expect any material adverse changes to its environmental strategy as a result of these events, but under an expanded federalthe current interpretations. The “Waters of the United States” definition could experience permitting delays for infrastructure projects where dual jurisdiction exists.
continues to be litigated in multiple jurisdictions.
Many of Consumers’ facilities maintain NPDES permits, which are renewed every five years and are vital to the facilities’ operations. Failure of EGLE to renew any NPDES permit, a successful appeal against a permit, a change in the interpretation or scope of NPDES permitting, or onerous terms contained in a permit could have a significant detrimental effect on the operations of a facility.
Protected Wildlife: Multiple regulations apply, or may apply, to Consumers relating to protected species and habitats. Statutes like the Endangered Species Act, the Migratory Bird Treaty Act, and the Bald and Golden Eagle Protection Act may impact operations at Consumers’ facilities. In May 2021, the U.S. Fish and Wildlife Service proposed to repeal a January 2021 rule related to incidental take of migratory birds. In November 2021, the U.S. Fish and Wildlife Service published an advanced notice of proposed rulemaking outlining its intent to regulate incidental take under the Migratory Bird Treaty Act. Permitting and monitoring fees and restrictions on operations associated with the rules could impact Consumers’ existing and future operations, including wind and solar generation facilities. Additionally, Consumers is monitoring proposed changes to the listing status of several species within its operational area due to an increase in wildlife-related regulatory activity. A change in species listed under the Endangered Species Act may impact Consumers’ costs to mitigate its impact on protected species and habitats at certain existing facilities as well as siting choices for new facilities. Other Matters: Other electric environmental matters could have a material impact on Consumers’ outlook. For additional details on other electric environmental matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4,3, Contingencies and Commitments—Consumers Electric Utility Contingencies—Electric Environmental Matters. Retention Incentive Program: In October 2019, Consumers announced a retention incentive program to ensure necessary staffing at the D.E. Karn generating complex through the anticipated retirement of the coal-fueled electric generating units. Based on the number of employees that have chosen to participate, the aggregate cost of the program through 2023 is estimated to be $35 million. Consumers expects to recognize $15 million of expense related to retention and severance benefits in 2020. Consumers will seek recovery of these costs from customers. For additional details on this program, see Note 22, Asset Sales and Exit Activities.
Consumers Gas Utility Outlook and Uncertainties Gas Deliveries: Consumers’ gas customer deliveries are seasonal. The peak demand for natural gas typically occurs in the winter due to colder temperatures and the resulting use of natural gas as heating fuel. Over the next five years, Consumers expects weather-normalized gas deliveries over the next five years to remain stable relative to 2019.2021. This outlook reflects the effects of energy waste reduction programs offset largely by modest growth in gas demand offset by the predicted effects of energy efficiency and conservation.demand. Actual delivery levels from year to year may vary from this expectation as a result of:will depend on: •weather fluctuations weather fluctuations
•use by power producers •availability and development of renewable energy sources •gas price changes Michigan•Michigan’s economic conditions, including population trends and housing activity
•the price or demand of competing energy sources or fuels •energy efficiency and conservation impacts Gas Rate Matters: Rate matters are critical to Consumers’ gas utility business. For additional details on rate matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters and Note 3, Regulatory Matters.Contingencies and Commitments.
Gas Rate Case:In December 2019,2021, Consumers filed an application with the MPSC seeking an annual rate increase of $245$278 million, based on a 10.5 percent authorized return on equity and a projected twelve-month period ending September 30, 2021.2023. The filing requests authority to recover new infrastructure investment and related costs that willare expected to allow Consumers to improve system safety and reliability.
reliability and reduce fugitive methane emissions. Presented in the following table are the components of the requested increase in revenue: | | | | | | In Millions | | Projected Twelve-Month Period Ending September 30 | | 2021 |
| Components of the requested rate increase | | | Investment in rate base | | $ | 126 |
| Operating and maintenance costs | | 91 |
| Cost of capital | | 26 |
| Sales | | 2 |
| Total | | $ | 245 |
|
| | | | | | | | | In Millions | Projected Twelve-Month Period Ending September 30 | | 2022 | Components of the requested rate increase | | | Investment in rate base | | $ | 247 | | Operating and maintenance costs | | (4) | | Cost of capital | | 22 | | Sales | | 13 | | Total | | $ | 278 | |
The filing also seeks approval of a revenue decoupling mechanism that would annually reconcile Consumers’ actual weather-normalized non‑fuelnon-fuel revenues with the revenues approved by the MPSC. Depreciation Rate Case: In December 2021, Consumers filed a depreciation case related to its gas utility plant property. In this case, Consumers requested a decrease in depreciation expense of $1 million annually based on December 31, 2020 balances. GCR Plan:Consumers submitted its 2020-20212022-2023 GCR plan to the MPSC in December 20192021 and, in accordance with its proposed plan, expects to self-implement the 2020-20212022-2023 GCR charge beginning in April 2020.2022. Gas Pipeline and Storage Integrity and Safety: In October 2019,The PHMSA has published a final rulevarious rules that expandsexpand federal safety standards for gas transmission pipelines.pipelines and underground storage facilities. To comply with the rule,these rules, Consumers will incur increased capital and operating and maintenance costs to install and remediate pipelines as well as increased operating and maintenance costs to expand inspections, maintenance, and monitoring of its existing pipelines.pipelines and storage facilities. The initial requirements in the regulation taketook effect in July 1, 2020, with various implementationfuture regulation phases to be released over numerous years. In 2016, PHMSA published an interim final rule that established minimum federal safety standards for underground natural gas storage facilities. To comply with the interim rule, Consumers incurred increased capital and operating and maintenance costs to expand inspections, maintenance, and monitoring of its underground gas storage facilities. PHMSA expects to finalize additional requirements in early 2020.
Although associated capital or operating and maintenance costs relating to these regulations could be material and cost recovery cannot be assured, Consumers expects to recover such costs and capital expenditures in rates consistent with the recovery of other reasonable costs of complying with laws and regulations. Consumers will continue to monitor gas safety regulations and is implementingcontinue implementation of the American Petroleum Institute’s Recommended Practice 1173, Pipeline Safety Management Systems. This program ensuresminimizes gas system asset- and performance-related risks by ensuring that there are policies, procedures, work instructions, forms, and records in place to streamline adoption and deployment of any existing or future regulations. Gas Environmental Outlook: Consumers expects to incur response activity costs at a number of sites, including 23 former MGP sites. For additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4,3, Contingencies and Commitments—Consumers Gas Utility Contingencies—Gas Environmental Matters. Air Quality: In 2015, the EPA lowered the NAAQS for ozone. The 2015 ozone NAAQS made it more difficult to construct or modify power plants and other emission sources in areas of the country that have not met the 2015 ozone standard. In 2018, the EPA designated certain areas of Michigan as not meeting the ozone standard. Specifically, seven counties in southeastern Michigan and three counties in western Michigan were not in attainment with the ozone standard by an August 2021 regulatory deadline, and thus may have their nonattainment designations increased from marginal to moderate. Some of Consumers’ compressor stations are located in these areas. The State of Michigan has convened industry workgroups
to seek implementation and control strategy ideas for statewide compliance of the 2015 ozone standard, which will need to be in place by early 2023. In January 2022, EGLE submitted a request to the EPA for redesignation of the seven counties in southeastern Michigan to be in attainment with the 2015 ozone standard based on the most recent data. EGLE is awaiting the EPA’s response to that request. In August 2020, the EPA proposed to retain the 2015 NAAQS for ozone without revision and finalized this regulatory decision in December 2020. In October 2021, the EPA provided notice that it was going to reconsider the December 2020 ozone NAAQS decision. The EPA believes it will complete this reconsideration by December 2023. Consumers will continue to stay engaged with EGLE and the workgroups to assess potential impacts to its compressor stations. Greenhouse Gases: Consumers is making voluntary efforts to reduce its gas utility’s methane emissions. In October 2019, Consumers released its Methane Reduction Plan, which set a goal of net-zero methane emissions from its natural gas delivery system by 2030. Under its Methane Reduction Plan, Consumers plans to reduce methane emissions from its system by about 80 percent by accelerating the replacement of aging pipe, rehabilitating or retiring
outdated infrastructure, and adopting new technologies and practices. The remaining emissions will be eliminatedoffset by purchasing and/or producing renewable natural gas. In November 2021, the EPA released a proposed rule to regulate methane for the oil and gas sector. This proposed rule is not expected to have a material adverse impact on Consumers’ natural gas storage, compressor stations, and distribution systems, as it applies upstream of Consumers’ facilities. In 2020, Michigan’s Governor signed an executive order creating the Michigan Healthy Climate Plan, which outlines goals for Michigan to achieve economy-wide net-zero greenhouse gas emissions and to be carbon neutral by 2050. The executive order aims for a 28-percent reduction below 2005 levels of greenhouse gas emissions by 2025. These new goals could impact Consumers’ gas business over the long term. Consumers is evaluating decarbonization options for its gas business including energy efficiency, renewable natural gas, carbon offsets, and other decarbonization methods. As one strategy, Consumers recently requested the MPSC’s approval of a proposed program that would allow gas customers to purchase carbon offset credits on a voluntary basis. Similarly, in December 2021, Consumers announced plans to begin development of a renewable natural gas facility that will capture methane from manure generated at a neighboring farm and convert it into renewable natural gas. For additional details on the executive order, see Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook. In 2015, a group of 195 countries, including the U.S., finalized the Paris Agreement, which addresses carbon dioxide reduction measures beginning in 2020. While the U.S. had withdrawn from the Paris Agreement, it rejoined the Paris Agreement in 2021. In April 2021, the U.S. announced it is committing to a nationally determined contribution under the Paris Agreement. Nationally determined contributions are the efforts by each country to reduce national greenhouse gas emissions. The commitment made by the U.S. is to reduce greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. In its 2021 IRP, pending MPSC approval, Consumers proposed a 60-percent reduction in its carbon emissions from 2005 levels by 2025. At this time, Consumers does not expect any adverse changes to its environmental strategy as a result of these events, as the nationally determined contribution is not binding without new Congressional legislation. There is also increasing interest at the federal, state, and local levels involving potential regulation of greenhouse gases or its sources, which include methane emissions and carbon dioxide from Consumers’ gas utility.sources. Such regulation, if adopted, may involve requirements to reduce methane emissions from Consumers’ gas utility operations and carbon dioxide emissions from natural gas customer use. No such measures apply to Consumers at this time. Consumers continues to monitor these initiatives and comment as appropriate. Consumers cannot predict the impact of any potential future legislation or regulation on its gas utility.
Consumers Electric Utility and Gas Utility Outlook and Uncertainties Energy Waste Reduction Plan: The 2016 Energy Law authorized incentives for demand response programs and expanded existing incentives for energy efficiency programs, referring to the combined initiatives as energy waste reduction programs. The 2016 Energy Law: extended thelaw also set a requirement to achieve annual reductions of 1.0 percent in customers’ electricity use through 2021 and 0.75 percent in customers’ natural gas use indefinitely and established a goal of 35 percent combined renewable energy and energy waste reduction by 2025. Consumers achieved 30 percent combined renewable energy and energy waste reduction through 2021.
removed limitsAdditionally, the MPSC has approved the recovery of demand response costs and an associated financial incentive based on investments under the program and provided for a higher return on those investments; together, these provisions effectively doubled the financial incentives Consumers may earn for exceeding the statutory targetsdemand response target performance.
| | • | established a goal of 35 percent combined renewable energy and energy waste reduction by 2025; Consumers has achieved 22 percent of the combined renewable energy and energy waste reduction goal through 2019
|
Under its energy waste reduction plan, Consumers provides its customers with incentives to reduce usage by offering energy audits,audits; rebates and discounts on purchases of highly efficient appliances,appliances; and other incentives and programs. Enterprises Outlook and Uncertainties CMS Energy’s primary focus with respect to its enterprises businesses is to maximize the value of generating assets, its share of which represents 1,2341,483 MW of capacity, and to pursue opportunities for the development of renewable generation projects. In June 2021, DIG, CMS Generation Michigan Power, and CMS ERM entered into an agreement with Consumers to sell, for $515 million, subject to certain adjustments, the enterprises segment’s three natural gas-fueled generating units, totaling 1,001 MW of nameplate capacity: •the 770-MW DIG plant located in Dearborn, Michigan •a 156-MW peaking generating unit located in Gaylord, Michigan •a 75-MW peaking generating unit located in Comstock, Michigan The parties plan to close the sale, which is dependent upon regulatory approvals, in 2025. The enterprises segment’s assets may be affected by environmental laws and regulations. The new2015 ozone NAAQS will makemade it more difficult to construct or modify power plants and other emission sources in areas of the country that have not met the new2015 ozone standard. In April 2018, the EPA designated certain areas of Michigan as not meeting the new standard with an August 2018 effective date. ozone standard. The enterprises segment’s DIG plant located in Dearborn, Michigan is in one such area and, as a result, would be subject to additional permitting restrictions in the event of any future modifications. For additional details regarding the new ozone NAAQS, see Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook. Trends, uncertainties, and other matters related to the enterprises segment that could have a material impact on CMS Energy’s consolidated income, cash flows, or financial position include: •investment in and financial benefits received from renewable energy and energy storage projects •changes in energy and capacity prices •severe weather events and climate change associated with increasing levels of greenhouse gases
changes in commodity prices and interest rates on certain derivative contracts that do not qualify for hedge accounting and must be marked to market through earnings •changes in various environmental laws, regulations, principles, or practices, or in their interpretation the outcome of certain legal proceedings, including gas price reporting litigation
•indemnity and environmental remediation obligations at Bay Harbor including
•indemnity obligations assumed in connection with the purchase or ownership of an inability to renew an NPDES permitinterest in 2020one or more facilities that involve tax equity financing obligations related to a tax claim from the government of Equatorial Guinea
•representations, warranties, and indemnities provided by CMS Energy in connection with previous sales of assets For additional details regarding the enterprises segment’s uncertainties, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4,3, Contingencies and Commitments. EnerBank Outlook and Uncertainties
EnerBank is a Utah state-chartered, FDIC-insured industrial bank providing unsecured consumer installment loans, largely for financing home improvements. The carrying value of EnerBank’s loan portfolio was $2.5 billion at December 31, 2019. The 12-month rolling average net default rate on loans held by EnerBank was 1.2 percent at December 31, 2019. EnerBank expects lending growth of up to ten percent annually over the next five years.
EnerBank’s loan portfolio was funded primarily by certificates of deposit of $2.4 billion. CMS Energy is required both by law and by contract to provide financial support, including infusing additional capital, to ensure that EnerBank satisfies mandated capital requirements and has sufficient liquidity to operate. With its self-funding plan, EnerBank has exceeded these requirements historically and exceeded them as of December 31, 2019. For additional details regarding EnerBank’s loan portfolio, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 8, Notes Receivable.
Other Outlook and Uncertainties Employee Separation Program: In December 2019, CMS Energy and Consumers announced a voluntary separation program for non-union employees. Under the program, employees elected to request separation, and management decided which requests to accept. In January 2020, management communicated its decisions to affected employees, who will have 45 days to decide whether to separate. CMS Energy and Consumers estimate that they will recognize an after-tax charge of up to $10 million in 2020 related to the program. As a result of the program, however, CMS Energy and Consumers expect to benefit from future cost savings, as employee staffing levels will be better matched to workload demand, which reflects the companies’ ongoing workforce productivity improvements.
Litigation: CMS Energy, Consumers, and certain of their subsidiaries are named as parties in various litigation matters, as well as in administrative proceedings before various courts and governmental agencies, arising in the ordinary course of business. For additional details regarding these and other legal matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3,2, Regulatory Matters and Note 4,3, Contingencies and Commitments.
Critical Accounting Policies and Estimates The following information is important to understand CMS Energy’s and Consumers’ results of operations and financial condition. For additional accounting policies, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 1, Significant Accounting Policies. In the preparation of CMS Energy’s and Consumers’ consolidated financial statements, estimates and assumptions are used that may affect reported amounts and disclosures. CMS Energy and Consumers use accounting estimates for asset valuations, unbilled revenue, depreciation, amortization, financial and derivative instruments, employee benefits, stock-based compensation, the effects of regulation, indemnities, contingencies, and contingencies.AROs. Actual results may differ from estimated results due to changes in the regulatory environment, regulatory decisions, lawsuits, competition, and other factors. CMS Energy and Consumers consider all relevant factors in making these assessments. Accounting for the Effects of Industry Regulation: Because Consumers has regulated operations, it uses regulatory accounting to recognize the effects of the regulators’ decisions on its financial statements. Consumers continually assesses whether future recovery of its regulatory assets is probable by considering communications and experience with its regulators and changes in the regulatory environment. If Consumers determined that recovery of a regulatory asset were not probable, Consumers would be required to write off the asset and immediately recognize the expense in earnings. Contingencies: CMS Energy and Consumers make judgments regarding the future outcome of various matters that give rise to contingent liabilities. For such matters, they record liabilities when they are considered probable and reasonably estimable, based on all available information. In particular, CMS Energy and Consumers are participating in various environmental remediation projects for which they have recorded liabilities. The recorded amounts represent estimates that may take into account such considerations as the number of sites, the anticipated scope, cost, and timing of remediation work, the available technology, applicable regulations, and the requirements of governmental authorities. For remediation projects in which the timing of estimated expenditures is considered reliably determinable, CMS Energy and Consumers record the liability at its net present value, using a discount rate equal to the interest rate on monetary assets that are essentially risk-free and have maturities comparable to that of the environmental liability. The amount recorded for any contingency may differ from actual costs incurred when the contingency is resolved. For additional details, see Item 8. Financial Statements and
Supplementary Data—Notes to the Consolidated Financial Statements—Note 4,3, Contingencies and Commitments. Derivative Instruments: CMS Energy and Consumers account for certain contracts as derivative instruments. If a contract is a derivative and does not qualify for the normal purchases and sales exception, it is recorded on the consolidated balance sheets at its fair value. At CMS Energy, if the derivative is accounted for as a cash flow hedge, unrealized gains and losses from changes in the fair value of the derivative are recognized in AOCI and subsequently recognized in earnings when the hedged transactions impact earnings. If the derivative is accounted for as a fair value hedge, changes in the fair value of the derivative and changes in the fair value of the hedged item due to the hedged risk are recognized in earnings. For the FTRs at Consumers, changes in fair value are deferred as regulatory assets or liabilities. The criteria used to determine if an instrument qualifies for derivative accounting or for an exception from derivative accounting are complex and often require judgment in application. Changes in business strategies or market conditions, as well as a requirement to apply different interpretations of the derivative accounting literature, could result in changes in accounting for a single contract or groups of contracts, which could have a material impact on CMS Energy’s and Consumers’ financial statements. For
additional details on CMS Energy’s and Consumers’ derivatives and how the fair values of derivatives are determined, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 6,5, Fair Value Measurements. Income Taxes: The amount of income taxes paid by CMS Energy is subject to ongoing audits by federal, state, and foreign tax authorities, which can result in proposed assessments. An estimate of the potential outcome of any uncertain tax issue is highly judgmental. CMS Energy believes adequate reserves have been provided for these exposures; however, future results may include favorable or unfavorable adjustments to the estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments expire. Additionally, CMS Energy’s judgment as to the ability to recover its deferred tax assets may change. CMS Energy believes the valuation allowances related to its deferred tax assets are adequate, but future results may include favorable or unfavorable adjustments. As a result, CMS Energy’s effective tax rate may fluctuate significantly over time. For additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 14,12, Income Taxes. Pension and OPEB: CMS Energy and Consumers provide retirement pension benefits to certain employees under non‑contributory DB Pension Plans, and they provide postretirement health and life benefits to qualifying retired employees under an OPEB Plan. CMS Energy and Consumers record liabilities for pension and OPEB on their consolidated balance sheets at the present value of the future obligations, net of any plan assets. The calculation of the liabilities and associated expenses requires the expertise of actuaries, and requires many assumptions, including: •life expectancies •discount rates •expected long-term rate of return on plan assets •rate of compensation increases •expected health care costs A change in these assumptions could change significantly CMS Energy’s and Consumers’ recorded liabilities and associated expenses.
Presented in the following table are estimates of costscredits and cash contributions through 20222024 for the DB Pension Plans and OPEB Plan. Actual future costs, credits, and contributions will depend on future investment performance, discount rates, and various factors related to the participants of the DB Pension Plans and OPEB Plan. CMS Energy and Consumers will, at a minimum, contribute to the plans as needed to comply with federal funding requirements. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | DB Pension Plans | | OPEB Plan | | Credit | Contribution | | Credit | Contribution | CMS Energy, including Consumers | | | | | | | | | | 2022 | | $ | (10) | | | $ | — | | | | $ | (120) | | | $ | — | | 2023 | | (31) | | | — | | | | (114) | | | — | | 2024 | | (52) | | | — | | | | (104) | | | — | | Consumers1 | | | | | | | | | | 2022 | | $ | (7) | | | $ | — | | | | $ | (113) | | | $ | — | | 2023 | | (27) | | | — | | | | (107) | | | — | | 2024 | | (47) | | | — | | | | (97) | | | — | |
1Consumers’ pension and OPEB costs are recoverable through its general ratemaking process. | | | | | | | | | | | | | | | | | | | In Millions | | | DB Pension Plans | | OPEB Plan | | Cost | | Contribution¹ | | | Credit | | Contribution | | CMS Energy, including Consumers | | | | | | | | | | 2020 | | $ | 29 |
| | $ | 531 |
| | | $ | (92 | ) | | $ | — |
| 2021 | | 13 |
| | — |
| | | (93 | ) | | — |
| 2022 | | 5 |
| | — |
| | | (94 | ) | | — |
| Consumers2 | | | | | | | | | | 2020 | | $ | 30 |
| | $ | 518 |
| | | $ | (86 | ) | | $ | — |
| 2021 | | 14 |
| | — |
| | | (87 | ) | | — |
| 2022 | | 7 |
| | — |
| | | (88 | ) | | — |
|
| | 1
| Contribution occurred in January 2020. |
| | 2
| Consumers’ pension and OPEB costs are recoverable through its general ratemaking process. |
Lowering the expected long-term rate of return on the assets of the DB Pension Plans by 25 basis points would increase estimated pension cost for 20202022 by $6$8 million for both CMS Energy and Consumers. Lowering the PBO discount rates by 25 basis points would increase estimated pension cost for 20202022 by $6$5 million for both CMS Energy and Consumers. Pension and OPEB plan assets are accounted for and disclosed at fair value. Fair value measurements incorporate assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Development of these assumptions may require judgment. For additional details on postretirement benefits, including the fair value measurements for the assets of the DB Pension Plans and OPEB Plan, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 12,10, Retirement Benefits. Unbilled Revenues: Consumers’ customers are billed monthly in cycles having billing dates that do not generally coincide with the end of a calendar month. This results in customers having received electricity or natural gas that they have not been billed for as of the month-end. Consumers estimates its unbilled revenues by applying an average billed rate to total unbilled deliveries for each customer class. Consumers records unbilled revenues as accounts receivable and accrued revenue on its consolidated balance sheet. For additional information on unbilled revenues, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 16,14, Revenue. New Accounting Standards For details regardingThere are no new accounting standards issued but not yet effective see Item 8. Financial Statements and Supplementary Data—Notesthat are expected to the Consolidated Financial Statements—Note 2, New Accounting Standards.have a material impact on CMS Energy’s or Consumers’ consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk CMS Energy and Consumers are exposed to market risks including, but not limited to, changes in interest rates, commodity prices, and investment security prices. They may enter into various risk management contracts to mitigate exposure to these risks, including swaps, options, futures, and forward contracts. CMS Energy and Consumers enter into these contracts using established policies and procedures, under the direction of an executive oversight committee consisting of certain officers and a risk committee consisting of those and other officers and business managers. The following risk sensitivities illustrate the potential loss in fair value, cash flows, or future earnings from financial instruments, assuming a hypothetical adverse change in market rates or prices of ten percent. Potential losses could exceed the amounts shown in the sensitivity analyses if changes in market rates or prices were to exceed ten percent. Interest-Rate Risk
Long-Term Debt: CMS Energy and Consumers are exposed to interest-rate risk resulting from issuing fixed-rate and variable-rate debt instruments. CMS Energy and Consumers use a combination of these instruments, and may also enter into interest-rate swap agreements, in order to manage this risk and to achieve a reasonable cost of capital.
Presented in the following table is a sensitivity analysis of interest-rate risk on CMS Energy’s and Consumers’ debt instruments, which includes the effects of interest-rate swaps (assuming an adverse change in market interest rates of ten percent): | | In Millions | In Millions | | In Millions | December 31 | 2019 | | 2018 | | December 31 | 2021 | 2020 | Fixed-rate financing—potential loss in fair value | | | | | Fixed-rate financing—potential loss in fair value | | CMS Energy, including Consumers | | $ | 558 |
| | $ | 465 |
| CMS Energy, including Consumers | | $ | 639 | | | $ | 612 | | Consumers | | 355 |
| | 330 |
| Consumers | | 402 | | | 372 | |
The fair value losses in the above table could be realized only if CMS Energy and Consumers transferred all of their fixed-rate financing to other creditors. The annual earnings exposure related to variable-rate financing was immaterial for both CMS Energy and Consumers at December 31, 20192021 and 2018,2020, assuming an adverse change in market interest rates of ten percent. Notes Receivable: CMS Energy is exposed to interest-rate risk resulting from EnerBank’s fixed-rate installment loans. EnerBank provides unsecured consumer installment loans, largely for financing home improvements.
Presented in the following table is a sensitivity analysis of interest-rate risk on EnerBank’s notes receivable, which includes the effects of interest-rate swaps (assuming an adverse change in market interest rates of ten percent):
| | | | | | | | | | In Millions | | December 31 | 2019 | | 2018 | | Notes receivable—potential loss in fair value | | $ | 61 |
| | $ | 46 |
|
The fair value losses for CMS Energy in the above table could be realized only if EnerBank’s loans were sold to other parties. The annual earnings exposure related to variable-rate interest receipts at EnerBank was immaterial at December 31, 2019 and 2018. For additional details on financial instruments see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 7,6, Financial Instruments.
Item 8. Financial Statements and Supplementary Data Index to Financial Statements
CMS Energy Corporation Consolidated Statements of Income | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions, Except Per Share Amounts | | | | | Years Ended December 31 | | | | 2021 | 2020 | 2019 | Operating Revenue | | | | | | | $ | 7,329 | | | $ | 6,418 | | | $ | 6,624 | | | | | | | | | | | | | | Operating Expenses | | | | | | | | | | | | Fuel for electric generation | | | | | | | 593 | | | 375 | | | 493 | | Purchased and interchange power | | | | | | | 1,665 | | | 1,492 | | | 1,496 | | Purchased power – related parties | | | | | | | 77 | | | 64 | | | 75 | | Cost of gas sold | | | | | | | 735 | | | 577 | | | 769 | | Maintenance and other operating expenses | | | | | | | 1,610 | | | 1,280 | | | 1,356 | | Depreciation and amortization | | | | | | | 1,114 | | | 1,043 | | | 989 | | General taxes | | | | | | | 389 | | | 357 | | | 331 | | Total operating expenses | | | | | | | 6,183 | |
| 5,188 | |
| 5,509 | | | | | | | | | | | | | | Operating Income | | | | | | | 1,146 | |
| 1,230 | |
| 1,115 | | | | | | | | | | | | | | Other Income (Expense) | | | | | | | | | | | | Interest income | | | | | | | 3 | | | 4 | | | 7 | | Interest income – related parties | | | | | | | — | | | 7 | | | — | | Allowance for equity funds used during construction | | | | | | | 8 | | | 6 | | | 10 | | Income from equity method investees | | | | | | | 10 | | | 5 | | | 10 | | Non-operating retirement benefits, net | | | | | | | 165 | | | 118 | | | 91 | | Other income | | | | | | | 9 | | | 6 | | | 4 | | Other expense | | | | | | | (18) | | | (62) | | | (13) | | Total other income | | | | | | | 177 | |
| 84 | |
| 109 | | | | | | | | | | | | | | Interest Charges | | | | | | | | | | | | Interest on long-term debt | | | | | | | 481 | | | 483 | | | 439 | | Interest expense – related parties | | | | | | | 12 | | | 12 | | | 9 | | Other interest expense | | | | | | | 10 | | | 12 | | | 16 | | Allowance for borrowed funds used during construction | | | | | | | (3) | | | (2) | | | (4) | | Total interest charges | | | | | | | 500 | |
| 505 | |
| 460 | | | | | | | | | | | | | | Income Before Income Taxes | | | | | | | 823 | | | 809 | | | 764 | | Income Tax Expense | | | | | | | 95 | | | 115 | | | 131 | | | | | | | | | | | | | | Income From Continuing Operations | | | | | | | 728 | | | 694 | | | 633 | | Income From Discontinued Operations, Net of Tax of $170, $18, and $16 | | | | | | | 602 | | | 58 | | | 49 | | | | | | | | | | | | | | Net Income | | | | | | | 1,330 | | | 752 | | | 682 | | Income (Loss) Attributable to Noncontrolling Interests | | | | | | | (23) | | | (3) | | | 2 | | | | | | | | | | | | | | Net Income Attributable to CMS Energy | | | | | | | 1,353 | | | 755 | | | 680 | | Preferred Stock Dividends | | | | | | | 5 | | | — | | | — | | | | | | | | | | | | | | Net Income Available to Common Stockholders | | | | | | | $ | 1,348 | | | $ | 755 | | | $ | 680 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | In Millions, Except Per Share Amounts | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Operating Revenue | | $ | 6,845 |
| | $ | 6,873 |
| | $ | 6,583 |
| | | | | | | | Operating Expenses | | | | | | | Fuel for electric generation | | 493 |
| | 528 |
| | 505 |
| Purchased and interchange power | | 1,496 |
| | 1,613 |
| | 1,503 |
| Purchased power – related parties | | 75 |
| | 81 |
| | 86 |
| Cost of gas sold | | 769 |
| | 836 |
| | 750 |
| Maintenance and other operating expenses | | 1,448 |
| | 1,417 |
| | 1,236 |
| Depreciation and amortization | | 992 |
| | 933 |
| | 881 |
| General taxes | | 333 |
| | 303 |
| | 284 |
| Total operating expenses | | 5,606 |
| | 5,711 |
| | 5,245 |
| | | | | | | | Operating Income | | 1,239 |
| | 1,162 |
| | 1,338 |
| | | | | | | | Other Income (Expense) | | | | | | | Interest income | | 7 |
| | 11 |
| | 12 |
| Allowance for equity funds used during construction | | 10 |
| | 6 |
| | 5 |
| Income from equity method investees | | 10 |
| | 9 |
| | 15 |
| Nonoperating retirement benefits, net | | 91 |
| | 90 |
| | 24 |
| Other income | | 4 |
| | 2 |
| | 6 |
| Other expense | | (13 | ) | | (48 | ) | | (76 | ) | Total other income (expense) | | 109 |
| | 70 |
| | (14 | ) | | | | | | | | Interest Charges | | | | | | | Interest on long-term debt | | 439 |
| | 412 |
| | 406 |
| Interest expense – related parties | | 9 |
| | — |
| | — |
| Other interest expense | | 75 |
| | 49 |
| | 34 |
| Allowance for borrowed funds used during construction | | (4 | ) | | (3 | ) | | (2 | ) | Total interest charges | | 519 |
| | 458 |
| | 438 |
| | | | | | | | Income Before Income Taxes | | 829 |
| | 774 |
| | 886 |
| Income Tax Expense | | 147 |
| | 115 |
| | 424 |
| | | | | | | | Net Income | | 682 |
| | 659 |
| | 462 |
| Income Attributable to Noncontrolling Interests | | 2 |
| | 2 |
| | 2 |
| | | | | | | | Net Income Available to Common Stockholders | | $ | 680 |
| | $ | 657 |
| | $ | 460 |
| | | | | | | | Basic Earnings Per Average Common Share | | $ | 2.40 |
| | $ | 2.33 |
| | $ | 1.64 |
| Diluted Earnings Per Average Common Share | | $ | 2.39 |
| | $ | 2.32 |
| | $ | 1.64 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | In Millions, Except Per Share Amounts | | | | | Years Ended December 31 | | | | 2021 | 2020 | 2019 | Basic Earnings Per Average Common Share | | | | | | | | | | | | Income from continuing operations per average common share available to common stockholders | | | | | | | $ | 2.58 | | | $ | 2.45 | | | $ | 2.23 | | Income from discontinued operations per average common share available to common stockholders | | | | | | | 2.08 | | | 0.20 | | | 0.17 | | Basic earnings per average common share | | | | | | | $ | 4.66 | | | $ | 2.65 | | | 2.40 | | | | | | | | | | | | | | Diluted Earnings Per Average Common Share | | | | | | | | | | | | Income from continuing operations per average common share available to common stockholders | | | | | | | $ | 2.58 | | | $ | 2.44 | | | 2.22 | | Income from discontinued operations per average common share available to common stockholders | | | | | | | 2.08 | | | 0.20 | | | 0.17 | | Diluted earnings per average common share | | | | | | | $ | 4.66 | | | $ | 2.64 | | | 2.39 | |
The accompanying notes are an integral part of these statements.
CMS Energy Corporation Consolidated Statements of Comprehensive Income | | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Net Income | | $ | 682 |
| | $ | 659 |
| | $ | 462 |
| | | | | | | | Retirement Benefits Liability | | | | | | | Net loss arising during the period, net of tax of $(3), $(1), and $(4) | | (7 | ) | | (4 | ) | | (5 | ) | Prior service credit adjustment, net of tax of $-, $-, and $3 | | — |
| | (1 | ) | | 4 |
| Amortization of net actuarial loss, net of tax of $1 for all periods | | 3 |
| | 4 |
| | 2 |
| Amortization of prior service credit, net of tax of $-, $(1), and $- | | (2 | ) | | (1 | ) | | (1 | ) | | | | | | | | Derivatives | | | | | | | Unrealized loss on derivative instruments, net of tax of $(1), $-, and $- | | (3 | ) | | (2 | ) | | — |
| Reclassification adjustments included in net income, net of tax of $- for all periods | | 1 |
| | — |
| | — |
| | | | | | | | Other Comprehensive Loss | | (8 | ) | | (4 | ) | | — |
| | | | | | | | Comprehensive Income | | 674 |
| | 655 |
| | 462 |
| | | | | | | | Comprehensive Income Attributable to Noncontrolling Interests | | 2 |
| | 2 |
| | 2 |
| | | | | | | | Comprehensive Income Attributable to CMS Energy | | $ | 672 |
| | $ | 653 |
| | $ | 460 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | | | Years Ended December 31 | | | | 2021 | 2020 | 2019 | Net Income | | | | | | | $ | 1,330 | | | $ | 752 | | | $ | 682 | | | | | | | | | | | | | | Retirement Benefits Liability | | | | | | | | | | | | Net gain (loss) arising during the period, net of tax of $6, $(4), and $(3) | | | | | | | 19 | | | (15) | | | (7) | | Settlement arising during the period, net of tax of $— for all periods | | | | | | | 1 | | | 1 | | | — | | Prior service credit adjustment, net of tax of $— for all periods | | | | | | | — | | | (1) | | | — | | Amortization of net actuarial loss, net of tax of $2, $1, and $1 | | | | | | | 5 | | | 5 | | | 3 | | Amortization of prior service credit, net of tax of $— for all periods | | | | | | | (1) | | | (1) | | | (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivatives | | | | | | | | | | | | Unrealized gain (loss) on derivative instruments, net of tax of $—, $(2), and $(1) | | | | | | | 2 | | | (4) | | | (3) | | Reclassification adjustments included in net income, net of tax of $1, $—, and $— | | | | | | | 1 | | | 2 | | | 1 | | | | | | | | | | | | | | Other Comprehensive Income (Loss) | | | | | | | 27 | | | (13) | | | (8) | | | | | | | | | | | | | | Comprehensive Income | | | | | | | 1,357 | | | 739 | | | 674 | | Comprehensive Income (Loss) Attributable to Noncontrolling Interests | | | | | | | (23) | | | (3) | | | 2 | | | | | | | | | | | | | | Comprehensive Income Attributable to CMS Energy | | | | | | | $ | 1,380 | | | $ | 742 | | | $ | 672 | |
The accompanying notes are an integral part of these statements.
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CMS Energy Corporation Consolidated Statements of Cash Flows | | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Cash Flows from Operating Activities | | | | | | | Net income | | $ | 682 |
| | $ | 659 |
| | $ | 462 |
| Adjustments to reconcile net income to net cash provided by operating activities | | | | | | | Depreciation and amortization | | 992 |
| | 933 |
| | 881 |
| Deferred income taxes and investment tax credits | | 150 |
| | 182 |
| | 417 |
| Bad debt expense | | 67 |
| | 54 |
| | 49 |
| Other non‑cash operating activities and reconciling adjustments | | (58 | ) | | 22 |
| | 82 |
| Postretirement benefits contributions | | (10 | ) | | (252 | ) | | (12 | ) | Cash provided by (used in) changes in assets and liabilities | | | | | | | Accounts and notes receivable and accrued revenue | | 45 |
| | 15 |
| | (66 | ) | Inventories | | 44 |
| | 14 |
| | (46 | ) | Accounts payable and accrued rate refunds | | (69 | ) | | 22 |
| | 49 |
| Other current and non‑current assets and liabilities | | (53 | ) | | 54 |
| | (111 | ) | Net cash provided by operating activities | | 1,790 |
| | 1,703 |
| | 1,705 |
| | | | | | | | Cash Flows from Investing Activities | | | | | | | Capital expenditures (excludes assets placed under finance lease) | | (2,104 | ) | | (2,074 | ) | | (1,665 | ) | Increase in EnerBank notes receivable | | (401 | ) | | (307 | ) | | (138 | ) | Purchase of notes receivable by EnerBank | | (343 | ) | | (225 | ) | | — |
| Proceeds from DB SERP investments | | — |
| | 146 |
| | — |
| Proceeds from sale of EnerBank notes receivable | | 67 |
| | — |
| | 50 |
| Proceeds from sale of transmission equipment | | 97 |
| | — |
| | — |
| Cost to retire property and other investing activities | | (132 | ) | | (146 | ) | | (115 | ) | Net cash used in investing activities | | (2,816 | ) | | (2,606 | ) | | (1,868 | ) | | | | | | | | Cash Flows from Financing Activities | | | | | | | Proceeds from issuance of debt | | 2,151 |
| | 2,767 |
| | 1,633 |
| Retirement of debt | | (1,285 | ) | | (1,870 | ) | | (980 | ) | Increase in EnerBank certificates of deposit | | 631 |
| | 513 |
| | 47 |
| Decrease in notes payable | | (7 | ) | | (73 | ) | | (228 | ) | Issuance of common stock | | 12 |
| | 41 |
| | 83 |
| Payment of dividends on common and preferred stock | | (436 | ) | | (407 | ) | | (377 | ) | Debt prepayment costs | | (8 | ) | | (36 | ) | | (22 | ) | Other financing costs | | (50 | ) | | (61 | ) | | (46 | ) | Net cash provided by financing activities | | 1,008 |
| | 874 |
| | 110 |
| | | | | | | | Net Decrease in Cash and Cash Equivalents, Including Restricted Amounts | | (18 | ) | | (29 | ) | | (53 | ) | Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period | | 175 |
| | 204 |
| | 257 |
| | | | | | | | Cash and Cash Equivalents, Including Restricted Amounts, End of Period | | $ | 157 |
| | $ | 175 |
| | $ | 204 |
|
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | Cash Flows from Operating Activities | | | | | | | Net income | | $ | 1,330 | | | $ | 752 | | | $ | 682 | | Adjustments to reconcile net income to net cash provided by operating activities | | | | | | | Depreciation and amortization | | 1,114 | | | 1,043 | | | 989 | | Deferred income taxes and investment tax credits | | 249 | | | 170 | | | 150 | | Bad debt expense | | 22 | | | 30 | | | 30 | | Postretirement benefits contributions | | (12) | | | (712) | | | (10) | | Gain from sale of EnerBank | | (657) | | | — | | | — | | Other non‑cash operating activities and reconciling adjustments | | (70) | | | (15) | | | (55) | | Net cash provided by (used in) discontinued operations | | (111) | | | 33 | | | 39 | | Changes in assets and liabilities | | | | | | | Accounts receivable and accrued revenue | | (103) | | | (5) | | | 48 | | Inventories | | (93) | | | 28 | | | 44 | | Accounts payable and accrued rate refunds | | 153 | | | 56 | | | (71) | | Other current assets and liabilities | | 13 | | | (68) | | | (93) | | Other non‑current assets and liabilities | | (16) | | | (36) | | | 37 | | Net cash provided by operating activities | | 1,819 | |
| 1,276 | |
| 1,790 | | | | | | | | | Cash Flows from Investing Activities | | | | | | | Capital expenditures (excludes assets placed under finance lease) | | (2,076) | | | (2,311) | | | (2,097) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net proceeds from sale of EnerBank | | 898 | | | — | | | — | | Proceeds from sale of transmission equipment | | — | | | 58 | | | 97 | | Net cash provided by (used in) discontinued operations | | 78 | | | (485) | | | (689) | | Cost to retire property and other investing activities | | (133) | | | (129) | | | (127) | | Net cash used in investing activities | | (1,233) | |
| (2,867) | |
| (2,816) | | | | | | | | | Cash Flows from Financing Activities | | | | | | | Proceeds from issuance of debt | | 335 | | | 3,179 | | | 2,151 | | Retirement of debt | | (235) | | | (2,010) | | | (1,285) | | | | | | | | | Decrease in notes payable | | — | | | (90) | | | (7) | | Issuance of common stock, net of issuance costs | | 26 | | | 253 | | | 12 | | Issuance of preferred stock, net of issuance costs | | 224 | | | — | | | — | | Payment of dividends on common and preferred stock | | (509) | | | (467) | | | (436) | | Debt prepayment costs | | — | | | (59) | | | (8) | | Proceeds from the sale of membership interest in VIE to tax equity investor | | — | | | 417 | | | — | | Contribution from noncontrolling interest | | 1 | | | 31 | | | — | | Net cash provided by (used in) discontinued operations | | (84) | | | 416 | | | 631 | | Other financing costs | | (53) | | | (51) | | | (50) | | Net cash provided by (used in) financing activities | | (295) | |
| 1,619 | |
| 1,008 | | | | | | | | | Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts | | 291 | | | 28 | | | (18) | | Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period | | 185 | | | 157 | | | 175 | | | | | | | | | Cash and Cash Equivalents, Including Restricted Amounts, End of Period | | $ | 476 | |
| $ | 185 | |
| $ | 157 | | | | | | | | | | | | | | | |
| | In Millions | In Millions | | In Millions | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Years Ended December 31 | 2021 | 2020 | 2019 | Other cash flow activities and non‑cash investing and financing activities | | | | | | | | | | Other Cash Flow Activities and Non‑cash Investing and Financing Activities | | Other Cash Flow Activities and Non‑cash Investing and Financing Activities | Cash transactions | | | | | | | Cash transactions | | Interest paid (net of amounts capitalized) | | $ | 498 |
| | $ | 458 |
| | $ | 418 |
| Interest paid (net of amounts capitalized) | | $ | 489 | | | $ | 549 | | | $ | 498 | | Income taxes paid (refunds received), net | | (58 | ) | | (123 | ) | | 5 |
| Income taxes paid (refunds received), net | | 16 | | | (58) | | | (58) | | Non‑cash transactions | | Non‑cash transactions | | Capital expenditures not paid | | Capital expenditures not paid | | $ | 196 | | | $ | 141 | | | $ | 170 | | | | | | | | | | Non‑cash transactions | | | | | | | | Capital expenditures not paid | | 170 |
| | 158 |
| | 172 |
| | Other assets placed under finance lease | | — |
| | — |
| | 3 |
| |
The accompanying notes are an integral part of these statements.
CMS Energy Corporation Consolidated Balance Sheets | | | | | | | | | | ASSETS | In Millions | | December 31 | 2019 | | 2018 | | Current Assets | | | | | Cash and cash equivalents | | $ | 140 |
| | $ | 153 |
| Restricted cash and cash equivalents | | 17 |
| | 21 |
| Accounts receivable and accrued revenue, less allowances of $20 in both periods | | 886 |
| | 964 |
| Notes receivable, less allowances of $33 in 2019 and $24 in 2018 | | 223 |
| | 233 |
| Notes receivable held for sale | | 19 |
| | — |
| Accounts receivable – related parties | | 17 |
| | 14 |
| Accrued gas revenue | | — |
| | 16 |
| Inventories at average cost | | | | | Gas in underground storage | | 399 |
| | 450 |
| Materials and supplies | | 140 |
| | 143 |
| Generating plant fuel stock | | 66 |
| | 57 |
| Deferred property taxes | | 305 |
| | 279 |
| Regulatory assets | | 33 |
| | 37 |
| Prepayments and other current assets | | 86 |
| | 101 |
| Total current assets | | 2,331 |
| | 2,468 |
| | | | | | Plant, Property, and Equipment | | | | | Plant, property, and equipment, gross | | 25,390 |
| | 24,400 |
| Less accumulated depreciation and amortization | | 7,360 |
| | 7,037 |
| Plant, property, and equipment, net | | 18,030 |
| | 17,363 |
| Construction work in progress | | 896 |
| | 763 |
| Total plant, property, and equipment | | 18,926 |
| | 18,126 |
| | | | | | Other Non‑current Assets | | | | | Regulatory assets | | 2,489 |
| | 1,743 |
| Accounts and notes receivable | | 2,281 |
| | 1,645 |
| Investments | | 71 |
| | 69 |
| Other | | 739 |
| | 478 |
| Total other non‑current assets | | 5,580 |
| | 3,935 |
| | | | | | Total Assets | | $ | 26,837 |
| | $ | 24,529 |
|
| | | | | | | | | | | | | | | ASSETS | In Millions | December 31 | 2021 | 2020 | Current Assets | | | | | Cash and cash equivalents | | $ | 452 | | | $ | 32 | | Restricted cash and cash equivalents | | 24 | | | 17 | | Accounts receivable and accrued revenue, less allowance of $20 in 2021 and $29 in 2020 | | 931 | | | 853 | | | | | | | | | | | | Accounts receivable – related parties | | 12 | | | 19 | | | | | | | Inventories at average cost | | | | | Gas in underground storage | | 462 | | | 353 | | Materials and supplies | | 168 | | | 155 | | Generating plant fuel stock | | 37 | | | 68 | | Deferred property taxes | | 356 | | | 332 | | Regulatory assets | | 46 | | | 42 | | Assets held for sale | | 19 | | | 429 | | Prepayments and other current assets | | 120 | | | 104 | | Total current assets | | 2,627 | |
| 2,404 | | | | | | | Plant, Property, and Equipment | | | | | Plant, property, and equipment, gross | | 29,893 | | | 27,870 | | Less accumulated depreciation and amortization | | 8,502 | | | 7,938 | | Plant, property, and equipment, net | | 21,391 | |
| 19,932 | | Construction work in progress | | 961 | | | 1,085 | | Total plant, property, and equipment | | 22,352 | |
| 21,017 | | | | | | | Other Non‑current Assets | | | | | Regulatory assets | | 2,259 | | | 2,653 | | Accounts receivable | | 30 | | | 19 | | Investments | | 71 | | | 70 | | Assets held for sale | | — | | | 2,680 | | Other | | 1,414 | | | 823 | | Total other non‑current assets | | 3,774 | |
| 6,245 | | | | | | | Total Assets | | $ | 28,753 | |
| $ | 29,666 | |
| | LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | In Millions | In Millions | | In Millions | December 31 | 2019 | | 2018 | | December 31 | 2021 | 2020 | Current Liabilities | | | | | Current Liabilities | | Current portion of long-term debt, finance leases, and other financing | | $ | 1,130 |
| | $ | 996 |
| Current portion of long-term debt, finance leases, and other financing | | $ | 382 | | | $ | 591 | | Notes payable | | 90 |
| | 97 |
| | | Accounts payable | | 622 |
| | 723 |
| Accounts payable | | 875 | | | 661 | | Accounts payable – related parties | | 13 |
| | 10 |
| Accounts payable – related parties | | 11 | | | 7 | | Accrued rate refunds | | 35 |
| | 4 |
| Accrued rate refunds | | 12 | | | 20 | | Accrued interest | | 104 |
| | 94 |
| Accrued interest | | 107 | | | 104 | | Accrued taxes | | 437 |
| | 398 |
| Accrued taxes | | 515 | | | 454 | | Regulatory liabilities | | 87 |
| | 155 |
| Regulatory liabilities | | 146 | | | 151 | | Liabilities held for sale | | Liabilities held for sale | | — | | | 953 | | Other current liabilities | | 186 |
| | 147 |
| Other current liabilities | | 156 | | | 133 | | Total current liabilities | | 2,704 |
| | 2,624 |
| Total current liabilities | | 2,204 | |
| 3,074 | | | | | | | | Non‑current Liabilities | | | | | | Non‑current Liabilities | | Non‑current Liabilities | | Long-term debt | | 11,951 |
| | 10,615 |
| Long-term debt | | 12,046 | | | 11,744 | | Non-current portion of finance leases and other financing | | 76 |
| | 69 |
| Non-current portion of finance leases and other financing | | 46 | | | 56 | | Regulatory liabilities | | 3,742 |
| | 3,681 |
| Regulatory liabilities | | 3,802 | | | 3,744 | | Postretirement benefits | | 674 |
| | 436 |
| Postretirement benefits | | 142 | | | 152 | | Asset retirement obligations | | 477 |
| | 432 |
| Asset retirement obligations | | 628 | | | 553 | | Deferred investment tax credit | | 120 |
| | 99 |
| Deferred investment tax credit | | 112 | | | 115 | | Deferred income taxes | | 1,655 |
| | 1,487 |
| Deferred income taxes | | 2,210 | | | 1,863 | | Other non‑current liabilities | | 383 |
| | 294 |
| | Total non‑current liabilities | | 19,078 |
| | 17,113 |
| | Liabilities held for sale | | Liabilities held for sale | | — | | | 1,894 | | Other non‑current liabilities | | Other non‑current liabilities | | 375 | | | 394 | | Total non‑current liabilities | | Total non‑current liabilities | | 19,361 | |
| 20,515 | | | | | | | | Commitments and Contingencies (Notes 3 and 4) | |
|
| |
|
| | Commitments and Contingencies (Notes 2, 3, and 20) | | Commitments and Contingencies (Notes 2, 3, and 20) | | 0 | | 0 | | | | | | | Equity | | | | | Equity | | Common stockholders’ equity | | | | | Common stockholders’ equity | | Common stock, authorized 350.0 shares; outstanding 283.9 shares in 2019 and 283.4 shares in 2018 | | 3 |
| | 3 |
| | Common stock, authorized 350.0 shares; outstanding 289.8 shares in 2021 and 288.9 shares in 2020 | | Common stock, authorized 350.0 shares; outstanding 289.8 shares in 2021 and 288.9 shares in 2020 | | 3 | | | 3 | | Other paid-in capital | | 5,113 |
| | 5,088 |
| Other paid-in capital | | 5,406 | | | 5,365 | | Accumulated other comprehensive loss | | (73 | ) | | (65 | ) | Accumulated other comprehensive loss | | (59) | | | (86) | | Accumulated deficit | | (25 | ) | | (271 | ) | | Retained earnings | | Retained earnings | | 1,057 | | | 214 | | Total common stockholders’ equity | | 5,018 |
| | 4,755 |
| Total common stockholders’ equity | | 6,407 | | | 5,496 | | Cumulative preferred stock, Series C, authorized 9.2 depositary shares in 2021; outstanding 9.2 depositary shares in 2021 | | Cumulative preferred stock, Series C, authorized 9.2 depositary shares in 2021; outstanding 9.2 depositary shares in 2021 | | 224 | | | — | | Total stockholders’ equity | | Total stockholders’ equity | | 6,631 | | | 5,496 | | Noncontrolling interests | | 37 |
| | 37 |
| Noncontrolling interests | | 557 | | | 581 | | Total equity | | 5,055 |
| | 4,792 |
| Total equity | | 7,188 | |
| 6,077 | | | | | | | | Total Liabilities and Equity | | $ | 26,837 |
| | $ | 24,529 |
| Total Liabilities and Equity | | $ | 28,753 | |
| $ | 29,666 | |
The accompanying notes are an integral part of these statements.
CMS Energy Corporation Consolidated Statements of Changes in Equity
| | | | | | | | | | | | | | | | | | | | In Millions, Except Number of Shares in Thousands and Per Share Amounts | | | Number of Shares | | | | | | | Years Ended December 31 | 2019 |
| 2018 |
| 2017 |
| 2019 | | 2018 | | 2017 | | Total Equity at Beginning of Period | | $ | 4,792 |
| | $ | 4,478 |
| | $ | 4,290 |
| | | | | | | | Common Stock | | | | | | | At beginning and end of period | | 3 |
| | 3 |
| | 3 |
| | | | | | | | | | | Other Paid-in Capital | | | | | | | | | | At beginning of period | 283,374 |
| 281,647 |
| 279,206 |
| | 5,088 |
| | 5,019 |
| | 4,916 |
| Common stock issued | 710 |
| 1,554 |
| 2,492 |
| | 35 |
| | 59 |
| | 102 |
| Common stock repurchased | (181 | ) | (224 | ) | (317 | ) | | (10 | ) | | (10 | ) | | (14 | ) | Common stock reissued | 8 |
| 423 |
| 360 |
| | — |
| | 20 |
| | 15 |
| Common stock reacquired | (47 | ) | (26 | ) | (94 | ) | | — |
| | — |
| | — |
| At end of period | 283,864 |
| 283,374 |
| 281,647 |
| | 5,113 |
| | 5,088 |
| | 5,019 |
| | | | | | | | Accumulated Other Comprehensive Loss | | | | | | | At beginning of period | | (65 | ) | | (50 | ) | | (50 | ) | Retirement benefits liability | | | | | | | At beginning of period | | (63 | ) | | (50 | ) | | (50 | ) | Cumulative effect of change in accounting principle | | — |
| | (11 | ) | | — |
| Net loss arising during the period | | (7 | ) | | (4 | ) | | (5 | ) | Prior service credit adjustment | | — |
| | (1 | ) | | 4 |
| Amortization of net actuarial loss | | 3 |
| | 4 |
| | 2 |
| Amortization of prior service credit | | (2 | ) | | (1 | ) | | (1 | ) | At end of period | | (69 | ) | | (63 | ) | | (50 | ) | Derivative instruments | | | | | | | At beginning of period | | (2 | ) | | — |
| | — |
| Unrealized loss on derivative instruments | | (3 | ) | | (2 | ) | | — |
| Reclassification adjustments included in net income | | 1 |
| | — |
| | — |
| At end of period | | (4 | ) | | (2 | ) | | — |
| At end of period | | (73 | ) | | (65 | ) | | (50 | ) |
| | | | | | | | | | | | | | | | | | | | In Millions, Except Number of Shares in Thousands and Per Share Amounts | | | Number of Shares | | | | | | | Years Ended December 31 | 2019 |
| 2018 |
| 2017 |
| 2019 | | 2018 | | 2017 | | | | | | | | | Accumulated Deficit | | | | | | | At beginning of period | | (271 | ) | | (531 | ) | | (616 | ) | Cumulative effect of change in accounting principle | | — |
| | 8 |
| | — |
| Net income attributable to CMS Energy | | 680 |
| | 657 |
| | 460 |
| Dividends declared on common stock | | (434 | ) | | (405 | ) | | (375 | ) | At end of period | | (25 | ) | | (271 | ) | | (531 | ) | | | | | | | | Noncontrolling Interests | | | | | | | At beginning of period | | 37 |
| | 37 |
| | 37 |
| Income attributable to noncontrolling interests | | 2 |
| | 2 |
| | 2 |
| Distributions and other changes in noncontrolling interests | | (2 | ) | | (2 | ) | | (2 | ) | At end of period | | 37 |
| | 37 |
| | 37 |
| | | | | | | | Total Equity at End of Period | | $ | 5,055 |
| | $ | 4,792 |
| | $ | 4,478 |
| | |
|
| | | | | Dividends declared per common share | | $ | 1.53 |
| | $ | 1.43 |
| | $ | 1.33 |
|
The accompanying notes are an integral part of these statements.
Consumers Energy Company
Consolidated Statements of Income
| | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Operating Revenue | | $ | 6,376 |
| | $ | 6,464 |
| | $ | 6,222 |
| | | | | | | | Operating Expenses | | | | | | | Fuel for electric generation | | 375 |
| | 407 |
| | 398 |
| Purchased and interchange power | | 1,470 |
| | 1,587 |
| | 1,491 |
| Purchased power – related parties | | 75 |
| | 83 |
| | 90 |
| Cost of gas sold | | 754 |
| | 819 |
| | 730 |
| Maintenance and other operating expenses | | 1,275 |
| | 1,287 |
| | 1,113 |
| Depreciation and amortization | | 975 |
| | 921 |
| | 872 |
| General taxes | | 322 |
| | 295 |
| | 276 |
| Total operating expenses | | 5,246 |
| | 5,399 |
| | 4,970 |
| | | | | | | | Operating Income | | 1,130 |
| | 1,065 |
| | 1,252 |
| | | | | | | | Other Income (Expense) | | | | | | | Interest income | | 5 |
| | 8 |
| | 9 |
| Interest and dividend income – related parties | | 5 |
| | 2 |
| | 1 |
| Allowance for equity funds used during construction | | 10 |
| | 6 |
| | 5 |
| Nonoperating retirement benefits, net | | 85 |
| | 83 |
| | 21 |
| Other income | | 3 |
| | 2 |
| | 17 |
| Other expense | | (13 | ) | | (30 | ) | | (58 | ) | Total other income (expense) | | 95 |
| | 71 |
| | (5 | ) | | | | | | | | Interest Charges | | | | | | | Interest on long-term debt | | 277 |
| | 276 |
| | 263 |
| Interest expense – related parties | | 9 |
| | — |
| | — |
| Other interest expense | | 15 |
| | 16 |
| | 15 |
| Allowance for borrowed funds used during construction | | (4 | ) | | (3 | ) | | (2 | ) | Total interest charges | | 297 |
| | 289 |
| | 276 |
| | | | | | | | Income Before Income Taxes | | 928 |
| | 847 |
| | 971 |
| Income Tax Expense | | 185 |
| | 142 |
| | 339 |
| | | | | | | | Net Income | | 743 |
| | 705 |
| | 632 |
| Preferred Stock Dividends | | 2 |
| | 2 |
| | 2 |
| | | | | | | | Net Income Available to Common Stockholder | | $ | 741 |
| | $ | 703 |
| | $ | 630 |
|
The accompanying notes are an integral part of these statements.
Consumers Energy Company
Consolidated Statements of Comprehensive Income
| | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Net Income | | $ | 743 |
| | $ | 705 |
| | $ | 632 |
| | | | | | | | Retirement Benefits Liability | | | | | | | Net gain (loss) arising during the period, net of tax of $(3), $2, and $(1) | | (8 | ) | | 6 |
| | (4 | ) | Amortization of net actuarial loss, net of tax of $- for all periods | | 1 |
| | 2 |
| | 1 |
| | | | | | | | Investments | | | | | | | Unrealized gain (loss) on investments, net of tax of $-, $-, and $1 | | — |
| | (1 | ) | | 3 |
| Reclassification adjustments included in net income, net of tax of $-, $-, and $(6) | | — |
| | 1 |
| | (9 | ) | | | | | | | | Other Comprehensive Income (Loss) | | (7 | ) | | 8 |
| | (9 | ) | | | | | | | | Comprehensive Income | | $ | 736 |
| | $ | 713 |
| | $ | 623 |
|
The accompanying notes are an integral part of these statements.
Consumers Energy Company
Consolidated Statements of Cash Flows
| | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Cash Flows from Operating Activities | | | | | | | Net income | | $ | 743 |
| | $ | 705 |
| | $ | 632 |
| Adjustments to reconcile net income to net cash provided by operating activities | | | | | | | Depreciation and amortization | | 975 |
| | 921 |
| | 872 |
| Deferred income taxes and investment tax credits | | 37 |
| | 123 |
| | 163 |
| Bad debt expense | | 29 |
| | 29 |
| | 29 |
| Other non‑cash operating activities and reconciling adjustments | | (32 | ) | | 13 |
| | 59 |
| Postretirement benefits contributions | | (7 | ) | | (242 | ) | | (8 | ) | Cash provided by (used in) changes in assets and liabilities | | | | | | | Accounts and notes receivable and accrued revenue | | 8 |
| | (26 | ) | | (63 | ) | Inventories | | 40 |
| | 15 |
| | (45 | ) | Accounts payable and accrued rate refunds | | (63 | ) | | 12 |
| | 43 |
| Other current and non-current assets and liabilities | | (129 | ) | | (101 | ) | | 33 |
| Net cash provided by operating activities | | 1,601 |
| | 1,449 |
| | 1,715 |
| | | | | | | | Cash Flows from Investing Activities | | | | | | | Capital expenditures (excludes assets placed under finance lease) | | (2,085 | ) | | (1,822 | ) | | (1,632 | ) | Proceeds from DB SERP investments | | — |
| | 106 |
| | — |
| DB SERP investment in note receivable – related party | | — |
| | (106 | ) | | — |
| Proceeds from sale of transmission equipment | | 77 |
| | — |
| | — |
| Cost to retire property and other investing activities | | (129 | ) | | (149 | ) | | (119 | ) | Net cash used in investing activities | | (2,137 | ) | | (1,971 | ) | | (1,751 | ) | | | | | | | | Cash Flows from Financing Activities | | | | | | | Proceeds from issuance of debt | | 993 |
| | 2,106 |
| | 834 |
| Retirement of debt | | (541 | ) | | (1,193 | ) | | (555 | ) | Decrease in notes payable | | (7 | ) | | (73 | ) | | (228 | ) | Stockholder contribution | | 675 |
| | 250 |
| | 450 |
| Payment of dividends on common and preferred stock | | (594 | ) | | (533 | ) | | (524 | ) | Debt prepayment costs | | (8 | ) | | (20 | ) | | (4 | ) | Other financing costs | | (10 | ) | | (24 | ) | | (24 | ) | Net cash provided by (used in) financing activities | | 508 |
| | 513 |
| | (51 | ) | | | | | | | | Net Decrease in Cash and Cash Equivalents, Including Restricted Amounts | | (28 | ) | | (9 | ) | | (87 | ) | Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period | | 56 |
| | 65 |
| | 152 |
| | | | | | | | Cash and Cash Equivalents, Including Restricted Amounts, End of Period | | $ | 28 |
| | $ | 56 |
| | $ | 65 |
|
| | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Other cash flow activities and non‑cash investing and financing activities | | | | | | | | Cash transactions | | | | | | | Interest paid (net of amounts capitalized) | | $ | 279 |
| | $ | 287 |
| | $ | 266 |
| Income taxes paid (refunds received), net | | 132 |
| | 156 |
| | (1 | ) | | | | | | | | Non‑cash transactions | | | | | | | Capital expenditures not paid | | 160 |
| | 143 |
| | 160 |
| Other assets placed under finance lease | | — |
| | — |
| | 3 |
|
The accompanying notes are an integral part of these statements.
Consumers Energy Company
Consolidated Balance Sheets
| | | | | | | | | | ASSETS | In Millions | | December 31 | 2019 | | 2018 | | Current Assets | | | | | Cash and cash equivalents | | $ | 11 |
| | $ | 39 |
| Restricted cash and cash equivalents | | 17 |
| | 17 |
| Accounts receivable and accrued revenue, less allowances of $20 in both periods | | 827 |
| | 855 |
| Accounts and notes receivable – related parties | | 9 |
| | 15 |
| Accrued gas revenue | | — |
| | 16 |
| Inventories at average cost | | | | | Gas in underground storage | | 399 |
| | 450 |
| Materials and supplies | | 135 |
| | 137 |
| Generating plant fuel stock | | 63 |
| | 52 |
| Deferred property taxes | | 305 |
| | 279 |
| Regulatory assets | | 33 |
| | 37 |
| Prepayments and other current assets | | 73 |
| | 83 |
| Total current assets | | 1,872 |
| | 1,980 |
| | | | | | Plant, Property, and Equipment | | | | | Plant, property, and equipment, gross | | 24,963 |
| | 23,963 |
| Less accumulated depreciation and amortization | | 7,272 |
| | 6,958 |
| Plant, property, and equipment, net | | 17,691 |
| | 17,005 |
| Construction work in progress | | 879 |
| | 756 |
| Total plant, property, and equipment | | 18,570 |
| | 17,761 |
| | | | | | Other Non-current Assets | | | | | Regulatory assets | | 2,489 |
| | 1,743 |
| Accounts receivable | | 29 |
| | 27 |
| Accounts and notes receivable – related parties | | 102 |
| | 104 |
| Other | | 637 |
| | 410 |
| Total other non-current assets | | 3,257 |
| | 2,284 |
| | | | | | Total Assets | | $ | 23,699 |
| | $ | 22,025 |
|
| | | | | | | | | | LIABILITIES AND EQUITY | In Millions | | December 31 | 2019 | | 2018 | | Current Liabilities | | | | | Current portion of long-term debt, finance leases, and other financing | | $ | 221 |
| | $ | 48 |
| Notes payable | | 90 |
| | 97 |
| Accounts payable | | 593 |
| | 685 |
| Accounts payable – related parties | | 20 |
| | 14 |
| Accrued rate refunds | | 35 |
| | 4 |
| Accrued interest | | 67 |
| | 59 |
| Accrued taxes | | 481 |
| | 436 |
| Regulatory liabilities | | 87 |
| | 155 |
| Other current liabilities | | 118 |
| | 120 |
| Total current liabilities | | 1,712 |
| | 1,618 |
| | | | | | Non-current Liabilities | | | | | Long-term debt | | 7,048 |
| | 6,779 |
| Non-current portion of finance leases and other financing | | 76 |
| | 69 |
| Regulatory liabilities | | 3,742 |
| | 3,681 |
| Postretirement benefits | | 622 |
| | 392 |
| Asset retirement obligations | | 474 |
| | 428 |
| Deferred investment tax credit | | 120 |
| | 99 |
| Deferred income taxes | | 1,864 |
| | 1,809 |
| Other non-current liabilities | | 304 |
| | 230 |
| Total non-current liabilities | | 14,250 |
| | 13,487 |
| | | | | | Commitments and Contingencies (Notes 3 and 4) | |
|
| |
|
| | | | | | Equity | | | | | Common stockholder’s equity | | | | | Common stock, authorized 125.0 shares; outstanding 84.1 shares in both periods | | 841 |
| | 841 |
| Other paid-in capital | | 5,374 |
| | 4,699 |
| Accumulated other comprehensive loss | | (28 | ) | | (21 | ) | Retained earnings | | 1,513 |
| | 1,364 |
| Total common stockholder’s equity | | 7,700 |
| | 6,883 |
| Cumulative preferred stock, $4.50 series | | 37 |
| | 37 |
| Total equity | | 7,737 |
| | 6,920 |
| | | | | | Total Liabilities and Equity | | $ | 23,699 |
| | $ | 22,025 |
|
The accompanying notes are an integral part of these statements.
Consumers Energy Company
Consolidated Statements of Changes in Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions, Except Number of Shares in Thousands and Per Share Amounts | | | | | | | | | Number of Shares | | | | | | | | | | | | Years Ended December 31 | 2021 | 2020 | 2019 | | | | 2021 | 2020 | 2019 | Total Equity at Beginning of Period | | | | | | | $ | 6,077 | | | $ | 5,055 | | | $ | 4,792 | | | | | | | | | | | | | | Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At beginning and end of period | | | | | | | 3 | | | 3 | | | 3 | | | | | | | | | | | | | | Other Paid-in Capital | | | | | | | | | | | | | | | At beginning of period | 288,940 | | 283,864 | | 283,374 | | | | | | | | 5,365 | | | 5,113 | | | 5,088 | | Common stock issued | 997 | | 5,609 | | 710 | | | | | | | | 50 | | | 265 | | | 35 | | Common stock repurchased | (157) | | (216) | | (181) | | | | | | | | (9) | | | (13) | | | (10) | | Common stock reissued | — | | 12 | | 8 | | | | | | | | — | | | 1 | | | — | | Common stock reacquired | (22) | | (329) | | (47) | | | | | | | | — | | | (1) | | | — | | At end of period | 289,758 | | 288,940 | | 283,864 | | | | | | | | 5,406 | | | 5,365 | | | 5,113 | | | | | | | | | | | | | | Accumulated Other Comprehensive Loss | | | | | | | | | | | | At beginning of period | | | | | | | (86) | | | (73) | | | (65) | | Retirement benefits liability | | | | | | | | | | | | At beginning of period | | | | | | | (80) | | | (69) | | | (63) | | | | | | | | | | | | | | Net gain (loss) arising during the period | | | | | | | 19 | | | (15) | | | (7) | | Settlement arising during the period | | | | | | | 1 | | | 1 | | | — | | Prior service credit adjustment | | | | | | | — | | | (1) | | | — | | Amortization of net actuarial loss | | | | | | | 5 | | | 5 | | | 3 | | Amortization of prior service credit | | | | | | | (1) | | | (1) | | | (2) | | At end of period | | | | | | | (56) | | | (80) | | | (69) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative instruments | | | | | |
|
|
|
|
|
| At beginning of period | | | | | |
| (6) | | | (4) | | | (2) | | | | | | | | | | | | | | Unrealized gain (loss) on derivative instruments | | | | | |
| 2 | | | (4) | | | (3) | | Reclassification adjustments included in net income | | | | | | | 1 | | | 2 | | | 1 | | At end of period | | | | | |
| (3) | | | (6) | | | (4) | | | | | | | | | | | | | | At end of period | | | | | | | (59) | | | (86) | | | (73) | | | | | | | | | | | | | | Retained Earnings (Accumulated Deficit) | | | | | | | | | | | | At beginning of period | | | | | | | 214 | | | (25) | | | (271) | | Cumulative effect of change in accounting principle | | | | | | | — | | | (51) | | | — | | Net income attributable to CMS Energy | | | | | | | 1,353 | | | 755 | | | 680 | | Dividends declared on common stock | | | | | | | (505) | | | (465) | | | (434) | | Dividends declared on preferred stock | | | | | | | (5) | | | — | | | — | | At end of period | | | | | | | 1,057 | | | 214 | | | (25) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Total Equity at Beginning of Period | | $ | 6,920 |
| | $ | 6,488 |
| | $ | 5,939 |
| | | | | | | | Common Stock | | | | | | | At beginning and end of period | | 841 |
| | 841 |
| | 841 |
| | | | | | | | Other Paid-in Capital | | | | | | | At beginning of period | | 4,699 |
| | 4,449 |
| | 3,999 |
| Stockholder contribution | | 675 |
| | 250 |
| | 450 |
| At end of period | | 5,374 |
| | 4,699 |
| | 4,449 |
| | | | | | | | Accumulated Other Comprehensive Loss | | | | | | | At beginning of period | | (21 | ) | | (12 | ) | | (3 | ) | Retirement benefits liability | | | | | | | At beginning of period | | (21 | ) | | (24 | ) | | (21 | ) | Cumulative effect of change in accounting principle | | — |
| | (5 | ) | | — |
| Net gain (loss) arising during the period | | (8 | ) | | 6 |
| | (4 | ) | Amortization of net actuarial loss | | 1 |
| | 2 |
| | 1 |
| At end of period | | (28 | ) | | (21 | ) | | (24 | ) | Investments | | | | | | | At beginning of period | | — |
| | 12 |
| | 18 |
| Cumulative effect of change in accounting principle | | — |
| | (12 | ) | | — |
| Unrealized gain (loss) on investments | | — |
| | (1 | ) | | 3 |
| Reclassification adjustments included in net income | | — |
| | 1 |
| | (9 | ) | At end of period | | — |
| | — |
| | 12 |
| At end of period | | (28 | ) | | (21 | ) | | (12 | ) | | | | | | | | Retained Earnings | | | | | | | At beginning of period | | 1,364 |
| | 1,173 |
| | 1,065 |
| Cumulative effect of change in accounting principle | | — |
| | 19 |
| | — |
| Net income | | 743 |
| | 705 |
| | 632 |
| Dividends declared on common stock | | (592 | ) | | (531 | ) | | (522 | ) | Dividends declared on preferred stock | | (2 | ) | | (2 | ) | | (2 | ) | At end of period | | 1,513 |
| | 1,364 |
| | 1,173 |
| | | | | | | | Cumulative Preferred Stock | | | | | | | At beginning and end of period | | 37 |
| | 37 |
| | 37 |
| | | | | | | | Total Equity at End of Period | | $ | 7,737 |
| | $ | 6,920 |
| | $ | 6,488 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions, Except Number of Shares in Thousands and Per Share Amounts | | | | | | | | | Number of Shares | | | | | | | | | | | | Years Ended December 31 | 2021 | 2020 | 2019 | | | | 2021 | 2020 | 2019 | Cumulative Preferred Stock | | | | | | | | | | | | At beginning of period | | | | | | | — | | | — | | | — | | Preferred stock issued, net of issuance costs | | | | | | | 224 | | | — | | | — | | At end of period | | | | | | | 224 | | | — | | | — | | | | | | | | | | | | | | Noncontrolling Interests | | | | | | | | | | | | At beginning of period | | | | | | | 581 | | | 37 | | | 37 | | Impact of purchase and consolidation of VIE | | | | | | | — | | | 101 | | | — | | Sale of membership interest in VIE to tax equity investor | | | | | | | — | | | 417 | | | — | | Contribution from noncontrolling interest | | | | | | | 1 | | | 31 | | | — | | Income (loss) attributable to noncontrolling interests | | | | | | | (23) | | | (3) | | | 2 | | Distributions and other changes in noncontrolling interests | | | | | | | (2) | | | (2) | | | (2) | | At end of period | | | | | | | 557 | | | 581 | | | 37 | | | | | | | | | | | | | | Total Equity at End of Period | | | | | | | $ | 7,188 | | | $ | 6,077 | | | $ | 5,055 | | | | | | | | | | | | | | Dividends declared per common share | | | | | | | $ | 1.7400 | | | $ | 1.6300 | | | $ | 1.5300 | | Dividends declared per preferred stock Series C depositary share | | | | | | | | | | $ | 0.5688 | | | $ | — | | | $ | — | |
The accompanying notes are an integral part of these statements.
Consumers Energy Company Consolidated Statements of Income | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | | | Years Ended December 31 | | | | 2021 | 2020 | 2019 | Operating Revenue | | | | | | | $ | 7,021 | | | $ | 6,189 | | | $ | 6,376 | | | | | | | | | | | | | | Operating Expenses | | | | | | | | | | | | Fuel for electric generation | | | | | | | 463 | | | 286 | | | 375 | | Purchased and interchange power | | | | | | | 1,599 | | | 1,454 | | | 1,470 | | Purchased power – related parties | | | | | | | 77 | | | 64 | | | 75 | | Cost of gas sold | | | | | | | 726 | | | 568 | | | 754 | | Maintenance and other operating expenses | | | | | | | 1,531 | | | 1,224 | | | 1,275 | | Depreciation and amortization | | | | | | | 1,077 | | | 1,023 | | | 975 | | General taxes | | | | | | | 373 | | | 349 | | | 322 | | Total operating expenses | | | | | | | 5,846 | |
| 4,968 | |
| 5,246 | | | | | | | | | | | | | | Operating Income | | | | | | | 1,175 | |
| 1,221 | |
| 1,130 | | | | | | | | | | | | | | Other Income (Expense) | | | | | | | | | | | | Interest income | | | | | | | 2 | | | 3 | | | 5 | | Interest and dividend income – related parties | | | | | | | 5 | | | 5 | | | 5 | | Allowance for equity funds used during construction | | | | | | | 8 | | | 6 | | | 10 | | Non-operating retirement benefits, net | | | | | | | 155 | | | 112 | | | 85 | | Other income | | | | | | | 8 | | | 5 | | | 3 | | Other expense | | | | | | | (18) | | | (43) | | | (13) | | Total other income | | | | | | | 160 | |
| 88 | |
| 95 | | | | | | | | | | | | | | Interest Charges | | | | | | | | | | | | Interest on long-term debt | | | | | | | 294 | | | 299 | | | 277 | | Interest expense – related parties | | | | | | | 12 | | | 12 | | | 9 | | Other interest expense | | | | | | | 8 | | | 11 | | | 15 | | Allowance for borrowed funds used during construction | | | | | | | (3) | | | (2) | | | (4) | | Total interest charges | | | | | | | 311 | |
| 320 | |
| 297 | | | | | | | | | | | | | | Income Before Income Taxes | | | | | | | 1,024 | | | 989 | | | 928 | | Income Tax Expense | | | | | | | 156 | | | 173 | | | 185 | | | | | | | | | | | | | | Net Income | | | | | | | 868 | |
| 816 | |
| 743 | | Preferred Stock Dividends | | | | | | | 2 | | | 2 | | | 2 | | | | | | | | | | | | | | Net Income Available to Common Stockholder | | | | | | | $ | 866 | | | $ | 814 | | | $ | 741 | | | | | | | | | | | | | |
The accompanying notes are an integral part of these statements.
Consumers Energy Company Consolidated Statements of Comprehensive Income | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | | | Years Ended December 31 | | | | 2021 | 2020 | 2019 | Net Income | | | | | | | $ | 868 | | | $ | 816 | | | $ | 743 | | | | | | | | | | | | | | Retirement Benefits Liability | | | | | | | | | | | | Net gain (loss) arising during the period, net of tax of $1, $(3), and $(3) | | | | | | | 2 | | | (9) | | | (8) | | Amortization of net actuarial loss, net of tax of $1, $1, and $— | | | | | | | 2 | | | 1 | | | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other Comprehensive Income (Loss) | | | | | | | 4 | | | (8) | | | (7) | | | | | | | | | | | | | | Comprehensive Income | | | | | | | $ | 872 | | | $ | 808 | | | $ | 736 | |
The accompanying notes are an integral part of these statements.
Consumers Energy Company Consolidated Statements of Cash Flows | | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | Cash Flows from Operating Activities | | | | | | | Net income | | $ | 868 | | | $ | 816 | | | $ | 743 | | Adjustments to reconcile net income to net cash provided by operating activities | | | | | | | Depreciation and amortization | | 1,077 | | | 1,023 | | | 975 | | Deferred income taxes and investment tax credits | | 154 | | | 177 | | | 37 | | Bad debt expense | | 22 | | | 33 | | | 29 | | Postretirement benefits contributions | | (9) | | | (690) | | | (7) | | Other non‑cash operating activities and reconciling adjustments | | (64) | | | (30) | | | (32) | | Changes in assets and liabilities | | | | | | | Accounts and notes receivable and accrued revenue | | (103) | | | (46) | | | 8 | | Inventories | | (90) | | | 26 | | | 40 | | Accounts payable and accrued rate refunds | | 140 | | | 45 | | | (63) | | Other current assets and liabilities | | 27 | | | (78) | | | (136) | | Other non-current assets and liabilities | | (40) | | | (58) | | | 7 | | Net cash provided by operating activities | | 1,982 | |
| 1,218 | |
| 1,601 | | | | | | | | | Cash Flows from Investing Activities | | | | | | | Capital expenditures (excludes assets placed under finance lease) | | (2,052) | | | (2,170) | | | (2,085) | | | | | | | | | DB SERP investment in note receivable – related party | | — | | | (5) | | | — | | Proceeds from sale of transmission equipment | | — | | | 58 | | | 77 | | Cost to retire property and other investing activities | | (133) | | | (129) | | | (129) | | Net cash used in investing activities | | (2,185) | |
| (2,246) | |
| (2,137) | | | | | | | | | Cash Flows from Financing Activities | | | | | | | Proceeds from issuance of debt | | 335 | | | 1,954 | | | 993 | | Retirement of debt | | (27) | | | (1,086) | | | (541) | | Decrease in notes payable | | — | | | (90) | | | (7) | | Increase in notes payable – related parties | | 85 | | | 307 | | | — | | Stockholder contribution | | 575 | | | 650 | | | 675 | | Payment of dividends on common and preferred stock | | (724) | | | (639) | | | (594) | | Debt prepayment costs | | — | | | (43) | | | (8) | | Other financing costs | | (32) | | | (18) | | | (10) | | Net cash provided by financing activities | | 212 | |
| 1,035 | |
| 508 | | | | | | | | | Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts | | 9 | | | 7 | | | (28) | | Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period | | 35 | | | 28 | | | 56 | | | | | | | | | Cash and Cash Equivalents, Including Restricted Amounts, End of Period | | $ | 44 | |
| $ | 35 | |
| $ | 28 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | Other Cash Flow Activities and Non‑cash Investing and Financing Activities | Cash transactions | | | | | | | Interest paid (net of amounts capitalized) | | $ | 298 | | | $ | 305 | | | $ | 279 | | Income taxes paid (refunds received), net | | (10) | | | 51 | | | 132 | | Non‑cash transactions | | | | | | | Capital expenditures not paid | | $ | 192 | | | $ | 130 | | | $ | 160 | | | | | | | | |
The accompanying notes are an integral part of these statements.
Consumers Energy Company Consolidated Balance Sheets | | | | | | | | | | | | | | | ASSETS | In Millions | December 31 | 2021 | 2020 | Current Assets | | | | | Cash and cash equivalents | | $ | 22 | | | $ | 20 | | Restricted cash and cash equivalents | | 22 | | | 15 | | Accounts receivable and accrued revenue, less allowance of $20 in 2021 and $29 in 2020 | | 905 | | | 828 | | | | | | | Assets held for sale | | 19 | | | — | | Accounts and notes receivable – related parties | | 9 | | | 18 | | | | | | | Inventories at average cost | | | | | Gas in underground storage | | 462 | | | 353 | | Materials and supplies | | 163 | | | 149 | | Generating plant fuel stock | | 33 | | | 67 | | Deferred property taxes | | 356 | | | 332 | | Regulatory assets | | 46 | | | 42 | | Prepayments and other current assets | | 84 | | | 68 | | Total current assets | | 2,121 | |
| 1,892 | | | | | | | Plant, Property, and Equipment | | | | | Plant, property, and equipment, gross | | 28,771 | | | 26,757 | | Less accumulated depreciation and amortization | | 8,371 | | | 7,844 | | Plant, property, and equipment, net | | 20,400 | |
| 18,913 | | Construction work in progress | | 915 | | | 1,058 | | Total plant, property, and equipment | | 21,315 | |
| 19,971 | | | | | | | Other Non-current Assets | | | | | Regulatory assets | | 2,259 | | | 2,653 | | Accounts receivable | | 36 | | | 25 | | Accounts and notes receivable – related parties | | 102 | | | 105 | | Other | | 1,307 | | | 753 | | Total other non-current assets | | 3,704 | |
| 3,536 | | | | | | | Total Assets | | $ | 27,140 | |
| $ | 25,399 | |
| | | | | | | | | | | | | | | LIABILITIES AND EQUITY | In Millions | December 31 | 2021 | 2020 | Current Liabilities | | | | | Current portion of long-term debt, finance leases, and other financing | | $ | 374 | | | $ | 384 | | | | | | | Notes payable – related parties | | 392 | | | 307 | | Accounts payable | | 835 | | | 636 | | Accounts payable – related parties | | 16 | | | 7 | | Accrued rate refunds | | 12 | | | 20 | | Accrued interest | | 75 | | | 72 | | Accrued taxes | | 529 | | | 458 | | Regulatory liabilities | | 146 | | | 151 | | Other current liabilities | | 109 | | | 104 | | Total current liabilities | | 2,488 | |
| 2,139 | | | | | | | Non-current Liabilities | | | | | Long-term debt | | 8,050 | | | 7,742 | | Non-current portion of finance leases and other financing | | 46 | | | 56 | | Regulatory liabilities | | 3,802 | | | 3,744 | | Postretirement benefits | | 104 | | | 112 | | Asset retirement obligations | | 605 | | | 530 | | Deferred investment tax credit | | 112 | | | 115 | | Deferred income taxes | | 2,340 | | | 2,094 | | Other non-current liabilities | | 314 | | | 311 | | Total non-current liabilities | | 15,373 | |
| 14,704 | | | | | | | Commitments and Contingencies (Notes 2 and 3) | | 0 | | 0 | | | | | | Equity | | | | | Common stockholder’s equity | | | | | Common stock, authorized 125.0 shares; outstanding 84.1 shares in both periods | | 841 | | | 841 | | Other paid-in capital | | 6,599 | | | 6,024 | | Accumulated other comprehensive loss | | (32) | | | (36) | | Retained earnings | | 1,834 | | | 1,690 | | Total common stockholder’s equity | | 9,242 | |
| 8,519 | | Cumulative preferred stock, $4.50 series, authorized 7.5 shares; outstanding 0.4 shares in both periods | | 37 | | | 37 | | Total equity | | 9,279 | |
| 8,556 | | | | | | | Total Liabilities and Equity | | $ | 27,140 | |
| $ | 25,399 | |
The accompanying notes are an integral part of these statements.
Consumers Energy Company Consolidated Statements of Changes in Equity | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | | | Years Ended December 31 | | | | 2021 | 2020 | 2019 | Total Equity at Beginning of Period | | | | | | | $ | 8,556 | | | $ | 7,737 | | | $ | 6,920 | | | | | | | | | | | | | | Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At beginning and end of period | | | | | | | 841 | | | 841 | | | 841 | | | | | | | | | | | | | | Other Paid-in Capital | | | | | | | | | | | | At beginning of period | | | | | | | 6,024 | | | 5,374 | | | 4,699 | | Stockholder contribution | | | | | | | 575 | | | 650 | | | 675 | | | | | | | | | | | | | | At end of period | | | | | | | 6,599 | | | 6,024 | | | 5,374 | | | | | | | | | | | | | | Accumulated Other Comprehensive Loss | | | | | | | | | | | | At beginning of period | | | | | | | (36) | | | (28) | | | (21) | | Retirement benefits liability | | | | | | | | | | | | At beginning of period | | | | | | | (36) | | | (28) | | | (21) | | | | | | | | | | | | | | Net gain (loss) arising during the period | | | | | | | 2 | | | (9) | | | (8) | | Amortization of net actuarial loss | | | | | | | 2 | | | 1 | | | 1 | | At end of period | | | | | | | (32) | | | (36) | | | (28) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At end of period | | | | | | | (32) | | | (36) | | | (28) | | | | | | | | | | | | | | Retained Earnings | | | | | | | | | | | | At beginning of period | | | | | | | 1,690 | | | 1,513 | | | 1,364 | | | | | | | | | | | | | | Net income | | | | | | | 868 | | | 816 | | | 743 | | Dividends declared on common stock | | | | | | | (722) | | | (637) | | | (592) | | Dividends declared on preferred stock | | | | | | | (2) | | | (2) | | | (2) | | At end of period | | | | | | | 1,834 | | | 1,690 | | | 1,513 | | | | | | | | | | | | | | Cumulative Preferred Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At beginning and end of period | | | | | | | 37 | | | 37 | | | 37 | | | | | | | | | | | | | | Total Equity at End of Period | | | | | | | $ | 9,279 | | | $ | 8,556 | | | $ | 7,737 | |
The accompanying notes are an integral part of these statements.
CMS Energy Corporation Consumers Energy Company Notes to the Consolidated Financial Statements | | 1: | Significant Accounting Policies |
1: Significant Accounting Policies Principles of Consolidation: CMS Energy and Consumers prepare their consolidated financial statements in conformity with GAAP. CMS Energy’s consolidated financial statements comprise CMS Energy, Consumers, CMS Enterprises, EnerBank, and all other entities in which CMS Energy has a controlling financial interest or is the primary beneficiary. Consumers’ consolidated financial statements comprise Consumers and all other entities in which it has a controlling financial interest or is the primary beneficiary.interest. CMS Energy uses the equity method of accounting for investments in companies and partnerships that are not consolidated, where they have significant influence over operations and financial policies but are not the primary beneficiary. CMS Energy and Consumers eliminate intercompany transactions and balances. Use of Estimates: CMS Energy and Consumers are required to make estimates using assumptions that may affect reported amounts and disclosures. Actual results could differ from those estimates. Contingencies: CMS Energy and Consumers record estimated liabilities forloss contingencies on their consolidated financial statements when it is probable that a liabilityloss has been incurred and when the amount of loss can be reasonably estimated. For environmental remediation projects in which the timing of estimated expenditures is considered reliably determinable, CMS Energy and Consumers record the liability at its net present value, using a discount rate equal to the interest rate on monetary assets that are essentially risk-free and have maturities comparable to that of the environmental liability. CMS Energy and Consumers expense legal fees as incurred; fees incurred but not yet billed are accrued based on estimates of work performed. Debt Issuance Costs, Discounts, Premiums, and Refinancing Costs: Upon the issuance of long-term debt, CMS Energy and Consumers defer issuance costs, discounts, and premiums and amortize those amounts over the terms of the associated debt. Debt issuance costs are presented as a direct deduction from the carrying amount of long-term debt on the balance sheet. Upon the refinancing of long-term debt, Consumers, as a regulated entity, defers any remaining unamortized issuance costs, discounts, and premiums associated with the refinanced debt and amortizes those amounts over the term of the newly issued debt. For the non‑regulated portions of CMS Energy’s business, any remaining unamortized issuance costs, discounts, and premiums associated with extinguished debt are charged to earnings. Derivative Instruments: In order to support ongoing operations, CMS Energy and Consumers enter into contracts for the future purchase and sale of various commodities, such as electricity, natural gas, and coal. These forward contracts are generally long-term in nature and result in physical delivery of the commodity at a contracted price. Most of these contracts are not subject to derivative accounting for one or more of the following reasons: •they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas) •they qualify for the normal purchases and sales exception •they cannot be net settled due in part to the absence of an active market for the commodity
Consumers also uses FTRs to manage price risk related to electricity transmission congestion. An FTR is a financial instrument that entitles its holder to receive compensation or requires its holder to remit payment for congestion-related transmission charges. Consumers accounts for FTRs as derivatives. Additionally, CMS Energy uses interest rate swaps to manage its interest rate risk on certain long-term debt and notes receivable transactions. CMS Energy and Consumers record derivative contracts that do not qualify for the normal purchases and sales exception at fair value on their consolidated balance sheets. At CMS Energy, if the derivative is accounted for as a cash flow hedge, unrealized gains and losses from changes in the fair value of the derivative are recognized in AOCI and subsequently recognized in earnings when the hedged transactions impact earnings. If the derivative is accounted for as a fair value hedge, changes in the fair value of the derivative and changes in the fair value of the hedged item due to the hedged risk are recognized in earnings. For the FTRs at Consumers, changes in fair value are deferred as regulatory assets or liabilities. For details regarding CMS Energy’s and Consumers’ derivative instruments recorded at fair value, see Note 6,5, Fair Value Measurements. EPS: CMS Energy calculates basic and diluted EPS using the weighted-average number of shares of common stock and dilutive potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted EPS, includes the effects of nonvested stock awards and forward equity sales. CMS Energy computes the effect on potential common stock using the treasury stock method. Diluted EPS excludes the impact of antidilutive securities, which are those securities resulting in an increase in EPS or a decrease in loss per share. For EPS computations, see Note 15,13, Earnings Per Share—CMS Energy. Impairment of Long-Lived Assets and Equity Method Investments: CMS Energy and Consumers perform tests of impairment if certain triggering events occur that indicate the carrying amount of an asset may not be recoverable or ifthat there has been a decline in value that may be other than temporary. CMS Energy and Consumers evaluate long-lived assets held in use for impairment by calculating the undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. If the undiscounted future cash flows are less than the carrying amount, CMS Energy and Consumers recognize an impairment loss equal to the amount by which the carrying amount exceeds the fair value. CMS Energy and Consumers estimate the fair value of the asset using quoted market prices, market prices of similar assets, or discounted future cash flow analyses. CMS Energy also assesses equity method investments for impairment whenever there has been a decline in value that is other than temporary. This assessment requires CMS Energy to determine the fair value of the equity method investment. CMS Energy determines fair value using valuation methodologies, including discounted cash flows, and assesses the ability of the investee to sustain an earnings capacity that justifies the carrying amount of the investment. CMS Energy records an impairment if the fair value is less than the carrying amount and the decline in value is considered to be other than temporary. Investment Tax Credits: Consumers amortizes its investment tax credits over the life of the related property in accordance with regulatory treatment. CMS Energy’s non‑regulated businesses use the deferral method of accounting for investment tax credits. Under the deferral method, the book basis of the associated assets is reduced by the amount of the credit, resulting in lower depreciation expense over the life of the assets. Furthermore, the tax basis of the assets is reduced by 50 percent of the related credit, resulting in a net deferred tax asset. CMS Energy recognizes the tax benefit of this basis difference as a reduction to income tax expense in the year in which the plant reaches commercial operation.
Inventory: CMS Energy and Consumers use the weighted-average cost method for valuing working gas, recoverable base gas in underground storage facilities, and materials and supplies inventory. CMS Energy and Consumers also use this method for valuing coal inventory, and they classify these amounts as generating plant fuel stock on their consolidated balance sheets. CMS Energy and Consumers account for RECs and emission allowances as inventory and use the weighted-average cost method to remove amounts from inventory. RECs and emission allowances are used to satisfy compliance obligations related to the generation of power. CMS Energy and Consumers classify these amounts within other assets on their consolidated balance sheets. CMS Energy and Consumers evaluate inventory for impairment as required to ensure that its carrying value does not exceed the lower of cost or net realizable value. MISO Transactions: MISO requires the submission of hourly day-ahead and real-time bids and offers for energy at locations across the MISO region. CMS Energy and Consumers account for MISO transactions on a net hourly basis in each of the real-time and day-ahead markets, netted across all MISO energy market locations. CMS Energy and Consumers record net hourly purchases in purchased and interchange power and net hourly sales in operating revenue on their consolidated statements of income. They record net billing adjustments upon receipt of settlement statements, record accruals for future net purchases and sales adjustments based on historical experience, and reconcile accruals to actual expenses and sales upon receipt of settlement statements. Property Taxes: Property taxes are based on the taxable value of Consumers’ real and personal property assessed by local taxing authorities. Consumers records property tax expense over the fiscal year of the taxing authority for which the taxes are levied. The deferred property tax balance represents the amount of Consumers’ accrued property tax that will be recognized over future governmental fiscal periods. Reclassifications: CMS Energy and Consumers have reclassified certain prior period amounts to conform to the presentation in the present period. The most significant of these reclassifications is related to CMS Energy’s sale of EnerBank to Regions Bank in October 2021. The assets and liabilities of EnerBank are presented as held for sale on CMS Energy’s consolidated balance sheets at December 31, 2020. Additionally, EnerBank’s results of operations through the date of the sale are presented as income from discontinued operations on CMS Energy’s consolidated statements of income for the years ended December 31, 2021, 2020, and 2019. For information regarding the sale of EnerBank, see Note 20, Exit Activities and Discontinued Operations. Renewable Energy Grant: In 2013, Consumers received a renewable energy cash grant for Lake Winds® Energy Park under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009. Upon receipt of the grant, Consumers recorded a regulatory liability, which Consumers is amortizing over the life of Lake Winds® Energy Park. Consumers presents the amortization as a reduction to maintenance and other operating expenses on its consolidated statements of income. Consumers recorded the deferred income taxes related to the grant as a reduction of the book basis of Lake Winds® Energy Park. Other: For additional accounting policies, see: •Note 8, Notes Receivable Note 9,7, Plant, Property, and Equipment
•Note 11,8, Leases and Palisades Financing •Note 9, Asset Retirement Obligations •Note 10, Retirement Benefits •Note 12, Retirement Benefits Note 14, Income Taxes
•Note 15,13, Earnings Per Share—CMS Energy •Note 14, Revenue •Note 16, Revenue Note 18, Cash and Cash Equivalents
| | 2: | New Accounting Standards |
Implementation of New Accounting Standards
ASU 2016•‑02, Leases: This standard, which was effective on January 1, 2019 for CMS Energy and Consumers, establishes a new accounting model for leases. The standard requires lessees to recognizeNote 19, Variable Interest Entities
lease assets and liabilities on the balance sheet for all leases with a term of more than one year, including operating leases, which were not recorded on the balance sheet under previous standards. The new guidance also amends the definition of a lease to require that a lessee have the right to control the use of a specified asset, and not simply control or take the output of the asset. On the statement of income, operating leases are generally accounted for under a straight-line expense model, while finance leases, which were previously referred to as capital leases, are generally accounted for under a financing model. Consistent with the previous lease guidance, however, the standard allows rate-regulated utilities to recognize expense consistent with the timing of recovery in rates.
CMS Energy and Consumers elected to use certain practical expedients permitted by the standard, under which they were not required to perform lease assessments or reassessments for agreements existing on the effective date. They also elected a transition method under which they initially applied the standard on January 1, 2019, without adjusting amounts presented for prior periods. Under the standard, CMS Energy and Consumers recognized additional lease assets and liabilities on their consolidated balance sheets as of January 1, 2019 for their operating leases. In addition, in accordance with the standard, they have provided additional disclosures about their leases in Note 10, Leases and Palisades Financing. The standard did not have any impact on CMS Energy’s and Consumers’ consolidated net income or cash flows, and there was no cumulative-effect adjustment recorded to beginning retained earnings.
New Accounting Standards Not Yet Effective
ASU 2016‑13, Measurement of Credit Losses on Financial Instruments: This standard, effective January 1, 2020 for CMS Energy and Consumers, provides new guidance for measuring and recognizing credit losses on financial instruments. The standard applies to financial assets that are not measured at fair value through net income as well as to certain off-balance sheet credit exposures. Entities will apply the standard using a modified retrospective approach, with a cumulative‑effect adjustment recorded to beginning retained earnings on the effective date.
The standard will require an increase to the allowance for loan losses at EnerBank. At December 31, 2019, the allowance reflected expected credit losses over a 12‑month period, but the new standard will require the allowance to reflect expected credit losses over the entire life of the loans. EnerBank expects to record a $65 million increase to its expected credit loss reserves on January 1, 2020, with the offsetting adjustment recorded to retained earnings, net of taxes. The standard will also require an increase in the initial provision for loan losses recognized in net income for new loans originated in 2020 and beyond. At Consumers, the new guidance will apply to the allowance for uncollectible accounts; however, Consumers does not expect material impacts from the standard.
Regulatory matters are critical to Consumers. The Michigan Attorney General, ABATE, the MPSC Staff, and certain other parties typically participate in MPSC proceedings concerning Consumers, such as Consumers’ rate cases and PSCR and GCR processes. These parties often challenge various aspects of those proceedings, including the prudence of Consumers’ policies and practices, and seek cost disallowances and other relief. The parties also have appealed significant MPSC orders. Depending upon the specific issues, the outcomes of rate cases and proceedings, including judicial proceedings challenging MPSC orders or other actions, could negatively affect CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. Consumers cannot predict the outcome of these proceedings. There are multiple appeals pending that involve various issues concerning cost recovery from customers, the adequacy of the record of evidence supporting the recovery of Smart Energy investments,MPSC’s authority to approve voluntary revenue refunds, and other matters. Consumers is unable to predict the outcome of these appeals. Regulatory Assets and Liabilities Consumers is subject to the actions of the MPSC and FERC and therefore prepares its consolidated financial statements in accordance with the provisions of regulatory accounting. A utility must apply regulatory accounting when its rates are designed to recover specific costs of providing regulated services. Under regulatory accounting, Consumers records regulatory assets or liabilities for certain transactions that would have been treated as expense or revenue by non‑regulated businesses.
Presented in the following table are the regulatory assets and liabilities on Consumers’ consolidated balance sheets: | | | | | | | | | | | | | | | | | | | | | In Millions | December 31 | End of Recovery or Refund Period | 2021 | 2020 | Regulatory assets | | | | | | | Current | | | | | | | Energy waste reduction plan incentive1 | | 2022 | | $ | 42 | | | $ | 34 | | Deferred capital spending2 | | 2021 | | — | | | 6 | | Other | | 2022 | | 4 | | | 2 | | Total current regulatory assets | | | | $ | 46 | | | $ | 42 | | Non-current | | | | | | | Postretirement benefits3 | | various | | $ | 837 | | | $ | 1,231 | | Costs of coal-fueled electric generating units to be retired2 | | various | | 678 | | | 678 | | ARO4 | | various | | 247 | | | 216 | | Securitized costs2 | | 2029 | | 193 | | | 221 | | MGP sites4 | | various | | 112 | | | 120 | | Unamortized loss on reacquired debt4 | | various | | 104 | | | 108 | | Energy waste reduction plan incentive1 | | 2023 | | 46 | | | 42 | | Energy waste reduction plan4 | | various | | 13 | | | 16 | | Demand response program4 | | various | | 10 | | | 10 | | Other | | various | | 19 | | | 11 | | Total non-current regulatory assets | | | | $ | 2,259 | | | $ | 2,653 | | Total regulatory assets | | | | $ | 2,305 | | | $ | 2,695 | | Regulatory liabilities | | | | | | | Current | | | | | | | Income taxes, net | | 2022 | | $ | 138 | | | $ | 105 | | Reserve for customer refunds | | 2022 | | 2 | | | 28 | | Voluntary transmission asset sale gain share | | 2021 | | — | | | 14 | | Other | | 2022 | | 6 | | | 4 | | Total current regulatory liabilities | | | | $ | 146 | | | $ | 151 | | Non-current | | | | | | | Cost of removal | | various | | $ | 2,375 | | | $ | 2,245 | | Income taxes, net | | various | | 1,297 | | | 1,419 | | Postretirement benefits | | various | | 54 | | | — | | Renewable energy grant | | 2043 | | 47 | | | 49 | | Renewable energy plan | | 2028 | | 13 | | | 9 | | ARO | | various | | — | | | 11 | | Other | | various | | 16 | | | 11 | | Total non-current regulatory liabilities | | | | $ | 3,802 | | | $ | 3,744 | | Total regulatory liabilities | | | | $ | 3,948 | | | $ | 3,895 | |
| | | | | | | | | | | | In Millions | | December 31 | End of Recovery or Refund Period | 2019 | | 2018 | | Regulatory assets | | | | | | | Current | | | | | | | Energy waste reduction plan incentive1 | | 2020 | | $ | 33 |
| | $ | 32 |
| Other | | 2019 | | — |
| | 5 |
| Total current regulatory assets | | | | $ | 33 |
| | $ | 37 |
| Non-current | | | | | | | Postretirement benefits2 | | various | | $ | 1,130 |
| | $ | 1,028 |
| Costs of coal-fueled electric generating units to be retired3 | | various | | 667 |
| | — |
| Securitized costs3 | | 2029 | | 247 |
| | 273 |
| ARO4 | | various | | 191 |
| | 175 |
| MGP sites4 | | various | | 130 |
| | 133 |
| Unamortized loss on reacquired debt4 | | various | | 70 |
| | 68 |
| Energy waste reduction plan incentive1 | | 2021 | | 34 |
| | 34 |
| Energy waste reduction plan4 | | various | | 10 |
| | 26 |
| Deferred capital spending4 | | various | | 3 |
| | — |
| Gas storage inventory adjustments4 | | various | | 3 |
| | 4 |
| Other | | various | | 4 |
| | 2 |
| Total non-current regulatory assets | | | | $ | 2,489 |
| | $ | 1,743 |
| Total regulatory assets | | | | $ | 2,522 |
| | $ | 1,780 |
| Regulatory liabilities | | | | | | | Current | | | | | | | Income taxes, net | | 2020 | | $ | 65 |
| | $ | 18 |
| Gain to be shared with customers | | 2020 | | 17 |
| | — |
| Reserve for customer refunds | | 2019 | | 2 |
| | 36 |
| TCJA reserve for refund | | 2019 | | — |
| | 98 |
| Other | | 2020 | | 3 |
| | 3 |
| Total current regulatory liabilities | | | | $ | 87 |
| | $ | 155 |
| Non-current | | | | | | | Cost of removal | | various | | $ | 2,126 |
| | $ | 1,966 |
| Income taxes, net | | various | | 1,510 |
| | 1,537 |
| Renewable energy grant | | 2043 | | 52 |
| | 54 |
| ARO | | various | | 26 |
| | 38 |
| Renewable energy plan | | 2028 | | 17 |
| | 42 |
| TCJA reserve for refund | | various | | — |
| | 35 |
| Other | | various | | 11 |
| | 9 |
| Total non-current regulatory liabilities | | | | $ | 3,742 |
| | $ | 3,681 |
| Total regulatory liabilities | | | | $ | 3,829 |
| | $ | 3,836 |
|
1These regulatory assets have arisen from an alternative revenue program and are not associated with incurred costs or capital investments. Therefore, the MPSC has provided for recovery without a return. | | 12The MPSC has provided, or Consumers expects, a specific return on these regulatory assets. | These regulatory assets have arisen from an alternative revenue program and are not associated with incurred costs or capital investments. Therefore, the MPSC has provided for recovery without a return. |
| | 2
| This regulatory asset is included in rate base, thereby providing a return. |
| | 33This regulatory asset is included in rate base, thereby providing a return.
| The MPSC has historically authorized and Consumers expects the MPSC to authorize a specific return on these regulatory assets. |
| | 4
| These regulatory assets represent incurred costs for which the MPSC has provided, or Consumers expects, recovery without a return on investment. |
4These regulatory assets represent incurred costs for which the MPSC has provided, or Consumers expects, recovery without a return on investment. Regulatory Assets Energy Waste Reduction Plan Incentive: The energy waste reduction incentive mechanism provides a financial incentive if the energy savings of Consumers’ customers exceed annual targets established by the MPSC. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizing revenue related to the incentive as soon as energy savings exceed the annual targets established by the MPSC. In December 2019,October 2021, the MPSC approved a settlement agreement authorizing Consumers to collect $34$42 million during 20202022 as an incentive for exceeding its statutory savings targets in 2018.2020. Consumers recognized incentive revenue under this program of $34$42 million in 2018.2020. Consumers also exceeded its statutory savings targets in 2019,2021, achieved certain other goals, and will request the MPSC’s approval to collect $34$46 million, the maximum performance incentive, in the energy waste reduction reconciliation to be filed in 2020.May 2022. Consumers recognized incentive revenue under this program of $34$46 million in 2019.2021. Deferred Capital Spending: In 2019, the MPSC approved a settlement agreement in Consumers’ 2018 electric rate case, which provided deferred accounting treatment for distribution-related capital investments exceeding certain threshold amounts. Thus, for actual capital spending above the threshold amounts detailed in the settlement agreement, Consumers had deferred as a regulatory asset the associated depreciation and property tax expense as well as the debt component of the overall rate of return on such spending. Postretirement Benefits: As part of the ratemaking process, the MPSC allows Consumers to recover the costs of postretirement benefits. Accordingly, Consumers defers the net impact of actuarial losses and gains, as well as prior service costs and credits, and settlements associated with postretirement benefits as a regulatory asset or liability. The asset or liability will decrease as the deferred items are amortized and recognized as components of net periodic benefit cost. For details about settlements and the amortization periods, see Note 12,10, Retirement Benefits. Costs of Coal-fueled Electric Generating Units to be Retired: In June 2019, the MPSC approved the settlement agreement reached in Consumers’ 2018 IRP, under which Consumers plans to retire the D.E. Karn 1 & 2 coal-fueled electric generating units in 2023. Under Michigan law, electric utilities have been permitted to use highly rated, low-cost securitization bonds to finance the recovery of qualified costs. Consumers will file for securitization financing by May 2023, requesting the MPSC’s approval to securitize the remaining book value of the 2 coal-fueled electric generating units upon their retirement. In 2019, Consumers removed from total plant, property, and equipment an amount representing the projected remaining book value of the 2 coal-fueled electric generating units upon their retirement, and recorded it as a regulatory asset. Until securitization, the book value of the generating units will remain in rate base and receive full regulatory returns in general rate cases. In December 2020, the MPSC issued a securitization financing order authorizing Consumers to issue securitization bonds in order to finance the recovery of the remaining book value of the 2 coal-fueled electric generating units upon their retirement. An intervenor appealed the order, contending that it should not have to pay the securitization surcharge. In November 2021, the Michigan Court of Appeals affirmed the MPSC’s determination that the intervenor must pay the securitization charge.
ARO: The recovery of the underlying asset investments and related removal and monitoring costs of recorded AROs is approved by the MPSC in depreciation rate cases. Consumers records a regulatory asset and a regulatory liability for timing differences between the recognition of AROs for financial reporting purposes and the recovery of these costs from customers. The recovery period approximates the useful life of the assets to be removed. Securitized Costs: In 2013, the MPSC issued a securitization financing order authorizing Consumers to issue securitization bonds in order to finance the recovery of the remaining book value of 7 smaller coal-fueled electric generating units that Consumers retired in 2016 and 3 smaller natural gas-fueled electric generating units that Consumers retired in 2015. Upon receipt of the MPSC’s order, Consumers removed the book value of the 10 units from plant, property, and equipment and recorded this amount as a regulatory asset. Consumers is amortizing the regulatory asset over the life of the related securitization bonds, which it issued through a subsidiary in 2014. For additional details regarding the securitization bonds, see Note 5,4, Financings and Capitalization. ARO: The recovery of the underlying asset investments and related removal and monitoring costs of recorded AROs is approved by the MPSC in depreciation rate cases. Consumers records a regulatory asset and a regulatory liability for timing differences between the recognition of AROs for financial reporting purposes and the recovery of these costs from customers. The recovery period approximates the useful life of the assets to be removed.
MGP Sites: Consumers is incurring environmental remediation and other response activity costs at 23 former MGP facilities. The MPSC allows Consumers to recover from its natural gas customers over a ten-year period the costs incurred to remediate the MGP sites. Unamortized Loss on Reacquired Debt: Under regulatory accounting, any unamortized discount, premium, or expense related to debt redeemed with the proceeds of new debt is capitalized and amortized over the life of the new debt. Energy Waste Reduction Plan: The MPSC allows Consumers to collect surcharges from customers to fund its energy waste reduction plan. The amount of spending incurred in excess of surcharges collected is recorded as a regulatory asset and amortized as surcharges are collected from customers over the plan period. The amount of surcharges collected in excess of spending incurred is recorded as a regulatory liability and amortized as costs are incurred. Deferred Capital Spending:Demand Response Program: In January 2019,Consumers’ 2018 IRP and general rate cases, the MPSC has approved the recovery of demand response costs. Consumers annually files a settlement agreement in Consumers’ 2018 electric rate case, which provided deferred accounting treatment for distribution-related capital investments exceeding certain threshold amounts. Thus, forreconciliation with the MPSC to review actual capital spending above the thresholddemand response costs against amounts detailed in the settlement agreement, Consumers has deferred as a regulatory asset the associated depreciation and property tax expense as well as the debt component of the overall rate of return on such spending.approved.
Gas Storage Inventory Adjustments: Consumers incurs inventory expenses related to the loss of gas from its natural gas storage fields. The MPSC allows Consumers to recover these costs from its natural gas customers over a five-year period.
Regulatory Liabilities Income Taxes, Net: Consumers records regulatory assets and liabilities to reflect the difference between deferred income taxes recognized for financial reporting purposes and amounts previously reflected in Consumers’ rates. This net balance will decrease over the remaining life of the related temporary differences and flow through current income tax benefit.expense. The majority of the net regulatory liability recorded related to income taxes is associated with plant assets that are subject to normalization, which is governed by the Internal Revenue Code, and will be returned to customers over the remaining book life of the related plant assets, the average of which is 44 years for gas plant assets and 27 years for electric plant assets. For additional details on deferred income taxes, see the Consumers Electric Utility and Gas Utility—Tax Cuts and Jobs Act section below and Note 14,12, Income Taxes. Gain to be Shared with Customers:Reserve for Customer Refunds: In December 2019,2020, the MPSC issued an order authorizing Consumers to refund $28 million voluntarily to utility customers. In May 2021, the MPSC approved a filing submitted by Consumers that proposed the refund take the form of incremental spending in 2021 and 2022 above amounts included in rates on various programs, including electric service restoration and gas and electric technology expenses. If Consumers does not achieve the incremental spending, the remaining balance will be provided to electric or gas utility customers through a bill credit.
Voluntary Transmission Asset Sale Gain Share: In October 2020, Consumers completed a sale of the electric utility’s remaining transmission equipment to METC. In December 2020, Consumers filed an application with the MPSC requesting approval to share voluntarily half of the gain from the sale with electric utility customers half of the gain recognized on a sale of a portion of its substation transmission equipment to METC. Consumers proposed the gain sharing take place through an offset to additionalincremental service restoration spending in 2021; this application was approved by the MPSC in February 2021. As a result, the $14 million gain was recorded on Consumers’ consolidated balance sheets as a current regulatory liability at December 31, 2020 or through a bill credit toand wasshared with customers in 2021. Reserve for Customer Refunds: At December 31, 2018, Consumers had recorded a provision for revenue subject to refund associated with electric rates it self-implemented in 2017. In August 2019, the MPSC approved Consumers’ reconciliation of total revenues collected from rates it self-implemented to those that would have been collected under the final rates approved in June 2018 and Consumers refunded the resulting amount in September 2019. The 2016 Energy Law eliminated utilities’ self-implementation of rates under general rate cases, but provided for more timely processing of general rate cases.
TCJA Reserve for Refund: In early 2018, the MPSC ordered Consumers to file various proceedings to determine the reduction in its electric and gas revenue requirements as a result of the TCJA. For further information on the various TCJA proceedings, see the Consumers Electric Utility and Gas Utility—Tax Cuts and Jobs Act section below.
Cost of Removal: The MPSC allows Consumers to collect amounts from customers to fund future asset removal activities. This regulatory liability is reduced as costs of removal are incurred. The refund period of this regulatory liability approximates the useful life of the assets to be removed. Renewable Energy Grant: In 2013, Consumers received a $69 million renewable energy grant for Lake Winds® Energy Park, which began operations in 2012. This grant reduces Consumers’ cost of complying with Michigan’s renewable portfolio standard and, accordingly, reduces the overall renewable energy surcharge to be collected from customers. The regulatory liability recorded for the grant will be amortized over the life of Lake Winds® Energy Park. Renewable Energy Plan: Consumers has collected surcharges to fund its renewable energy plan. Amounts not yet spent under the plan are recorded as a regulatory liability, which is amortized as incremental costs are incurred to operate and depreciate Consumers’ renewable generation facilities and to purchase RECs under renewable energy purchase agreements. Incremental costs represent costs incurred in excess of amounts recovered through the PSCR process. Consumers Electric Utility and Gas Utility Tax Cuts and Jobs Act: The TCJA, which changed existing federal tax law and included numerous provisions that affect businesses, was signed into law in December 2017.
In early 2018, the MPSC ordered Consumers to file various proceedings to determine the reduction in its electric and gas revenue requirements as a result of the reduction in the corporate income tax rate, and to implement bill credits to reflect that reduction until customer rates could be adjusted through Consumers’ general rate cases. Consumers filed, and the MPSC approved, such proceedings throughout 2018, resulting in credits to customer bills during 2018 to reflect reductions in Consumers’ electric and gas revenue requirements.
Consumers filed additional proceedings to address amounts collected from customers during 2018 prior to the implementation of bill credits. In late 2018, the MPSC approved the refund of $31 million to gas customers over six months beginning in December 2018 and the refund of $70 million to electric customers over six months beginning in January 2019.
In October 2018, Consumers filed an application to address the December 31, 2017 remeasurement of its deferred income taxes and other base rate impacts of the TCJA on customers. In September 2019, the MPSC authorized Consumers to begin returning net regulatory tax liabilities of $0.4 billion to gas customers through rates approved in the 2018 gas rate case and $1.2 billion to electric customers through rates to be determined in Consumers’ next electric rate case. Until then, the MPSC authorized Consumers to refund $32 million to electric customers through a temporary bill credit. Consumers’ total $1.6 billion of net regulatory tax liabilities comprises:
| | • | A regulatory tax liability of $1.7 billion associated with plant assets that are subject to normalization, which is governed by the Internal Revenue Code; this regulatory tax liability will be returned over the remaining book life of the related plant assets, the average of which is 44 years for gas plant assets and 27 years for electric plant assets.
|
| | • | A regulatory tax asset of $0.3 billion associated with plant assets that are not subject to normalization; this regulatory tax asset will be collected over 44 years from gas customers and over 27 years from electric customers.
|
| | • | A regulatory tax liability of $0.2 billion, which is primarily related to employee benefits; this regulatory tax liability will be refunded to customers over ten years.
|
In January 2018, Consumers began to reduce the regulatory liability subject to normalization by crediting income tax expense. Consumers fully reserved for the eventual refund of these excess deferred taxes that it credited to income tax expense in a separate non‑current regulatory liability established by reducing revenue. As a result of an order received in September 2019, Consumers began refunding these excess deferred taxes to customers and will no longer reserve for their refund. At the date of the order, this reserve for refund of these excess deferred taxes totaled $62 million. For additional details on the remeasurement, see Note 14, Income Taxes.
Consumers Electric Utility
20182021 Electric Rate Case: In May 2018,March 2021, Consumers filed an application with the MPSC seeking an annual rate increase of $58$225 million, based on a 10.7510.5 percent authorized return on equity.equity and a projected twelve-month period ending December 31, 2022. In October 2018,July 2021, Consumers reduced its requested annual rate increase to $44$201 million. In January 2019, the MPSC approved a settlement agreement authorizing an annual rate decrease of $24 million, based on a 10.0 percent authorized return on equity. With the elimination of the $113 million TCJA credit to customer bills, the approved settlement agreement resulted in an $89 million net increase in annual rates. The settlement agreement also provided for deferred accounting treatment for distribution-related capital investments exceeding certain amounts. Consumers also agreed to not file a new electric rate case prior to January 2020.
Consumers Gas Utility
2018 Gas Rate Case: In November 2018, Consumers filed an application with the MPSC seeking an annual rate increase of $229 million, based on a 10.75 percent authorized return on equity. In April 2019, Consumers reduced its requested annual rate increase to $204 million. In September 2019,December 2021, the MPSC approved an annual rate increase of $144$27 million, based on a 9.909.9 percent authorized return on equity. This increase reflects the net impact of the approved settlement agreement in Consumers’ electric depreciation rate case, which reduced annual depreciation expense by $27 million.
In its final order, the MPSC disallowed cost recovery for fleet assets and certain other categories of recently completed capital expenditures incurred by Consumers. As a result of this disallowance, Consumers recorded an impairment charge of $41 million within maintenance and other operating expenses on its consolidated statements of income for the year ended December 31, 2021. This charge includes a $13an assessment of probable loss of $11 million adjustmenton similar categories of gas utility capital expenditures that are pending recovery in Consumers’ 2021 gas rate case. Though Consumers plans to begin returning net regulatory tax liabilities associated withpursue full recovery of certain of these electric and gas capital expenditures, the TCJA to customers. The MPSC also approved the continuation of a revenue decoupling mechanism, which annually reconciles Consumers’ actual weather-normalized, non‑fuel revenues with the revenues approvedposition taken by the MPSC.MPSC in this electric rate case provides significant uncertainty around whether Consumers will ultimately succeed. In January 2022, Consumers filed a petition for rehearing requesting the MPSC reconsider its disallowance of $11 million in capital expenditures for which the MPSC had already approved recovery in a previous electric rate order; this amount was not included in the impairment charge based on Consumers’ assessment of the merits of the petition for rehearing. The order disallowed recovery of other categories of capital expenditures, requiring that Consumers provide additional cost/benefit analysis and other information in its next electric rate case to support cost recovery. Consumers has incurred approximately $23 million related to these programs as of December 31, 2021 and, for certain ongoing projects, expects to incur additional capital expenditures in 2022 and beyond. While Consumers intends to
support fully the prudency of such capital expenditures, it is reasonably possible that the MPSC will disallow some or all of these capital expenditures. An additional material disallowance of incurred capital costs could negatively affect CMS Energy’s and Consumers’ future results of operations. Consumers cannot predict the outcome of these proceedings. Finally, the order disallowed various other categories of capital expenditures in the projected test year, primarily challenging the accuracy of Consumers’ projection of these expenditures through 2022. While these are presently excluded from rate base, Consumers believes it will be successful in recovering the actual capital expenditures incurred for these programs in future rate cases. As a result of the order, in December 2021, Consumers committed to a plan to sell fleet assets with a fair value of $15 million. To reflect these held-for-sale assets at their fair value, less expected selling costs, Consumers recorded an additional impairment charge of $4 million within maintenance and other operating expenses on its consolidated statements of income for the year ended December 31, 2021. Power Supply Cost Recovery and Gas Cost Recovery The PSCR and GCR ratemaking processes are designed to allow Consumers to recover all of its power supply and purchased natural gas costs if incurred under reasonable and prudent policies and practices. The MPSC reviews these costs, policies, and practices in annual plan and reconciliation proceedings. Consumers adjusts its PSCR and GCR billing charges monthly in order to minimize the underrecovery or overrecovery amount in the annual reconciliations. Underrecoveries represent probable future revenues that will be recovered from customers; overrecoveries represent previously collected revenues that will be refunded to customers.
Presented in the following table are the assets and liabilities for PSCR and GCR underrecoveries and overrecoveries reflected on Consumers’ consolidated balance sheets: | | | | | | | | | | In Millions | | December 31 | 2019 | | 2018 | | Assets | | | | | GCR underrecoveries | | $ | — |
| | $ | 16 |
| Accrued gas revenue | | $ | — |
| | $ | 16 |
| Liabilities | | | | | PSCR overrecoveries | | $ | 33 |
| | $ | 4 |
| GCR overrecoveries | | 2 |
| | — |
| Accrued rate refunds | | $ | 35 |
| | $ | 4 |
|
| | | | | | | | | | | | | | | In Millions | December 31 | 2021 | 2020 | Assets | | | | | | | | | | GCR underrecoveries | | $ | 25 | | | $ | — | | Accounts receivable and accrued revenue | | $ | 25 | | | $ | — | | Liabilities | | | | | PSCR overrecoveries | | $ | 12 | | | $ | 5 | | GCR overrecoveries | | — | | | 15 | | Accrued rate refunds | | $ | 12 | | | $ | 20 | |
PSCR Plans and Reconciliations: In October 2019,2021, the MPSC issued an order in Consumers’ 20172019 PSCR reconciliation, authorizing recovery of $1.9 billion of power costs and authorizing Consumers to reflect in its 20182020 PSCR reconciliation the overrecovery of $32$18 million. In November 2019,April 2021, the MPSC issued an order in Consumers’ 20182020 PSCR plan authorizing the 20182020 PSCR charge that Consumers self-implemented beginning in January 2018.2020. In March 2019,2021, Consumers filed its 20182020 PSCR reconciliation, requesting full recovery of $2.0$1.8 billion of power costs and authorization to reflect in its 20192021 PSCR reconciliation the underrecovery of $31 million.$4 million. Consumers submitted its 2019In January 2022, the MPSC issued an order in Consumers’ amended 2021 PSCR plan toauthorizing the MPSC in September 2018 and, in accordance with its proposed plan, self-implemented the 20192021 PSCR charge that Consumers self-implemented beginning in January 2019.2021.
GCR Plans and Reconciliations: In September 2019,May 2021, the MPSC issued an orderapproved a settlement agreement in Consumers’ 2017-20182019-2020 GCR reconciliation, authorizing full recovery of $0.6$0.5 billion of gas costs and authorizing Consumers to reflect in its 2018-20192020-2021 GCR reconciliation the overrecovery of $1$6 million. In June 2019,2021, Consumers filed its 2018-20192020-2021 GCR reconciliation, requesting full recovery of $0.6$0.4 billion of gas costs and authorization to reflect in its 2019-20202021-2022 GCR reconciliation the underrecoveryoverrecovery of $18$1 million. In January 2020,Consumers submitted its 2021-2022 GCR plan to the MPSC issued an order in Consumers’ 2019-2020December 2020 and self-implemented its proposed 2021-2022 GCR plancharge in April 2021. The MPSC approved a settlement agreement in this proceeding in September 2021, authorizing the 2019-2020 GCR charge that Consumers self-implemented beginning in April 2019.had self-implemented.
| | 4: | Contingencies and Commitments |
3: Contingencies and Commitments CMS Energy and Consumers are involved in various matters that give rise to contingent liabilities. Depending on the specific issues, the resolution of these contingencies could negatively affect CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. In their disclosures of these matters, CMS Energy and Consumers provide an estimate of the possible loss or range of loss when such an estimate can be made. Disclosures that state that CMS Energy or Consumers cannot predict the outcome of a matter indicate that they are unable to estimate a possible loss or range of loss for the matter. CMS Energy Contingencies Gas Index Price Reporting Litigation: CMS Energy, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company, were named as defendants in 4 class action lawsuits and 1 individual lawsuit arising as a result of alleged inaccurate natural gas price reporting to
publications that report trade information. Allegations include price-fixing conspiracies, restraint of trade, and artificial inflation of natural gas retail prices in Kansas, Missouri, and Wisconsin. In 2016, CMS Energy entities reached a settlement with the plaintiffs in the Kansas and Missouri class action cases for an amount that was not material to CMS Energy. In 2017, the federal district court approved the settlement. The following provides more detail on the remaining cases in which CMS Energy or its affiliates were named as parties:
In 2006, a class action complaint, Arandell Corp., et al. v. XCEL Energy Inc., et al., was filed in Wisconsin state court on behalf of Wisconsin commercial entities that purchased natural gas between January 2000 and October 2002. The defendants, including CMS Energy, CMS ERM, and Cantera Gas Company, are alleged to have violated Wisconsin’s antitrust statute. The plaintiffs are seeking full consideration damages, treble damages, costs, interest, and attorneys’ fees.
In 2009, a class action complaint, Newpage Wisconsin System v. CMS ERM, et al., was filed in circuit court in Wood County, Wisconsin, against CMS Energy, CMS ERM, Cantera Gas Company, and others. The plaintiff is seeking full consideration damages, treble damages, costs, interest, and attorneys’ fees.
In 2005, J.P. Morgan Trust Company, N.A., in its capacity as trustee of the FLI Liquidating Trust, filed an action in Kansas state court against CMS Energy, CMS MST, CMS Field Services, and others. The complaint alleges various claims under the Kansas Restraint of Trade Act. The plaintiff is seeking statutory full consideration damages for its purchases of natural gas in 2000 and 2001, costs, and attorneys’ fees.
After removal to federal court, all of the cases were transferred to a single federal district court pursuant to the multidistrict litigation process. In 2010 and 2011, all claims against CMS Energy defendants were dismissed by the district court based on FERC preemption.
In 2013, the U.S. Court of Appeals for the Ninth Circuit reversed the district court decision. The appellate court found that FERC preemption does not apply under the facts of these cases. The appellate court affirmed the district court’s denial of leave to amend to add federal antitrust claims. The matter was appealed to the U.S. Supreme Court, which in 2015 upheld the Ninth Circuit’s decision. The cases were remanded back to the federal district court.
In 2016, the federal district court granted the defendants’ motion for summary judgment in the individual lawsuit filed in Kansas based on a release in a prior settlement involving similar allegations; the order of summary judgment was subsequently appealed. In March 2018, the U.S. Court of Appeals for the Ninth Circuit reversed the lower court’s ruling and remanded the case back to the federal district court.
In 2017, the federal district court denied plaintiffs’ motion for class certification in the two pending class action cases in Wisconsin. The plaintiffs appealed that decision to the U.S. Court of Appeals for the Ninth Circuit and in August 2018, the Ninth Circuit Court of Appeals reversed and remanded the matter back to the federal district court for further consideration.
In January 2019, the judge in the multidistrict litigation granted motions filed by plaintiffs for Suggestion of Remand of the actions back to the respective transferor courts in Wisconsin and Kansas for further handling. In the Kansas action, the Judicial Panel on Multidistrict Litigation ordered the remand and the case has been transferred. In the Wisconsin actions, oppositions to the remand were filed, but the Judicial Panel on Multidistrict Litigation granted the remand in June 2019.
CMS Energy and the plaintiffs in each of the Kansas and the Wisconsin actions engaged in settlement discussions and CMS Energy has recorded a $30 million liability at December 31, 2019 as a probable estimate to settle these two cases. CMS Energy can give no assurances that it can reach a final settlement with the plaintiffs in these two cases, of the actual amount CMS Energy would have to pay in any settlement, or, in the Wisconsin case, that the Wisconsin court would approve any such settlement. If settlement does not occur and the outcome after appeals is unfavorable to CMS Energy, these cases could negatively affect CMS Energy’s liquidity, financial condition, and results of operations.
Bay Harbor: CMS Land retained environmental remediation obligations for the collection and treatment of leachate at Bay Harbor after selling its interests in the development in 2002. Leachate is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site. In 2012, CMS Land and EGLE finalized an agreement that established the final remedies and the future water quality criteria at the site. CMS Land completed all construction necessary to implement the remedies required by the agreement and will continue to maintain and operate a system to discharge treated leachate into Little Traverse Bay under an NPDES permit, issued in 2010 andwhich was renewed in 2016. The renewed NPDES permitJanuary 2022 and is valid through September 2020.2025. At December 31, 2019,2021, CMS Energy had a recorded liability of $46$45 million for its remaining obligations for environmental remediation. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.34 percent and an inflation rate of 1 percent on annual operating and maintenance costs. The undiscounted amount of the remaining obligation is $58$57 million. CMS Energy expects to pay the following amounts for long-term leachate disposal and operating and maintenance costs in each of the next five years: | | | | | | | | | | | | | | | | | | | | | | In Millions | | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | CMS Energy | | | | | | | | | | | Long-term leachate disposal and operating and maintenance costs | | $ | 5 |
| | $ | 4 |
| | $ | 4 |
| | $ | 4 |
| | $ | 4 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | 2022 | 2023 | 2024 | 2025 | 2026 | CMS Energy | | | | | | | | | | | | | Long-term leachate disposal and operating and maintenance costs | | | | $ | 4 | | | $ | 4 | | | $ | 4 | | | $ | 4 | | | $ | 4 | |
CMS Energy’s estimate of response activity costs and the timing of expenditures could change if there are changes in circumstances or assumptions used in calculating the liability. Although a liability for its present estimate of remaining response activity costs has been recorded, CMS Energy cannot predict the ultimate financial impact or outcome of this matter.
Equatorial Guinea Tax Claim: In 2002, CMS Energy sold its oil, gas, and methanol investments in Equatorial Guinea. The government of Equatorial Guinea claims that, in connection with the sale, CMS Energy owes $152 million in taxes, plus substantial penalties and interest that could be up to or exceed the amount of the taxes claimed. In 2015, the matter was proceeding to formal arbitration; however, since then, the government of Equatorial Guinea has stopped communicating.communicating with CMS Energy. CMS Energy has concluded that the government’s tax claim is without merit and will continuebelieves the likelihood of material loss to contest the claim,be remote, but cannot predict the financial impact or outcome of the matter. An unfavorable outcome could have a material adverse effect on CMS Energy’s liquidity, financial condition, and results of operations. Consumers Electric Utility Contingencies Electric Environmental Matters: Consumers’ operations are subject to environmental laws and regulations. Historically, Consumers has generally been able to recover, in customer rates, the costs to operate its facilities in compliance with these laws and regulations.
Cleanup and Solid Waste: Consumers expects to incur remediation and other response activity costs at a number of sites under the NREPA. Consumers believes that these costs should be recoverable in rates, but cannot guarantee that outcome. Consumers estimates that its liability for NREPA sites for which it can estimate a range of loss will be between $3$2 million and $4 million. At December 31, 2019,2021, Consumers had a recorded liability of $3$2 million, the minimum amount in the range of its estimated probable NREPA liability, as no amount in the range was considered a better estimate than any other amount. Consumers is a potentially responsible party at a number of contaminated sites administered under CERCLA. CERCLA liability is joint and several. In 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party for cleanup of PCBs at the Kalamazoo River CERCLA site. The notification claimed that the EPA has reason to believe that Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site. In 2011, Consumers received a follow-up letter from the EPA requesting that Consumers agree to participate in a removal action plan along with several other companies for an area of lower Portage Creek, which is connected to the Kalamazoo River. All parties, including Consumers, that were asked to participate in the removal action plan declined to accept liability. Until further information is received from the EPA, Consumers is unable to estimate a range of potential liability for cleanup of the river. Based on its experience, Consumers estimates that its share of the total liability for known CERCLA sites will be between $3 million and $8 million. Various factors, including the number and creditworthiness of potentially responsible parties involved with each site, affect Consumers’ share of the total liability. At December 31, 2019,2021, Consumers had a recorded liability of $3 million for its share of the total liability at these sites, the minimum amount in the range of its estimated probable CERCLA liability, as no amount in the range was considered a better estimate than any other amount. The timing of payments related to Consumers’ remediation and other response activities at its CERCLA and NREPA sites is uncertain. Consumers periodically reviews these cost estimates. A change in the underlying assumptions, such as an increase in the number of sites, different remediation techniques, the nature and extent of contamination, and legal and regulatory requirements, could affect its estimates of NREPA and CERCLA liability. Ludington PCB: In 1998, during routine maintenance activities, Consumers identified PCB as a component in certain paint, grout, and sealant materials at Ludington. Consumers removed part of the PCB material and replaced it with non‑PCB material. Consumers has had several communications with the EPA regarding this matter, but cannot predict the financial impact or outcome.
MCV PPA: In 2017, the MCV Partnership initiated arbitration against Consumers, asserting a breach of contract associated with the MCV PPA. Under this PPA, Consumers pays the MCV Partnership a fixed energy charge based on Consumers’ annual average baseload coal generating plant operating and maintenance cost, fuel inventory, and administrative and general expenses. The MCV Partnership asserts that, under the Clean Air Act, Consumers should have installed pollution control equipment on coal-fueled electric generating units years before they were retired. The MCV Partnership also asserts that Consumers should have installed pollution control equipment earlier on its remaining coal-fueled electric generating units. Additionally, the MCV Partnership claims that Consumers improperly characterized certain costs included in the calculation of the fixed energy charge. In January 2019, an arbitration panel issued an order concluding that the MCV Partnership is not entitled to any damages associated with itsa claim against Consumers that was related to the Clean Air Act; the majority ofAct. In November 2020, the MCV Partnership’s claim, which estimated damagesPartnership and interest in excess of $270 million, was related to this dismissed claim. Consumers believes thatsigned a settlement agreement resolving all remaining disputes between the MCV Partnership’s remaining claims are without merit, but cannot predictparties, and filed the financial impact or outcome of the matter.
Underwater Cables in Straits of Mackinac: Consumers owns certain underwater electric cables in the Straits of Mackinac, which were de-energizedsettlement and retired in 1990. Consumers was notified that some of these cables were damaged as a result of vessel activity in April 2018. Following the notification, Consumers located, inspected, sampled, capped, and returned the damaged retired cables to their original location on the lake bottom, and did not find any substantive evidence of environmental contamination. After collaboratingassociated agreements with the State of Michigan, local Native American tribes,MPSC for approval. In March 2021, the MPSC approved the settlement and other stakeholders, Consumers submitted a permit application and removal work plan with EGLE and the U.S. Army Corps of Engineers in December 2019 for partial removal of all Consumers-owned cables. Upon EGLE’s issuance of a permit or certificate of coverage, which is expected in early 2020, Consumers will record an ARO for the cost to remove partially its cables, estimated to be up to $5 million. If Consumers were required to remove all the cables, it could incur costs of up to $10 million. Consumers filed suit against the companies that own the vessels that allegedly caused the damage and settled that matter. Consumers will seek recovery from customers of any costs incurred.associated agreements.
Consumers Gas Utility Contingencies Gas Environmental Matters: Consumers expects to incur remediation and other response activity costs at a number of sites under the NREPA. These sites include 23 former MGP facilities. Consumers operated the facilities on these sites for some part of their operating lives. For some of these sites, Consumers has no present ownership interest or may own only a portion of the original site. At December 31, 2019,2021, Consumers had a recorded liability of $68$57 million for its remaining obligations for these sites. This amount represents the present value of long-term projected costs, using a discount rate of 2.57 percent and an inflation rate of 2.5 percent. The undiscounted amount of the remaining obligation is $73$61 million. Consumers expects to pay the following amounts for remediation and other response activity costs in each of the next five years: | | | | | | | | | | | | | | | | | | | | | | In Millions | | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | Consumers | | | | | | | | | | | Remediation and other response activity costs | | $ | 12 |
| | $ | 8 |
| | $ | 20 |
| | $ | 11 |
| | $ | 2 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | 2022 | 2023 | 2024 | 2025 | 2026 | Consumers | | | | | | | | | | | | | Remediation and other response activity costs | | | | $ | 3 | | | $ | 9 | | | $ | 24 | | | $ | 11 | | | $ | 1 | |
Consumers periodically reviews these cost estimates. Any significant change in the underlying assumptions, such as an increase in the number of sites, changes in remediation techniques, or legal and regulatory requirements, could affect Consumers’ estimates of annual response activity costs and the MGP liability. Pursuant to orders issued by the MPSC, Consumers defers its MGP-related remediation costs and recovers them from its customers over a ten-year period. At December 31, 2019,2021, Consumers had a regulatory asset of $130$112 million related to the MGP sites. Consumers estimates that its liability to perform remediation and other response activities at NREPA sites other than the MGP sites could reach $3 million. At December 31, 2019,2021, Consumers had a recorded liability of less than $1 million, the minimum amount in the range of its estimated probable liability, as no amount in the range was considered a better estimate than any other amount. Ray Compressor Station: On January 30, 2019, Consumers experienced a fire at the Ray Compressor Station, which resulted in the Ray Storage Field being off‑line or operating at significantly reduced capacity, which negatively affected Consumers’ natural gas supply and delivery capacity. This incident, which occurred during the extreme polar vortex weather condition, required Consumers to request voluntary reductions in customer load, to implement contingency gas supply purchases, and to implement
a curtailment of natural gas deliveries for industrial and large commercial customers pursuant to Consumers’ MPSC curtailment tariff. The curtailment and request for voluntary reductions of customer loads were canceled as of midnight, February 1, 2019. Consumers investigated the cause of the incident, and filed a report on the incident with the MPSC in April 2019. In response, the MPSC issued an order in July 2019, directing Consumers to file additional reports regarding the incident and to include detail of
the resulting costs in a future rate proceeding. The compressor station is presently operating at full capacity. As a result ofIn May 2020, the fireMPSC approved an administrative settlement agreement between Consumers and the resulting curtailment, Consumers could be subject to disallowances of gas purchased and costs associatedMPSC Staff, which resulted in a $10,000 civil penalty in connection with the repairs to the Ray Compressor Station. Consumers’ incremental cost of gas purchased during the incident was $7 million. Additionally, at December 31, 2019,fire. Consumers had incurred capital expenditures of $12 million to restore the compressor station.Consumers may also be subject to various claims from impacted customers and claims for damages, or regulatory penalties. damages.
In September 2020, the MPSC disallowed the recovery of $7 million in incremental gas purchases related to the fire. In January 2021, the MPSC denied Consumers’ petition for a rehearing challenging this disallowance. In February 2021, Consumers filed an appeal of the MPSC’s denial with the Michigan Court of Appeals. Consumers could also be subject to disallowances of costs associated with the repair and modification of the Ray Compressor Station. At December 31, 2021, Consumers had incurred capital expenditures of $17 million to restore and modify the compressor station. As of December 31, 2021, Consumers had recorded an insurance recovery of $13 million related to the compressor station. During 2021, Consumers recognized $6 million of the insurance recovery as a reduction to plant, property, and equipment, $3 million as a reduction of maintenance and other operating expenses, and $4 million as operating revenue, which represented recovery of incremental gas purchases related to the fire. At this time, Consumers cannot predict the outcome of these matters or other gas-related incidents and a reasonable estimate of a total loss cannot be made, but they could have a material adverse effect on CMS Energy’s and Consumers’ results of operations, financial condition, or liquidity, and could subject Consumers’ gas utility to increased regulatory scrutiny. Consumers Electric and Gas Utility Contingencies
Electric and Gas Staking: In June 2019, the MPSC ordered Consumers to show cause as to why it should not be found in violation of the MISS DIG Act. The MPSC alleges that Consumers violated the law by failing to respond in a timely manner to over 20,000 requests to mark the location of underground facilities in April and May 2019 and only partially responding to others. The law provides the MPSC with discretion in setting fines for violations, if any; however, the fines cannot exceed $5,000 per violation. Consumers resolved the backlog of staking requests, and Consumers, the MPSC Staff, and the Michigan Attorney General filed an agreement with the MPSC settling this matter for an amount of less than $1 million. The MPSC approved the settlement agreement in January 2020.
Guarantees Presented in the following table are CMS Energy’s and Consumers’ guarantees at December 31, 2019:2021: | | | | | | | | | | | | | | | | | | | | | In Millions | Guarantee Description | Issue Date | Expiration Date | Maximum Obligation | Carrying Amount | CMS Energy, including Consumers | | | | | | | Indemnity obligations from purchase of VIE1 | September 2020 | indefinite | | $ | 314 | | | $ | — | | Indemnity obligations from stock and asset sale agreements2 | various | indefinite | | 225 | | 4 | | Guarantee3 | July 2011 | indefinite | | 30 | | | — | | Consumers | | | | | | | Guarantee3 | July 2011 | indefinite | | $ | 30 | | | $ | — | |
1In conjunction with the purchase of its interest in Aviator Wind Equity Holdings, CMS Enterprises assumed certain indemnity obligations that protect the associated tax equity investor against losses incurred as a result of breaches of representations and warranties provided by Aviator Wind Equity Holdings and its subsidiaries. These obligations are generally capped at an amount equal to the tax equity investor’s capital contributions plus a specified return, less any distributions and tax benefits it receives, in connection with its membership interest in Aviator Wind. CMS Enterprises would recover 49 percent of any amounts paid to the tax equity investor from the other owner of Aviator Wind Equity Holdings. Additionally, Aviator Wind holds insurance coverage that would partially protect against losses incurred as a result of certain failures to qualify for production tax credits. For further details on CMS Enterprises’ ownership interest in Aviator Wind Equity Holdings, see Note 19, Variable Interest Entities. | | | | | | | | | | | | In Millions | | Guarantee Description | Issue Date | Expiration Date | Maximum Obligation | | Carrying Amount | | CMS Energy, including Consumers | | | | | | | Indemnity obligations from stock and asset sale agreements1 | various | indefinite | | $ | 153 |
| | $ | 2 |
| Guarantees2 | various | indefinite | | 36 |
| | — |
| Consumers | | | | | | | Guarantee2 | July 2011 | indefinite | | $ | 30 |
| | $ | — |
|
117
| | 1
| These obligations arose from stock and asset sale agreements under which CMS Energy or a subsidiary of CMS Energy indemnified the purchaser for losses resulting from various matters, primarily claims related to taxes.2These obligations arose from stock and asset sale agreements under which CMS Energy or a subsidiary of CMS Energy indemnified the purchaser for losses resulting from various matters, including claims related to taxes and breaches of representations and warranties. The maximum obligation amount is mostly related to the Equatorial Guinea tax claim discussed in the CMS Energy Contingencies section of this Note. CMS Energy believes the likelihood of material loss to be remote for the indemnity obligations not recorded as liabilities. |
| | 2
| At Consumers, this Note and an indemnity provided in connection with the sale of EnerBank to Regions Bank. For further details on the sale, see Note 20, Exit Activities and Discontinued Operations. CMS Energy believes the likelihood of material loss to be remote for the indemnity obligations not recorded as liabilities.3This obligation comprises a guarantee provided by Consumers to the U.S. Department of Energy in connection with a settlement agreement regarding damages resulting from the department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by Consumers. At CMS Energy, the |
guarantee obligations comprise Consumers’ guarantee to the U.S. Department of Energy and CMS Energy’s 1994 guarantee of non‑recourse revenue bonds issued by Genesee. For additional details on this guarantee, see Note 21, Variable Interest Entities.
Additionally, in the normal course of business, CMS Energy, Consumers, and certain other subsidiaries of CMS Energy have entered into various agreements containing tax and other indemnity provisions for which they are unable to estimate the maximum potential obligation. TheAt December 31, 2021, the carrying value of these indemnity obligations iswas $1 million. CMS Energy and Consumers consider the likelihood that they would be required to perform or incur substantial losses related to these indemnities to be remote. Other Contingencies In addition to the matters disclosed in this Note, Note 2, Regulatory Matters, and Note 3, Regulatory Matters,20, Exit Activities and Discontinued Operations, there are certain other lawsuits and administrative proceedings before various courts and governmental agencies, as well as unasserted claims that may result in such proceedings, arising in the ordinary course of business to which CMS Energy, Consumers, and certain other subsidiaries of CMS Energy are parties. These other lawsuits, proceedings, and unasserted claims may involve personal injury, property damage, contracts, environmental matters, federal and state taxes, rates, licensing, employment, and other matters. Further, CMS Energy and Consumers occasionally self-report certain regulatory non‑compliance matters that may or may not eventually result in administrative proceedings. CMS Energy and Consumers believe that the outcome of any one of these proceedings and potential claims will not have a material negative effect on their consolidated results of operations, financial condition, or liquidity. Contractual Commitments Purchase Obligations:Purchase obligations arise from long-term contracts for the purchase of commodities and related services, plant purchase commitments, and construction and service agreements. The commodities and related services include long-term PPAs, natural gas and associated transportation, and coal and associated transportation. Related-party PPAs are between Consumers and certain affiliates
of CMS Enterprises. Presented in the following table are CMS Energy’s and Consumers’ contractual purchase obligations at December 31, 20192021 for each of the periods shown: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | Payments Due | | Total | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | Beyond 2024 | | CMS Energy, including Consumers | | | | | | | | | | | | | Total PPAs | | $ | 9,336 |
| | $ | 1,030 |
| | $ | 1,035 |
| | $ | 750 |
| | $ | 608 |
| | $ | 605 |
| | $ | 5,308 |
| Other | | 3,244 |
| | 1,685 |
| | 520 |
| | 451 |
| | 210 |
| | 199 |
| | 179 |
| Consumers | | | | | | | | | | | | | | | PPAs | | | | | | | | | | | | | | | MCV PPA | | $ | 3,295 |
| | $ | 313 |
| | $ | 287 |
| | $ | 272 |
| | $ | 225 |
| | $ | 201 |
| | $ | 1,997 |
| Palisades PPA | | 899 |
| | 388 |
| | 398 |
| | 113 |
| | — |
| | — |
| | — |
| Related-party PPAs | | 472 |
| | 71 |
| | 72 |
| | 74 |
| | 74 |
| | 75 |
| | 106 |
| Other PPAs | | 4,670 |
| | 258 |
| | 278 |
| | 291 |
| | 309 |
| | 329 |
| | 3,205 |
| Total PPAs | | $ | 9,336 |
| | $ | 1,030 |
| | $ | 1,035 |
| | $ | 750 |
| | $ | 608 |
| | $ | 605 |
| | $ | 5,308 |
| Other | | 2,865 |
| | 1,638 |
| | 477 |
| | 413 |
| | 174 |
| | 162 |
| | 1 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | Payments Due | | Total | 2022 | 2023 | 2024 | 2025 | 2026 | Beyond 2026 | CMS Energy, including Consumers | | | | | | | | | | | Total PPAs | | $ | 8,028 | | | $ | 828 | | | $ | 747 | | | $ | 762 | | | $ | 709 | | | $ | 606 | | | $ | 4,376 | | Other | | 4,445 | | | 1,489 | | | 1,657 | | | 412 | | | 639 | | | 36 | | | 212 | | Total purchase obligations | | $ | 12,473 | | | $ | 2,317 | | | $ | 2,404 | | | $ | 1,174 | | | $ | 1,348 | | | $ | 642 | | | $ | 4,588 | | Consumers | | | | | | | | | | | | | | | PPAs | | | | | | | | | | | | | | | MCV PPA | | $ | 2,204 | | | $ | 349 | | | $ | 348 | | | $ | 346 | | | $ | 306 | | | $ | 231 | | | $ | 624 | | Palisades PPA | | 116 | | | 116 | | | — | | | — | | | — | | | — | | | — | | Related-party PPAs | | 342 | | | 65 | | | 65 | | | 65 | | | 47 | | | 29 | | | 71 | | Other PPAs | | 5,366 | | | 298 | | | 334 | | | 351 | | | 356 | | | 346 | | | 3,681 | | Total PPAs | | $ | 8,028 | | | $ | 828 | | | $ | 747 | | | $ | 762 | | | $ | 709 | | | $ | 606 | | | $ | 4,376 | | Other | | 3,950 | | | 1,381 | | | 1,596 | | | 364 | | | 594 | | | 12 | | | 3 | | Total purchase obligations | | $ | 11,978 | | | $ | 2,209 | | | $ | 2,343 | | | $ | 1,126 | | | $ | 1,303 | | | $ | 618 | | | $ | 4,379 | |
MCV PPA: Consumers has a 35-year PPA that began in 1990 with the MCV Partnership giving Consumers the right to purchase up to 1,240 MW of electricity.capacity and energy produced by the MCV Facility. The MCV PPA aswas amended during 2020 and was approved by the MPSC in 2021. The amended and restated MCV PPA provides for: •an extension of the termination date from March 2025 to May 2030 •a capacity charge of $10.14 per MWh of available capacity through March 2025 and $5.00 per MWh of available capacity from March 2025 through the termination date of the PPA •a fixed energy charge based on Consumers’ annual average baseload coal generating plant operatingof $6.30 per MWh for on-peak hours and maintenance cost, fuel inventory, and administrative and general expenses$6.00 for off-peak hours •a variable energy charge based on the MCV Partnership’s cost of production when the plant is dispatchedfor energy delivered to Consumers •a $5 million annual contribution by the MCV Partnership to a renewable resources program an option for Consumers to extend the MCV PPA for five years or purchase the MCV Facility at the conclusion of the MCV PPA’s term in through March 2025; although Consumers is not obligated to exercise either of these options, the table above presents the impact on future cash flows of extending the MCV PPA through 20302025
Capacity and energy charges under the MCV PPA were $348 million in 2021, $298 million in 2020, and $318 million in 2019, $353 million in 2018, and $321 million in 2017.2019. Palisades PPA: Consumers has a PPA expiring in May 2022 with Entergy to purchase virtually all of the capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. For all delivered energy, the Palisades PPA has escalating capacity and variable energy charges. Total capacity and energy charges under the Palisades PPA were $413 million in 2021, $403 million in 2020, and $395 million in 2019, $375 million in 2018, and $366 million in 2017.2019. For further details about Palisades, see Note 10,8, Leases and Palisades Financing. Other PPAs: Consumers has PPAs expiring through 20402048 with various counterparties. The majority of the PPAs have capacity and energy charges for delivered energy. In addition, CMS Energy and Consumers account for several of their PPAs as leases. Capacity and energy charges under these PPAs were $338 million in 2021, $327 million in 2020, and $336 million in 2019, $350 million in 2018, and $349 million in 2017.2019. See Note 10,8, Leases and Palisades Financing for more information about CMS Energy’s and Consumers’ lease obligations.
4: Financings and Capitalization
| | 5: | Financings and Capitalization |
Presented in the following table is CMS Energy’s long-term debt at December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | Interest Rate (%) | Maturity | 2021 | 2020 | CMS Energy, including Consumers | | | | | | | | | CMS Energy, parent only | | | | | | | | | Senior notes | 3.875 | | | 2024 | | | $ | 250 | | | $ | 250 | | | 3.600 | | | 2025 | | | 250 | | | 250 | | | 3.000 | | | 2026 | | | 300 | | | 300 | | | 2.950 | | | 2027 | | | 275 | | | 275 | | | 3.450 | | | 2027 | | | 350 | | | 350 | | | 4.700 | | | 2043 | | | 250 | | | 250 | | | 4.875 | | | 2044 | | | 300 | | | 300 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,975 | | | $ | 1,975 | | | | | | | | | | | Term loan facility | variable | | 2021 | | | — | | | 200 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Junior subordinated notes1 | 4.750 | | 2 | 2050 | | | 500 | | | 500 | | | 3.750 | | 3 | 2050 | | | 400 | | | 400 | | | 5.625 | | | 2078 | | | 200 | | | 200 | | | 5.875 | | | 2078 | | | 280 | | | 280 | | | 5.875 | | | 2079 | | | 630 | | | 630 | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,010 | | | $ | 2,010 | | Total CMS Energy, parent only | | | | | | $ | 3,985 | | | $ | 4,185 | | Consumers | | | | | | 8,505 | | | 8,197 | | CMS Enterprises, including subsidiaries | | | | | | | | | Term loan facility | variable | 4 | 2025 | | | 78 | | | 85 | | | | | | | | | | | Total principal amount outstanding | | | | | | $ | 12,568 | | | $ | 12,467 | | Current amounts | | | | | | (373) | | | (571) | | Unamortized discounts | | | | | | (31) | | | (33) | | Unamortized issuance costs | | | | | | (118) | | | (119) | | Total long-term debt | | | | | | $ | 12,046 | | | $ | 11,744 | |
| | | | | | | | | | | | | | In Millions | | | Interest Rate (%) | Maturity | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | | | | | CMS Energy, parent only | | | | | | | | | Senior notes | 5.050 | | 2022 | | | $ | 300 |
| | $ | 300 |
| | 3.875 | | 2024 | | | 250 |
| | 250 |
| | 3.600 | | 2025 | | | 250 |
| | 250 |
| | 3.000 | | 2026 | | | 300 |
| | 300 |
| | 2.950 | | 2027 | | | 275 |
| | 275 |
| | 3.450 | | 2027 | | | 350 |
| | 350 |
| | 4.700 | | 2043 | | | 250 |
| | 250 |
| | 4.875 | | 2044 | | | 300 |
| | 300 |
| Total senior notes | | | | | | $ | 2,275 |
| | $ | 2,275 |
| | | | | | | | | | Term loans and revolving credit agreements | variable |
| 2019 | | | — |
| | 180 |
| | variable |
| 2023 | | | — |
| | 30 |
| | | | | | | $ | — |
| | $ | 210 |
| | | | | | | | | | Junior subordinated notes¹ | 5.625 | | 2078 | | | 200 |
| | 200 |
| | 5.875 | | 2078 | | | 280 |
| | 280 |
| | 5.875 | | 2079 | | | 630 |
| | — |
| | | | | | | $ | 1,110 |
| | $ | 480 |
| Total CMS Energy, parent only | | | | | | $ | 3,385 |
| | $ | 2,965 |
| CMS Energy subsidiaries | | | | | | | | | CMS Enterprises, including subsidiaries | | | | | | | | | Term loan facility | variable | 2 | 2025 | | | $ | 92 |
| | $ | 98 |
| EnerBank | | | | | | | | | Certificates of deposit | 2.445 | 3 | 2020-2027 | | | 2,389 |
| | 1,758 |
| Consumers | | | | | | 7,322 |
| | 6,862 |
| Total principal amount outstanding | | | | | | $ | 13,188 |
| | $ | 11,683 |
| Current amounts | | | | | | (1,111 | ) | | (974 | ) | Unamortized discounts | | | | | | (27 | ) | | (21 | ) | Unamortized issuance costs | | | | | | (99 | ) | | (73 | ) | Total long-term debt | | | | | | $ | 11,951 |
| | $ | 10,615 |
|
1These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness.
2On June 1, 2030, and every five years thereafter, the notes will reset to an interest rate equal to the five-year treasury rate plus 4.116 percent.
3On December 1, 2030, and every five years thereafter, the notes will reset to an interest rate equal to the five-year treasury rate plus 2.900 percent. 4A subsidiary of CMS Enterprises issued non‑recourse debt to finance the acquisition of a wind generation project in Northwest Ohio. The interest rate for the debt is three-month LIBOR plus 1.500 percent through October 2022 and three-month LIBOR plus 1.750 percent thereafter. At December 31, 2021 and 2020, the interest rate was 1.724 percent and 1.754 percent, respectively. The same subsidiary of CMS Enterprises entered into interest rate swaps with the lending banks to fix the interest charges associated with the debt, at a rate of 4.702 percent through October 2022 and 4.952 percent thereafter. Principal and interest payments are made quarterly. For information about the interest rate swaps, see Note 5, Fair Value Measurements.
| | 1
| These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness. |
| | 2
| A subsidiary of CMS Enterprises issued non‑recourse debt to finance the acquisition of a wind generation project in Northwest Ohio. The debt bears interest at an annual interest rate of LIBOR plus 1.500 percent through October 2022 (3.445 percent at December 31, 2019 and 4.303 percent at December 31, 2018).Beginning in October 2022, the debt will bear interest at an annual interest rate of LIBOR plus 1.750 percent. The same subsidiary of CMS Enterprises entered into interest rate swaps with the lending banks to fix the interest charges associated with the debt, at a rate of 4.702 percent through October 2022 and 4.952 percent beginning in October 2022. Principal and interest payments are made quarterly. For information about the interest rate swaps, see Note 6, Fair Value Measurements.
|
| | 3
| The weighted-average interest rate for EnerBank’s certificates of deposit was 2.445 percent at December 31, 2019 and 2.440 percent at December 31, 2018. EnerBank’s primary deposit product consists of brokered certificates of deposit with varying maturities and having a face value of $1,000. |
Presented in the following table is Consumers’ long-term debt at December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | Interest Rate (%) | Maturity | 2021 | 2020 | Consumers | | | | | | | | | First mortgage bonds | | | | | | | | | | 0.350 | | | 2023 | | | $ | 300 | | | $ | 300 | | | 3.375 | | | 2023 | | | 325 | | | 325 | | | 3.125 | | | 2024 | | | 250 | | | 250 | | | 3.190 | | | 2024 | | | 52 | | | 52 | | | 3.680 | | | 2027 | | | 100 | | | 100 | | | 3.390 | | | 2027 | | | 35 | | | 35 | | | 3.800 | | | 2028 | | | 300 | | | 300 | | | 3.180 | | | 2032 | | | 100 | | | 100 | | | 5.800 | | | 2035 | | | 175 | | | 175 | | | 3.520 | | | 2037 | | | 335 | | | 335 | | | 4.010 | | | 2038 | | | 215 | | | 215 | | | 6.170 | | | 2040 | | | 50 | | | 50 | | | 4.970 | | | 2040 | | | 50 | | | 50 | | | 4.310 | | | 2042 | | | 263 | | | 263 | | | 3.950 | | | 2043 | | | 425 | | | 425 | | | 4.100 | | | 2045 | | | 250 | | | 250 | | | 3.250 | | | 2046 | | | 450 | | | 450 | | | 3.950 | | | 2047 | | | 350 | | | 350 | | | 4.050 | | | 2048 | | | 550 | | | 550 | | | 4.350 | | | 2049 | | | 550 | | | 550 | | | 3.750 | | | 2050 | | | 300 | | | 300 | | | 3.100 | | | 2050 | | | 550 | | | 550 | | | 3.500 | | | 2051 | | | 575 | | | 575 | | | 2.650 | | | 2052 | | | 300 | | | — | | | 3.860 | | | 2052 | | | 50 | | | 50 | | | 4.280 | | | 2057 | | | 185 | | | 185 | | | 2.500 | | | 2060 | | | 525 | | | 525 | | | 4.350 | | | 2064 | | | 250 | | | 250 | | | variable | 1 | 2069 | | | 76 | | | 76 | | | variable | 1 | 2070 | | | 134 | | | 134 | | | variable | 1 | 2070 | | | 127 | | | 127 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 8,197 | | | $ | 7,897 | | | | | | | | | | | Tax-exempt revenue bonds | 0.875 | | 2 | 2035 | | | 35 | | | — | | | 1.800 | | 3 | 2049 | | | 75 | | | 75 | | | | | | | | $ | 110 | | | $ | 75 | | | | | | | | | | | Securitization bonds | 3.290 | | 4 | 2025-2029 | 5 | | 198 | | | 225 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total principal amount outstanding | | | | | | $ | 8,505 | | | $ | 8,197 | | Current amounts | | | | | | (365) | | | (364) | | Unamortized discounts | | | | | | (28) | | | (29) | | Unamortized issuance costs | | | | | | (62) | | | (62) | | Total long-term debt | | | | | | $ | 8,050 | | | $ | 7,742 | |
| | | | | | | | | | | | | | | In Millions | | | Interest Rate (%) | Maturity | 2019 | | 2018 | | Consumers | | | | | | | | | First mortgage bonds | 5.650 |
| | 2020 | | | $ | — |
| | $ | 300 |
| | 3.770 |
| | 2020 | | | 100 |
| | 100 |
| | 2.850 |
| | 2022 | | | 375 |
| | 375 |
| | 5.300 |
| | 2022 | | | 250 |
| | 250 |
| | 3.375 |
| | 2023 | | | 325 |
| | 325 |
| | 3.125 |
| | 2024 | | | 250 |
| | 250 |
| | 3.190 |
| | 2024 | | | 52 |
| | 52 |
| | 3.680 |
| | 2027 | | | 100 |
| | 100 |
| | 3.390 |
| | 2027 | | | 35 |
| | 35 |
| | 3.800 |
| | 2028 | | | 300 |
| | 300 |
| | 3.180 |
| | 2032 | | | 100 |
| | 100 |
| | 5.800 |
| | 2035 | | | 175 |
| | 175 |
| | 3.520 |
| | 2037 | | | 335 |
| | 335 |
| | 4.010 |
| | 2038 | | | 215 |
| | 215 |
| | 6.170 |
| | 2040 | | | 50 |
| | 50 |
| | 4.970 |
| | 2040 | | | 50 |
| | 50 |
| | 4.310 |
| | 2042 | | | 263 |
| | 263 |
| | 3.950 |
| | 2043 | | | 425 |
| | 425 |
| | 4.100 |
| | 2045 | | | 250 |
| | 250 |
| | 3.250 |
| | 2046 | | | 450 |
| | 450 |
| | 3.950 |
| | 2047 | | | 350 |
| | 350 |
| | 4.050 |
| | 2048 | | | 550 |
| | 550 |
| | 4.350 |
| | 2049 | | | 550 |
| | 550 |
| | 3.750 |
| | 2050 | | | 300 |
| | — |
| | 3.100 |
| | 2050 | | | 550 |
| | — |
| | 3.860 |
| | 2052 | | | 50 |
| | 50 |
| | 4.280 |
| | 2057 | | | 185 |
| | 185 |
| | 4.350 |
| | 2064 | | | 250 |
| | 250 |
| | variable |
| 1 | 2069 | | | 76 |
| | — |
| Total first mortgage bonds |
|
| |
| | | $ | 6,961 |
| | $ | 6,335 |
| | | | | | | | | | Tax-exempt revenue bonds | variable |
| 2 | 2035 | | | 35 |
| | 35 |
| | 1.800 |
| 3 | 2049 | | | 75 |
| | — |
| | | | | | | $ | 110 |
| | $ | 35 |
| | | | | | | | | | Securitization bonds | 3.220 |
| 4 | 2025-2029 | 5 | | 251 |
| | 277 |
| Revolving credit agreements | variable |
|
| 2020-2023 | | | — |
| | 215 |
| Total principal amount outstanding | | |
| | | $ | 7,322 |
| | $ | 6,862 |
| Current amounts | | |
| | | (202 | ) | | (26 | ) | Unamortized discounts | | |
| | | (23 | ) | | (16 | ) | Unamortized issuance costs | | | | | | (49 | ) | | (41 | ) | Total long-term debt | | | | | | $ | 7,048 |
| | $ | 6,779 |
|
1The variable-rate bonds bear interest quarterly at a rate of three-month LIBOR minus 0.300 percent, subject to a zero-percent floor (zero percent at December 31, 2021) and (zero percent at December 31, 2020). The holders of these variable-rate bonds may put them to Consumers for redemption on certain dates prior to their stated maturity, including dates within one year of December 31, 2021.
2The interest rate on these tax-exempt revenue bonds will reset on October 8, 2026.
| | 3The interest rate on these tax‑exempt revenue bonds will reset on October 1, 2024. 4The weighted-average interest rate for Consumers’ securitization bonds issued through its subsidiary, Consumers 2014 Securitization Funding, was 3.290 percent at December 31, 2021 and 3.250 percent at December 31, 2020. 5Principal and interest payments are made semiannually. 1
| The variable-rate bonds bear interest quarterly at a rate of three-month LIBOR minus 0.300 percent (1.594 percent at December 31, 2019).
|
| | 2
| The interest rate on these tax‑exempt revenue bonds is reset weekly and was 1.740 percent at December 31, 2019 and 1.780 percent at December 31, 2018. |
| | 3
| The interest rate on these tax‑exempt revenue bonds will reset on October 1, 2024. |
| | 4
| The weighted-average interest rate for Consumers’ securitization bonds issued through its subsidiary, Consumers 2014 Securitization Funding, was 3.220 percent at December 31, 2019 and 3.057 percent at December 31, 2018. |
| | 5
| Principal and interest payments are made semiannually. |
Financings: Presented in the following table is a summary of major long-term debt issuances during the year ended December 31, 2019:2021: | | | | | | | | | | | | | | | | | | | Principal (In Millions) | Interest Rate | Issuance Date | Maturity Date | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Consumers | | | | | | First mortgage bonds | | $ | 300 | | 2.650% | August 2021 | August 2052 | Tax-exempt revenue bonds1 | | 35 | | 0.875% | October 2021 | April 2035 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 These bonds were repurchased, in lieu of redemption, in July 2020. In October 2021, the bonds were remarketed to the public and the interest rate on the bonds will reset in October 2026. | | | | | | | | | | Principal (In Millions) | | Interest Rate (%) | Issuance Date | Maturity Date | CMS Energy, parent only | | | | | | Term loan facility |
| $ | 300 |
| variable | January | December 2019 | Junior subordinated notes1 |
| 630 |
| 5.875 | February | March 2079 | Term loan facility |
| 165 |
| variable | June | June 2020 | Total CMS Energy, parent only |
| $ | 1,095 |
|
|
| | Consumers | | | | | | First mortgage bonds | | $ | 300 |
| 3.750 | May | February 2050 | First mortgage bonds | | 550 |
| 3.100 | September | August 2050 | First mortgage bonds | | 76 |
| variable | September | September 2069 | Tax-exempt revenue bonds | | 75 |
| 1.800 | October | October 2049 | Total Consumers | | $ | 1,001 |
| | | | Total CMS Energy | | $ | 2,096 |
| | | |
| | 1
| These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness. |
Presented in the following table is a summary of major long-term debt retirements during the year ended December 31, 2019:2021: | | | | | | | | | | | Principal (In Millions) | | Interest Rate (%) |
| Retirement Date | Maturity Date | CMS Energy, parent only | | | | | | Term loan facility | | $ | 300 |
| variable |
| February | December 2019 | Term loan facility | | 180 |
| variable |
| February | April 2019 | Term loan facility | | 165 |
| variable |
| August-December | June 2020 | Total CMS Energy, parent only | | $ | 645 |
| | | | Consumers | | | | | | First mortgage bonds | | $ | 300 |
| 5.650 | % | May | April 2020 | Total Consumers | | $ | 300 |
| | | | Total CMS Energy | | $ | 945 |
| | | |
Term Loan Credit Agreement: In January 2020, Consumers entered into a $300 million unsecured term loan credit agreement. The term loan matures in January 2021. | | | | | | | | | | | | | | | | | | | Principal (In Millions) | Interest Rate | Retirement Date | Maturity Date | CMS Energy, parent only | | | | | | Term Loan facility | | $ | 200 | | variable | October 2021 | November 2021 |
First Mortgage Bonds: Consumers secures its first mortgage bonds by a mortgage and lien on substantially all of its property. Consumers’ ability to issue first mortgage bonds is restricted by certain provisions in the First Mortgage Bond Indenture and the need for regulatory approvals under federal law. Restrictive issuance provisions in the First Mortgage Bond Indenture include achieving a 2-timestwo-times interest coverage ratio and having sufficient unfunded net property additions. Regulatory Authorization for Financings: Consumers is required to maintain FERC authorization for financings. Its current authorization terminates on AugustJuly 31, 2021.2022. Any long-term issuances during the authorization period are exempt from FERC’s competitive bidding and negotiated placement requirements. In December 2021, Consumers filed an application for authority to issue securities between April 1, 2022 and March 31, 2024, replacing the current authorization. Securitization Bonds: Certain regulatory assets held by Consumers’ subsidiary, Consumers 2014 Securitization Funding, collateralize Consumers’ securitization bonds. The bondholders have no recourse to Consumers’ assets except for those held by the subsidiary that issued the bonds. Consumers collects securitization surcharges to cover the principal and interest on the bonds as well as certain other qualified costs. The surcharges collected are remitted to a trustee and are not available to creditors of Consumers or creditors of Consumers’ affiliates other than the subsidiary that issued the bonds.
Debt Maturities: At December 31, 2019,2021, the aggregate annual contractual maturities for long-term debt for the next five years, based on stated maturities or earlier put dates, were: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | 2022 | 2023 | 2024 | 2025 | 2026 | CMS Energy, including Consumers | | | | | | | | | | | Long-term debt | | | | | | | | | | | CMS Energy, parent only | | $ | — | | | $ | — | | | $ | 250 | | | $ | 250 | | | $ | 300 | | Consumers | | 365 | | | 654 | | | 332 | | | 31 | | | 32 | | CMS Enterprises, including subsidiaries | | 8 | | | 9 | | | 10 | | | 51 | | | — | | Total CMS Energy | | $ | 373 | | | $ | 663 | | | $ | 592 | | | $ | 332 | | | $ | 332 | | Consumers | | | | | | | | | | | Long-term debt | | $ | 365 | | | $ | 654 | | | $ | 332 | | | $ | 31 | | | $ | 32 | |
| | | | | | | | | | | | | | | | | | | | | | In Millions | | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | CMS Energy, including Consumers | | | | | | | | | | | Long-term debt | | $ | 1,111 |
| | $ | 538 |
| | $ | 1,354 |
| | $ | 669 |
| | $ | 808 |
| Consumers | | | | | | | | | | | Long-term debt | | $ | 202 |
| | $ | 27 |
| | $ | 653 |
| | $ | 354 |
| | $ | 332 |
|
Revolving Credit Facilities: The following revolving credit facilities with banks were available at December 31, 2019:2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | Expiration Date | Amount of Facility | Amount Borrowed | Letters of Credit Outstanding | Amount Available | CMS Energy, parent only | | | | | | | | | June 5, 20241 | | $ | 550 | | | $ | — | | | $ | 24 | | | $ | 526 | | September 23, 20222 | | 31 | | | — | | | 31 | | | — | | CMS Enterprises, including subsidiaries | | | | | | | | | September 25, 20253 | | $ | 39 | | | $ | — | | | $ | 39 | | | $ | — | | September 30, 20254 | | 18 | | | — | | | 8 | | | 10 | | Consumers5 | | | | | | | | | June 5, 2024 | | $ | 850 | | | $ | — | | | $ | 12 | | | $ | 838 | | November 19, 2023 | | 250 | | | — | | | 8 | | | 242 | | April 18, 2022 | | 30 | | | — | | | 30 | | | — | |
| | | | | | | | | | | | | | | | | | In Millions | | Expiration Date | Amount of Facility | | Amount Borrowed | | Letters of Credit Outstanding | | Amount Available | | CMS Energy, parent only | | | | | | | | | June 5, 20231 | | $ | 550 |
| | $ | — |
| | $ | 6 |
| | $ | 544 |
| CMS Enterprises, including subsidiaries | | | | | | | | | September 30, 20252 | | $ | 18 |
| | $ | — |
| | $ | 8 |
| | $ | 10 |
| Consumers3 | | | | | | | | | June 5, 2023 | | $ | 850 |
| | $ | — |
| | $ | 7 |
| | $ | 843 |
| November 19, 2021 | | 250 |
| | — |
| | 10 |
| | 240 |
| April 18, 2022 | | 30 |
| | — |
| | 30 |
| | — |
|
1There were no borrowings under this facility during the year ended December 31, 2021. | | 12The maximum aggregate of letters of credit that may be issued under this facility is $50 million. The amount remaining under the facility is uncommitted. 3This letter of credit facility is available to Aviator Wind Equity Holdings. For more information regarding Aviator Wind Equity Holdings, see Note 19, Variable Interest Entities. 4Under this facility, $8 million is available solely for the purpose of issuing letters of credit. Obligations under this facility are secured by the collateral accounts with the lending bank. There were no borrowings under this facility during the year ended December 31, 2021. 5Obligations under these facilities are secured by first mortgage bonds of Consumers. There were no borrowings under these facilities during the year ended December 31, 2021. | During the year ended December 31, 2019, CMS Energy’s average borrowings totaled $5 million with a weighted-average interest rate of 3.859 percent. |
| | 2
| Under this facility, $8 million is available solely for the purpose of issuing letters of credit. Obligations under this facility are secured by the collateral accounts with the lending bank. There were 0 borrowings under this facility during the year ended December 31, 2019. |
| | 3
| Obligations under these facilities are secured by first mortgage bonds of Consumers. During the year ended December 31, 2019, Consumers’ average borrowings totaled $2 million with a weighted-average interest rate of 3.225 percent. |
Short-term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, investment-grade commercial paper notes with maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities and may have an aggregate principal amount outstanding of up to $500 million. While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers
does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At December 31, 2019,2021, there were $90 millionno commercial paper notes outstanding under this programprogram. In December 2021, Consumers renewed a short-term credit agreement with CMS Energy, permitting Consumers to borrow up to $500 million at an annual interest rate of 2.050 percent, recorded as current notes payable onone month LIBOR minus 0.100 percent. At December 31, 2021, outstanding borrowings under the consolidated balance sheetsagreement were $392 million bearing an interest rate of zero percent. In January 2022, Consumers repaid $392 million of its loan outstanding with CMS Energy and Consumers.Energy. Dividend Restrictions: At December 31, 2019,2021, payment of dividends by CMS Energy on its common stock was limited to $5.0$6.4 billion under provisions of the Michigan Business Corporation Act of 1972. Under the provisions of its articles of incorporation, at December 31, 2019,2021, Consumers had $1.4$1.8 billion of unrestricted retained earnings available to pay dividends on its common stock to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that, under a variety of circumstances, dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process. ForDuring the year ended December 31, 2019,2021, Consumers paid $592$722 million in dividends on its common stock to CMS Energy.
Capitalization: The authorized capital stock of CMS Energy consists of: •350 million shares of CMS Energy Common Stock, par value $0.01 per share •10 million shares of CMS Energy Preferred Stock, par value $0.01 per share
Issuance of Common Stock:In 2018,2020, CMS Energy entered into an equity offering program under which it may sell, from time to time, shares of CMS Energy common stock having an aggregate sales price of up to $250 million.stock. Under thisthe program, CMS Energy may sell its common stock in privately negotiated transactions, in “at the market” offerings, through forward sales transactions, or otherwise. CMS Energy has entered into forward sales contractsmay sell shares of its common stock having an aggregate sales price of $250up to $500 million. Presented in the following table are details of these contracts:CMS Energy’s forward sales contracts under this program at December 31, 2021: | | | | | | | | | Contract Date | Maturity Date | Number of Shares |
| Initial Forward Price Per Share | | November 16, 2018 | May 16, 2020 | 2,017,783 |
| | $ | 49.06 |
| November 20, 2018 | May 20, 2020 | 777,899 |
| | 50.91 |
| February 21, 2019 | August 21, 2020 | 2,083,340 |
| | 52.27 |
|
| | | | | | | | | | | | | | | | | | | | | | | | Forward Price Per Share | Contract Date | Maturity Date | Number of Shares | Initial | December 31, 2021 | September 15, 2020 | June 30, 2022 | 846,759 | | $ | 61.04 | | | $ | 58.51 | | December 22, 2020 | June 22, 2022 | 115,595 | | 61.81 | | | 59.73 | |
These contracts allow CMS Energy to either physically settle the contracts by issuing shares of its common stock at the then-applicable forward sale price specified by the agreement or net settle the contracts through the delivery or receipt of cash or shares. CMS Energy may settle the contracts at any time through their maturity dates, and presently intends to physically settle the contracts by delivering shares of its common stock. The initial forward price in the forward equity sale contracts includes a deduction for commissions and will be adjusted on a daily basis over the term based on an interest rate factor and decreased on certain dates by certain predetermined amounts to reflect expected dividend payments. No amounts have or will beare recorded
on CMS Energy’s consolidated balance sheets until settlements of the forward equity sale contracts occur. If CMS Energy had elected to net share settle the contracts as of December 31, 2019,2021, CMS Energy would have been required to deliver 94,588 shares. Issuance of Preferred Stock: 992,596In 2021, CMS Energy issued 9.2 million depositary shares, each representing a 1/1,000th interest in a share of its cumulative Series C preferred stock, traded on the New York Stock Exchange under the symbol CMS PRC, at a price of $25.00 per depositary share. The transaction resulted in net proceeds of $224 million, which was used for general corporate purposes. Dividends on the preferred stock accumulate at an annual rate of 4.200 percent and are payable quarterly.. The Series C preferred stock has no maturity or mandatory redemption date and is not redeemable at the option of the holders. CMS Energy may, at its option, redeem the Series C preferred stock, in whole or in part, at a price equal to $25,000 per share (equivalent to $25.00 per depositary share), plus accumulated and unpaid dividends, at any time on or after July 15, 2026. The Series C preferred stock ranks senior to CMS Energy’s common stock with respect to dividend rights and distribution rights upon liquidation. Preferred Stock of Subsidiary: Consumers’ preferred stock is traded on the New York Stock Exchange under the symbol CMS-PB. Presented in the following table are details of Consumers’ preferred stock at December 31, 20192021 and 2018:2020: | | | | | | | | | | | | | | | Par Value | | Optional Redemption Price | | Number of Shares Authorized |
| Number of Shares Outstanding |
| Cumulative, with no mandatory redemption | | $ | 100 |
| | $ | 110 |
| 7,500,000 |
| 373,148 |
|
| | | | | | | | | | | | | | | | | | | | | | Par Value | Optional Redemption Price | Number of Shares Authorized | Number of Shares Outstanding | Cumulative, with no mandatory redemption | | $ | 100 | | | $ | 110 | | 7,500,000 | 373,148 |
5: Fair Value Measurements
125
| | 6: | Fair Value Measurements |
Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. When measuring fair value, CMS Energy and Consumers are required to incorporate all assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. A fair value hierarchy prioritizes inputs used to measure fair value according to their observability in the market. The three levels of the fair value hierarchy are as follows: •Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. •Level 2 inputs are observable, market-based inputs, other than Level 1 prices. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, and inputs derived from or corroborated by observable market data. •Level 3 inputs are unobservable inputs that reflect CMS Energy’s or Consumers’ own assumptions about how market participants would value their assets and liabilities. CMS Energy and Consumers classify fair value measurements within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement in its entirety.
Assets and Liabilities Measured at Fair Value on a Recurring Basis Presented in the following table are CMS Energy’s and Consumers’ assets and liabilities recorded at fair value on a recurring basis: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | CMS Energy, including Consumers | | Consumers | December 31 | 2021 | 2020 | | 2021 | 2020 | Assets1 | | | | | | | | | | | | | | | | | | | | Restricted cash equivalents | | $ | 24 | | | $ | 17 | | | | $ | 22 | | | $ | 15 | | Nonqualified deferred compensation plan assets | | 27 | | | 23 | | | | 21 | | | 18 | | Derivative instruments | | 2 | | | 1 | | | | 2 | | | 1 | | Total assets | | $ | 53 | | | $ | 41 | | | | $ | 45 | | | $ | 34 | | Liabilities1 | | | | | | | | | | Nonqualified deferred compensation plan liabilities | | $ | 27 | | | $ | 23 | | | | $ | 21 | | | $ | 18 | | Derivative instruments | | 7 | | | 11 | | | | — | | | — | | Total liabilities | | $ | 34 | | | $ | 34 | | | | 21 | | | $ | 18 | |
| | | | | | | | | | | | | | | | | | | In Millions | | | CMS Energy, including Consumers | | Consumers | December 31 | 2019 | | 2018 | | | 2019 | | 2018 | | Assets1 | | | | | | | | | | Cash equivalents | | $ | — |
| | $ | 27 |
| | | $ | — |
| | $ | — |
| Restricted cash and cash equivalents | | 17 |
| | 21 |
| | | 17 |
| | 17 |
| CMS Energy common stock | | — |
| | — |
| | | 1 |
| | 1 |
| Nonqualified deferred compensation plan assets | | 18 |
| | 14 |
| | | 14 |
| | 10 |
| Other non-current assets | | — |
| | 1 |
| | | — |
| | — |
| Derivative instruments | | 1 |
| | 1 |
| | | 1 |
| | 1 |
| Total | | $ | 36 |
| | $ | 64 |
| | | $ | 33 |
| | $ | 29 |
| Liabilities1 | | | | | | | | | | Nonqualified deferred compensation plan liabilities | | $ | 18 |
| | $ | 14 |
| | | $ | 14 |
| | $ | 10 |
| Derivative instruments | | 8 |
| | 3 |
| | | — |
| | — |
| Total | | $ | 26 |
| | $ | 17 |
| | | $ | 14 |
| | $ | 10 |
|
| | 11All assets and liabilities were classified as Level 1 with the exception of derivative contracts, which were classified as Level 2 or Level 3.
| All assets and liabilities were classified as Level 1 with the exception of derivative contracts, which were classified as Level 2 or Level 3. |
Restricted Cash Equivalents: Cash equivalents and restrictedRestricted cash equivalents consist of money market funds with daily liquidity. For further details, see Note 18,16, Cash and Cash Equivalents.
Nonqualified Deferred Compensation Plan Assets and Liabilities: The nonqualified deferred compensation plan assets consist of mutual funds, which are valued using the daily quoted net asset values. CMS Energy and Consumers value their nonqualified deferred compensation plan liabilities based on the fair values of the plan assets, as they reflect the amount owed to the plan participants in accordance with their investment elections. CMS Energy and Consumers report the assets in other non‑current assets and the liabilities in other non‑current liabilities on their consolidated balance sheets. Derivative Instruments: CMS Energy and Consumers value their derivative instruments using either a market approach that incorporates information from market transactions, or an income approach that discounts future expected cash flows to a present value amount. CMS Energy’s and Consumers’ derivatives are classified as Level 2 or Level 3. The derivatives classified as Level 2 are interest rate swaps at CMS Energy, which are valued using market-based inputs. CMS Energy uses interest rate swaps to manage its interest rate risk on certain long‑term debt obligations and certain notes receivable at EnerBank.obligations. In 2018, aA subsidiary of CMS Enterprises entered intouses floating-to-fixed interest rate swaps to reduce the impact of interest rate fluctuations associated with future interest payments on certain long‑term variable-rate debt. The interest rate swaps are accounted for as cash flow hedges of the future variability of interest payments on debt with a notional amount of $92$78 million at December 31, 2019.2021 and $85 million at December 31, 2020. Gains or losses on these swaps are initially reported in AOCIother comprehensive income (loss) and then, as interest payments are made on the hedged debt, are recognized in earnings within other interest expenseon long-term debt on CMS Energy’s consolidated statements of income. CMS Energy recorded losses in AOCIgains (losses) of $4 million for the year ended December 31, 2019 and $2 million for the year ended December 31, 2018.in 2021, $(6) million in 2020, and $(4) million in 2019. There were no material impacts on other
interest expenseon long-term debt associated with these swaps during the yearsperiods presented. The fair value of these swaps recorded in other liabilities on CMS Energy’s consolidated balance sheets totaled $5$4 million at December 31, 20192021 and $2$9 million at December 31, 2018.2020. CMS Energy also has other interest rate swaps that economically hedge interest rate risk on debt, but that do not qualify for cash flow hedge accounting; the amounts associated with these swaps were not material for the yearsperiods presented. In 2019, EnerBank entered into fixed-to-floating interest rate swaps to manage interest rate risk exposure associated with changes in the fair value of certain long‑term fixed‑rate loans. The interest rate swaps qualify as fair value hedges of long‑term, fixed‑rate notes receivable with a notional amount of $134 million at December 31, 2019. The fair value of these interest rate swaps recorded in other liabilities was $1 million at December 31, 2019. CMS Energy is adjusting the carrying value of the hedged notes receivable for the change in their fair value due to the hedged risk. Both gains and losses on the swaps and the changes to the carrying value of the hedged notes receivable are recorded within operating revenue on CMS Energy’s consolidated statements of income. There were no material amounts recognized in operating revenue associated with these swaps for the year ended December 31, 2019.
The majority of derivatives classified as Level 3 are FTRs held by Consumers. Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements. There was no material activity within the Level 3 categories of assets and liabilities during the yearsperiods presented. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Presented in the following table are Consumers’ assets, by level within the fair value hierarchy, reported at fair value on a nonrecurring basis during the year ended December 31, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | Level 1 | Level 2 | Level 3 | | Gains (Losses) | Assets held for sale | | $ | — | | | $ | 15 | | | $ | — | | | $ | (4) | |
In 2021, Consumers wrote down fleet assets held for sale from their carrying amount of $19 million to their fair value, less selling costs, of $15 million, resulting in an impairment charge of $4 million, which was recorded within maintenance and other operating expenses on its consolidated statements of income for the year ended December 31, 2021. The fair value was determined based on the market prices of similar fleet vehicles. For additional information, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters.
6: Financial Instruments Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value. The table excludes cash, cash equivalents, short-term financial instruments, and trade accounts receivable and payable whose carrying amounts approximate their fair values. For information about assets and liabilities
recorded at fair value and for additional details regarding the fair value hierarchy, see Note 6,5, Fair Value Measurements. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | December 31, 2021 | | December 31, 2020 | | Carrying Amount | Fair Value | | Carrying Amount | Fair Value | | Total | Level | | Total | Level | | 1 | 2 | 3 | | 1 | 2 | 3 | CMS Energy, including Consumers | | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | | | | | | | Long-term receivables1 | | $ | 14 | | | $ | 14 | | | $ | — | | | $ | — | | | $ | 14 | | | | $ | 17 | | | $ | 17 | | | $ | — | | | $ | — | | | $ | 17 | | Liabilities | | | | | | | | | | | | | | | | | | | | | | Long-term debt2 | | 12,419 | | | 13,800 | | | 1,189 | | | 10,656 | | | 1,955 | | | | 12,315 | | | 14,601 | | | 1,249 | | | 11,267 | | | 2,085 | | Long-term payables3 | | 31 | | | 32 | | | — | | | — | | | 32 | | | | 33 | | | 35 | | | — | | | — | | | 35 | | Consumers | | | | | | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | | | | | | | Long-term receivables1 | | $ | 14 | | | $ | 14 | | | $ | — | | | $ | — | | | $ | 14 | | | | $ | 17 | | | $ | 17 | | | $ | — | | | $ | — | | | $ | 17 | | | | | | | | | | | | | | | | | | | | | | | | Notes receivable – related party4 | | 104 | | | 104 | | | — | | | — | | | 104 | | | | 107 | | | 107 | | | — | | | — | | | 107 | | Liabilities | | | | | | | | | | | | | | | | | | | | | | Long-term debt5 | | 8,415 | | | 9,410 | | | — | | | 7,455 | | | 1,955 | | | | 8,106 | | | 9,801 | | | — | | | 7,716 | | | 2,085 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | December 31, 2019 | | December 31, 2018 | | | | Fair Value | | | | Fair Value | | Carrying | | | Level | | Carrying | | | Level | | Amount | Total | 1 | 2 | 3 | | Amount | Total | 1 | 2 | 3 | CMS Energy, including Consumers | | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | | | | | | | Long-term receivables1 | | $ | 20 |
| | $ | 20 |
| | $ | — |
| | $ | — |
| | $ | 20 |
| | | $ | 22 |
| | $ | 22 |
| | $ | — |
| | $ | — |
| | $ | 22 |
| Notes receivable2 | | 2,500 |
| | 2,652 |
| | — |
| | — |
| | 2,652 |
| | | 1,857 |
| | 1,967 |
| | — |
| | — |
| | 1,967 |
| Securities held to maturity | | 26 |
| | 26 |
| | — |
| | 26 |
| | — |
| | | 22 |
| | 21 |
| | — |
| | 21 |
| | — |
| Liabilities | | | | | | | | | | | | | | | | | | | | | | Long-term debt3 | | 13,062 |
| | 14,185 |
| | 1,197 |
| | 11,048 |
| | 1,940 |
| | | 11,589 |
| | 11,630 |
| | 459 |
| | 9,404 |
| | 1,767 |
| Long-term payables4 | | 30 |
| | 32 |
| | — |
| | — |
| | 32 |
| | | 27 |
| | 27 |
| | — |
| | — |
| | 27 |
| Consumers | | | | | | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | | | | | | | Long-term receivables1 | | $ | 20 |
| | $ | 20 |
| | $ | — |
| | $ | — |
| | $ | 20 |
| | | $ | 22 |
| | $ | 22 |
| | $ | — |
| | $ | — |
| | $ | 22 |
| Notes receivable – related party5 | | 103 |
| | 103 |
| | — |
| | — |
| | 103 |
| | | 106 |
| | 106 |
| | — |
| | — |
| | 106 |
| Liabilities | | | | | | | | | | | | | | | | | | | | | | Long-term debt6 | | 7,250 |
| | 8,010 |
| | — |
| | 6,070 |
| | 1,940 |
| | | 6,805 |
| | 6,833 |
| | — |
| | 5,066 |
| | 1,767 |
|
| | 11 | Includes current portion of long-term accounts receivable of $13 million at December 31, 2019 and $14 million at December 31, 2018. |
| | 2
| Includes current portion of notes receivable of $242 million at December 31, 2019 and $233 million at December 31, 2018. For further details, see Note 8, Notes Receivable. |
| | 3
| Includes current portion of long-term debt of $1.1 billion at December 31, 2019 and $1.0 billion at December 31, 2018. |
| | 4
| Includes current portion of long-term payables of $1 million at December 31, 2019 and December 31, 2018. |
| | 5
| Includes current portion of notes receivable – related party of $7 million at December 31, 2019 and December 31, 2018. For further details on this note receivable, see the DB SERP discussion below. |
| | 6
| Includes current portion of long-term debt of $202 million at December 31, 2019 and $26 million at December 31, 2018. |
The effects of third-party credit enhancements were excluded from the fair value measurements of long-term debt. The principal amountaccounts receivable of CMS Energy’s long-term debt supported by third-party credit enhancements was $35$9 million at December 31, 20192021 and $12 million at December 31, 2018. The entirety of these amounts was at Consumers.2020.
DB SERP Securities:2 Presented in the following table is a summary of the sales activity for investment securities held within the DB SERP and classified as available for sale:
| | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | CMS Energy, including Consumers | | | | | | | Proceeds from sales of investment securities | | $ | — |
| | $ | 142 |
| | $ | 145 |
| Consumers | | | | | | | Proceeds from sales of investment securities | | $ | — |
| | $ | 103 |
| | $ | 105 |
|
In 2018, CMS Energy and Consumers sold the DB SERP debt securities and CMS Energy issued a $146 million demand note payable to the DB SERP rabbi trust. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028. The demand note payable and associated DB SERP investment were eliminated on CMS Energy’s consolidated balance sheets. TheIncludes current portion of the demand note attributable to Consumers was recorded as a notelong-term debt of $373 million at December 31, 2021 and $571 million at December 31, 2020.
3Includes current portion of long-term payables of $23 million at December 31, 2021 and $6 million at December 31, 2020. 4Includes current portion of notes receivable – related party on Consumers’ consolidated balance sheets. During 2017, CMS Energy and Consumers sold mutual fund securities held within the DB SERP and used the proceeds to purchase the debt securities, which were later sold in 2018. CMS Energy reclassified gains of $2 million ($1 million, net of tax) from AOCI and included this amount in other income on the consolidated statements of income. This amount included Consumers’ gains of $2 million ($1 million, net of tax).
Debt securities classified as held to maturity consisted primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank. Presented in the following table are these investment securities:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | December 31, 2019 | | December 31, 2018 | | Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | | | Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | | CMS Energy | | | | | | | | | | | | | | Debt securities | | $ | 26 |
| | $ | — |
| | $ | — |
| | $ | 26 |
| | | $ | 22 |
| | $ | — |
| | $ | 1 |
| | $ | 21 |
|
Presented in the following table are details of CMS Energy’s and Consumers’ current and non‑current notes receivable:
| | | | | | | | | | In Millions | | December 31 | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | Current | | | | | EnerBank notes receivable, net of allowance for loan losses | | $ | 223 |
| | $ | 233 |
| EnerBank notes receivable held for sale | | 19 |
| | — |
| Non‑current | | | | | EnerBank notes receivable | | 2,258 |
| | 1,624 |
| Total notes receivable | | $ | 2,500 |
| | $ | 1,857 |
| Consumers | | | | | Current | | | | | DB SERP note receivable – related party | | $ | 7 |
| | $ | 7 |
| Non‑current | | | | | DB SERP note receivable – related party | | 96 |
| | 99 |
| Total notes receivable | | $ | 103 |
| | $ | 106 |
|
EnerBank Notes Receivable
EnerBank notes receivable are primarily unsecured consumer installment loans, largely for financing home improvements. EnerBank records its notes receivable at cost, less an allowance for loan losses. During 2019, EnerBank completed sales of notes receivable, receiving proceeds of $67 million and recording immaterial gains. At December 31, 2019, $19 million of notes receivable were classified as held for sale; the fair value of notes receivable held for sale exceeded their carrying value. These notes are expected to be sold in 2020.
During 2019, EnerBank purchased a portfolio of secured and unsecured consumer installment loans with a principal value of $373 million.
Authorized contractors pay fees to EnerBank to provide borrowers with same-as-cash, zero interest, or reduced interest loans. Unearned income associated with the loan fees, which is recorded as a reduction to notes receivable on CMS Energy’s consolidated balance sheets, was $134$7 million at December 31, 20192021 and $1022020.
5Includes current portion of long-term debt of $365 million at December 31, 2018. Unearned income associated with loan fees for notes receivable held for sale was $22021 and $364 million at December 31, 2019. The allowance for loan losses is a valuation allowance to reflect estimated credit losses. The allowance is increased by the provision for loan losses and decreased by loan charge-offs net of recoveries. Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors. Loan losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.
Presented in the following table are the changes in the allowance for loan losses:
| | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | Balance at beginning of period | | $ | 24 |
| | $ | 20 |
| Charge-offs | | (35 | ) | | (24 | ) | Recoveries | | 6 |
| | 3 |
| Provision for loan losses | | 38 |
| | 25 |
| Balance at end of period | | $ | 33 |
| | $ | 24 |
|
Loans that are 30 days or more past due are considered delinquent. The balance of EnerBank’s delinquent consumer loans was $33 million at December 31, 2019 and $21 million at December 31, 2018. At December 31, 2019 and December 31, 2018, EnerBank’s loans that had been modified as troubled debt restructurings were immaterial.
EnerBank has entered into interest rate swaps on $134 million of its loans (notes receivable). For information about interest rate swaps, see Note 6, Fair Value Measurements.
DB SERP Note Receivable – Related Party
The DB SERP note receivable – related party is Consumers’ portion of a demand note payable issued by CMS Energy to the DB SERP rabbi trust. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028.
7: Plant, Property, and Equipment
| | 9: | Plant, Property, and Equipment |
Presented in the following table are details of CMS Energy’s and Consumers’ plant, property, and equipment: | | | | | | | | | | | | | | | | | | In Millions | December 31 | Estimated Depreciable Life in Years | 2021 | 2020 | CMS Energy, including Consumers | | | | | | Plant, property, and equipment, gross | | | | | | Consumers | 3 - 125 | | $ | 28,771 | | | $ | 26,757 | | Enterprises | | | | | | Independent power production1 | 2 - 40 | | 1,121 | | | 1,112 | | Other | 3 - 5 | | 1 | | | 1 | | | | | | | | Plant, property, and equipment, gross | | | $ | 29,893 | | | $ | 27,870 | | Construction work in progress | | | 961 | | | 1,085 | | Accumulated depreciation and amortization | | | (8,502) | | | (7,938) | | Total plant, property, and equipment2 | | | $ | 22,352 | | | $ | 21,017 | | Consumers | | | | | | Plant, property, and equipment, gross | | | | | | Electric | | | | | | Generation | 22 - 125 | | $ | 6,704 | | | $ | 6,376 | | Distribution | 20 - 75 | | 9,815 | | | 9,130 | | Other | 5 - 50 | | 1,309 | | | 1,326 | | Assets under finance leases and other financing3 | | | 319 | | | 323 | | Gas | | | | | | Distribution | 20 - 85 | | 6,338 | | | 5,702 | | Transmission | 17 - 75 | | 2,319 | | | 2,003 | | Underground storage facilities4 | 27 - 75 | | 1,117 | | | 1,046 | | Other | 5 - 50 | | 814 | | | 817 | | Assets under finance leases3 | | | 13 | | | 13 | | Other non-utility property | 3 - 51 | | 23 | | | 21 | | Plant, property, and equipment, gross | | | $ | 28,771 | | | $ | 26,757 | | Construction work in progress | | | 915 | | | 1,058 | | Accumulated depreciation and amortization | | | (8,371) | | | (7,844) | | Total plant, property, and equipment2 | | | $ | 21,315 | | | $ | 19,971 | |
| | | | | | | | | | | | | In Millions | | December 31 | Estimated Depreciable Life in Years | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | | | | Plant, property, and equipment, gross | | | | | | | | Consumers | 3 | — | 125 | | $ | 24,963 |
| | $ | 23,963 |
| Enterprises | | | | | | | | Independent power production1 | 3 | — | 40 | | 403 |
| | 410 |
| Other | 3 | — | 5 | | 2 |
| | 2 |
| EnerBank | 1 | — | 7 | | 22 |
| | 25 |
| Plant, property, and equipment, gross | | | | | $ | 25,390 |
| | $ | 24,400 |
| Construction work in progress | | | | | 896 |
| | 763 |
| Accumulated depreciation and amortization | | | | | (7,360 | ) | | (7,037 | ) | Total plant, property, and equipment | | | | | $ | 18,926 |
| | $ | 18,126 |
| Consumers | | | | | | | | Plant, property, and equipment, gross | | | | | | | | Electric | | | | | | | | Generation | 22 | — | 125 | | $ | 5,942 |
| | $ | 6,305 |
| Distribution | 20 | — | 75 | | 8,519 |
| | 7,957 |
| Transmission | 46 | — | 75 | | 113 |
| | 154 |
| Other | 5 | — | 50 | | 1,258 |
| | 1,316 |
| Assets under finance leases and other financing2 | | | | | 326 |
| | 295 |
| Gas | | | | | | | | Distribution | 20 | — | 85 | | 5,235 |
| | 4,651 |
| Transmission | 17 | — | 75 | | 1,752 |
| | 1,521 |
| Underground storage facilities3 | 27 | — | 75 | | 987 |
| | 910 |
| Other | 5 | — | 50 | | 797 |
| | 823 |
| Assets under finance leases2 | | | | | 14 |
| | 14 |
| Other non‑utility property | 3 | — | 51 | | 20 |
| | 17 |
| Plant, property, and equipment, gross | | | | | $ | 24,963 |
| | $ | 23,963 |
| Construction work in progress | | | | | 879 |
| | 756 |
| Accumulated depreciation and amortization | | | | | (7,272 | ) | | (6,958 | ) | Total plant, property, and equipment4 | | | | | $ | 18,570 |
| | $ | 17,761 |
|
1A significant portion of independent power production assets are leased to others under operating leases. For information regarding CMS Energy’s operating leases of owned assets, see Note 8, Leases and Palisades Financing. | | 12Consumers’ plant additions were $2.4 billion for the year ended December 31, 2021 and $2.0 billion for the year ended December 31, 2020. Consumers’ plant retirements, which include the impact of disallowances and transfers to held for sale, were $361 million for the year ended December 31, 2021, and $220 million for the year ended December 31, 2020. | The majority of independent power production assets are leased to others under operating leases. For information regarding CMS Energy’s operating leases of owned assets, see Note 10, Leases and Palisades Financing. |
| | 2
| For information regarding the amortization terms of Consumers’ assets under finance leases and other financing, see Note 10, Leases and Palisades Financing. |
3For information regarding the amortization terms of Consumers’ assets under finance leases and other financing, see Note 8, Leases and Palisades Financing.
| | 34Underground storage includes base natural gas of $26 million at December 31, 2021 and 2020. Base natural gas is not subject to depreciation. | Underground storage includes base natural gas of $26 million at December 31, 2019 and 2018. Base natural gas is not subject to depreciation. |
| | 4
| For the year ended December 31, 2019, Consumers’ plant additions were $2.0 billion and plant retirements were $380 million. For the year ended December 31, 2018, Consumers’ plant additions were $1.8 billion and plant retirements were $190 million. Consumers plans to retire the D.E. Karn 1 & 2 coal-fueled electric generating units in 2023. Accordingly, in 2019, Consumers removed from total plant, property, and equipment $667 million, representing the remaining book value of the 2 units upon their retirement, and recorded it as a regulatory asset. For additional details, see Note 3, Regulatory Matters. |
Intangible Assets: Included in net plant, property, and equipment are intangible assets. Presented in the following table are details about CMS Energy’s and Consumers’ intangible assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | Description | Amortization Life in Years | December 31, 2021 | | December 31, 2020 | Gross Cost1 | Accumulated Amortization | | Gross Cost1 | Accumulated Amortization | CMS Energy, including Consumers | | | | | | | | | | | Software development | 3 - 15 | | $ | 840 | | | $ | 592 | | | | $ | 856 | | | $ | 568 | | Rights of way | 50 - 85 | | 211 | | | 60 | | | | 197 | | | 57 | | Franchises and consents | 5 - 50 | | 16 | | | 10 | | | | 16 | | | 10 | | Leasehold improvements | various2 | | 9 | | | 6 | | | | 10 | | | 7 | | Other intangibles | various | | 26 | | | 16 | | | | 26 | | | 16 | | Total | | | $ | 1,102 | | | $ | 684 | | | | $ | 1,105 | | | $ | 658 | | Consumers | | | | | | | | | | | Software development | 3 - 15 | | $ | 840 | | | $ | 592 | | | | $ | 856 | | | $ | 568 | | Rights of way | 50 - 85 | | 211 | | | 60 | | | | 197 | | | 57 | | Franchises and consents | 5 - 50 | | 16 | | | 10 | | | | 16 | | | 10 | | Leasehold improvements | various2 | | 9 | | | 6 | | | | 10 | | | 7 | | Other intangibles | various | | 26 | | | 16 | | | | 25 | | | 16 | | Total | | | $ | 1,102 | | | $ | 684 | | | | $ | 1,104 | | | $ | 658 | |
| | | | | | | | | | | | | | | | | | | | | | In Millions | | | | December 31, 2019 | | December 31, 2018 | Description | Amortization Life in Years | Gross Cost¹ | | Accumulated Amortization | | | Gross Cost¹ | | Accumulated Amortization | | CMS Energy, including Consumers | | | | | | | | | | Software development | 1 | — | 15 | | $ | 882 |
| | $ | 529 |
| | | $ | 1,024 |
| | $ | 603 |
| Rights of way | 50 | — | 85 | | 180 |
| | 55 |
| | | 167 |
| | 52 |
| Franchises and consents | 5 | — | 50 | | 16 |
| | 9 |
| | | 15 |
| | 9 |
| Leasehold improvements | various² | | 9 |
| | 7 |
| | | 9 |
| | 7 |
| Other intangibles | various | | 27 |
| | 15 |
| | | 27 |
| | 15 |
| Total | | | | | $ | 1,114 |
| | $ | 615 |
| | | $ | 1,242 |
| | $ | 686 |
| Consumers | | | | | | | | | | | | | Software development | 3 | — | 15 | | $ | 869 |
| | $ | 521 |
| | | $ | 1,009 |
| | $ | 595 |
| Rights of way | 50 | — | 85 | | 180 |
| | 55 |
| | | 167 |
| | 52 |
| Franchises and consents | 5 | — | 50 | | 16 |
| | 9 |
| | | 15 |
| | 9 |
| Leasehold improvements | various² | | 9 |
| | 7 |
| | | 9 |
| | 7 |
| Other intangibles | various | | 26 |
| | 15 |
| | | 26 |
| | 15 |
| Total | | | | | $ | 1,100 |
| | $ | 607 |
| | | $ | 1,226 |
| | $ | 678 |
|
1Consumers’ intangible asset additions were $88 million for the year ended December 31, 2021 and $69 million for the year ended December 31, 2020. Consumers’ intangible asset retirements were $91 million for the year ended December 31, 2021 and $65 million for the year ended December 31, 2020. | | 12Leasehold improvements are amortized over the life of the lease, which may change whenever the lease is renewed or extended. | For the year ended December 31, 2019, Consumers’ intangible asset additions were $67 million and intangible asset retirements were $193 million. For the year ended December 31, 2018, Consumers’ intangible asset additions were $90 million and intangible asset retirements were $7 million. |
| | 2
| Leasehold improvements are amortized over the life of the lease, which may change whenever the lease is renewed or extended. |
Capitalization: CMS Energy and Consumers record plant, property, and equipment at original cost when placed into service. The cost includes labor, material, applicable taxes, overhead such as pension and other benefits, and AFUDC, if applicable. Consumers’ plant, property, and equipment is generally recoverable through its general ratemaking process. With the exception of utility property for which the remaining book value has been securitized, mothballed utility property stays in rate base and continues to be depreciated at the same rate as before the mothball period. When utility property is retired or otherwise disposed of in the ordinary course of business, Consumers records the original cost to accumulated depreciation, along with associated cost of removal, net of salvage. CMS Energy and Consumers recognize gains or losses on the retirement or disposal of non‑regulated assets in income. Consumers records cost of removal collected from customers, but not spent, as a regulatory liability.
Software: CMS Energy and Consumers capitalize the costs to purchase and develop internal-use computer software. These costs are expensed evenly over the estimated useful life of the internal-use
computer software. If computer software is integral to computer hardware, then its cost is capitalized and depreciated with the hardware. AFUDC: Consumers capitalizes AFUDC on regulated major construction projects, except pollution control facilities on its fossil-fuel-fired power plants. AFUDC represents the estimated cost of debt and authorized return-on-equity funds used to finance construction additions. Consumers records the offsetting credit as a reduction of interest for the amount representing the borrowed funds component and as other income for the equity funds component on the consolidated statements of income. When construction is completed and the property is placed in service, Consumers depreciates and recovers the capitalized AFUDC from customers over the life of the related asset. Presented in the following table are Consumers’ average AFUDC capitalization rates: | | | | | | | | Years Ended December 31 | 2019 |
| 2018 |
| 2017 |
| Electric | 6.4 | % | 6.9 | % | 6.8 | % | Gas | 5.8 |
| 5.9 |
| 6.0 |
|
| | | | | | | | | | | | Years Ended December 31 | 2021 | 2020 | 2019 | Electric | 6.2 | % | 6.9 | % | 6.4 | % | Gas | 5.6 | | 5.7 | | 5.8 | |
Assets Under Finance Leases and Other Financing: Presented in the following table are further details about changes in Consumers’ assets under finance leases and other financing: | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | Consumers | | | | | Balance at beginning of period | | $ | 309 |
| | $ | 312 |
| Additions | | 26 |
| | — |
| Net retirements and other adjustments | | 5 |
| | (3 | ) | Balance at end of period | | $ | 340 |
| | $ | 309 |
|
| | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | Consumers | | | | | Balance at beginning of period | | $ | 336 | | | $ | 340 | | Additions | | — | | | — | | Net retirements and other adjustments | | (4) | | | (4) | | Balance at end of period | | $ | 332 | | | $ | 336 | |
Assets under finance leases and other financing are presented as gross amounts. AccumulatedConsumers’ accumulated amortization of assets under finance leases and other financing was $239$272 million at December 31, 20192021 and $212$254 million at December 31, 2018 for Consumers.2020. Depreciation and Amortization: Presented in the following table are further details about CMS Energy’s and Consumers’ accumulated depreciation and amortization: | | | | | | | | | | In Millions | | December 31 | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | Utility plant assets | | $ | 7,269 |
| | $ | 6,956 |
| Non‑utility plant assets | | 91 |
| | 81 |
| Consumers | | | | | Utility plant assets | | $ | 7,269 |
| | $ | 6,956 |
| Non‑utility plant assets | | 3 |
| | 2 |
|
| | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | CMS Energy, including Consumers | | | | | Utility plant assets | | $ | 8,366 | | | $ | 7,841 | | Non-utility plant assets | | 136 | | | 97 | | Consumers | | | | | Utility plant assets | | $ | 8,366 | | | $ | 7,841 | | Non-utility plant assets | | 5 | | | 3 | |
Consumers depreciates utility property on an asset-group basis, in which it applies a single MPSC-approved depreciation rate to the gross investment in a particular class of property within the electric and
gas segments. Consumers performs depreciation studies periodically to determine appropriate group lives. Presented in the following table are the composite depreciation rates for Consumers’ segment properties: | | | | | | | | | | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Electric utility property | | 3.9 | % | | 3.9 | % | | 3.9 | % | Gas utility property | | 2.9 |
| | 2.9 |
| | 2.9 |
| Other property | | 10.0 |
| | 10.1 |
| | 10.0 |
|
| | | | | | | | | | | | Years Ended December 31 | 2021 | 2020 | 2019 | Electric utility property | 3.9 | % | 3.9 | % | 3.9 | % | Gas utility property | 2.9 | | 2.9 | | 2.9 | | Other property | 9.4 | | 9.8 | | 10.0 | |
CMS Energy and Consumers record property repairs and minor property replacement as maintenance expense. CMS Energy and Consumers record planned major maintenance activities as operating expense unless the cost represents the acquisition of additional long-lived assets or the replacement of an existing long-lived asset. Presented in the following table are the components of CMS Energy’s and Consumers’ depreciation and amortization expense: | | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | CMS Energy, including Consumers | | | | | | | Depreciation expense – plant, property, and equipment | | $ | 842 |
| | $ | 778 |
| | $ | 739 |
| Amortization expense | | | | | | | Software | | 121 |
| | 127 |
| | 114 |
| Other intangible assets | | 3 |
| | 3 |
| | 3 |
| Securitized regulatory assets | | 26 |
| | 25 |
| | 25 |
| Total depreciation and amortization expense | | $ | 992 |
| | $ | 933 |
| | $ | 881 |
| Consumers | | | | | | | Depreciation expense – plant, property, and equipment | | $ | 827 |
| | $ | 768 |
| | $ | 732 |
| Amortization expense | | | | | | | Software | | 119 |
| | 125 |
| | 112 |
| Other intangible assets | | 3 |
| | 3 |
| | 3 |
| Securitized regulatory assets | | 26 |
| | 25 |
| | 25 |
| Total depreciation and amortization expense | | $ | 975 |
| | $ | 921 |
| | $ | 872 |
|
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | Depreciation expense – plant, property, and equipment | | $ | 975 | | | $ | 901 | | | $ | 841 | | Amortization expense | | | | | | | Software | | 108 | | | 112 | | | 119 | | Other intangible assets | | 4 | | | 4 | | | 3 | | Securitized regulatory assets | | 27 | | | 26 | | | 26 | | Total depreciation and amortization expense | | $ | 1,114 | | | $ | 1,043 | | | $ | 989 | | Consumers | | | | | | | Depreciation expense – plant, property, and equipment | | $ | 938 | | | $ | 881 | | | $ | 827 | | Amortization expense | | | | | | | Software | | 108 | | | 112 | | | 119 | | Other intangible assets | | 4 | | | 4 | | | 3 | | Securitized regulatory assets | | 27 | | | 26 | | | 26 | | Total depreciation and amortization expense | | $ | 1,077 | | | $ | 1,023 | | | $ | 975 | |
Presented in the following table is CMS Energy’s and Consumers’ estimated amortization expense on intangible assets for each of the next five years: | | | | | | | | | | | | | | | | | | | | | | In Millions | | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | CMS Energy, including Consumers | | | | | | | | | | | Intangible asset amortization expense | | $ | 118 |
| | $ | 112 |
| | $ | 107 |
| | $ | 87 |
| | $ | 70 |
| Consumers | | | | | | | | | | | Intangible asset amortization expense | | $ | 116 |
| | $ | 110 |
| | $ | 106 |
| | $ | 87 |
| | $ | 70 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | 2022 | 2023 | 2024 | 2025 | 2026 | CMS Energy, including Consumers | | | | | | | | | | | Intangible asset amortization expense | | $ | 108 | | | $ | 94 | | | $ | 84 | | | $ | 86 | | | $ | 84 | | Consumers | | | | | | | | | | | Intangible asset amortization expense | | $ | 108 | | | $ | 94 | | | $ | 84 | | | $ | 86 | | | $ | 84 | |
Jointly Owned Regulated Utility Facilities Presented in the following table are Consumers’ investments in jointly owned regulated utility facilities at December 31, 2019:2021: | | | | | | | | | | | | | | In Millions, Except Ownership Share | | J.H. Campbell Unit 3 | | Ludington | | | Other |
| Ownership share | | 93.3 | % | | 51.0 | % | | various |
| Utility plant in service | | $ | 1,731 |
| | $ | 486 |
| | $ | 233 |
| Accumulated depreciation | | (753 | ) | | (166 | ) | | (68 | ) | Construction work in progress | | 16 |
| | 64 |
| | 15 |
| Net investment | | $ | 994 |
| | $ | 384 |
| | $ | 180 |
|
| | | | | | | | | | | | | | | | | | | | | In Millions, Except Ownership Share | | J.H. Campbell Unit 3 | Ludington | Other | Ownership share | | 93.3 | % | | 51.0 | % | | various | Utility plant in service | | $ | 1,751 | | | $ | 499 | | | $ | 395 | | Accumulated depreciation | | (897) | | | (198) | | | (112) | | Construction work in progress | | 21 | | | 92 | | | 13 | | Net investment | | $ | 875 | | | $ | 393 | | | $ | 296 | |
Consumers includes its share of the direct expenses of the jointly owned plants in operating expenses. Consumers shares operation, maintenance, and other expenses of these jointly owned utility facilities in proportion to each participant’s undivided ownership interest. Consumers is required to provide only its share of financing for the jointly owned utility facilities. | | 10: | Leases and Palisades Financing |
8: Leases and Palisades Financing Lessee CMS Energy and Consumers lease various assets from third parties, including coal-carrying railcars, real estate, service vehicles, and gas pipeline capacity. In addition, CMS Energy and Consumers account for several of their PPAs as leases. CMS Energy and Consumers do not record right-of-use assets or lease liabilities on their consolidated balance sheets for rentals with lease terms of 12 months or less, most of which are for the lease of real estate and service vehicles. Lease expense for these rentals is recognized on a straight-line basis over the lease term. CMS Energy and Consumers include future payments for all renewal options, fair market value extensions, and buyout provisions reasonably certain of exercise in their measurement of lease right-of-use assets and lease liabilities. In addition, certain leases for service vehicles contain end-of-lease adjustment clauses based on proceeds received from the sale or disposition of the vehicles. CMS Energy and Consumers also include executory costs in the measurement of their right-of-use assets and lease liabilities, except for maintenance costs related to their coal-carrying railcar leases. Most of Consumers’ PPAs contain provisions at the end of the initial contract terms to renew the agreements annually under mutually agreed‑upon terms at the time of renewal. Energy and capacity payments that vary depending on quantities delivered are recognized as variable lease costs when incurred. Consumers accounts for a PPA with one of CMS Energy’s equity method subsidiaries as a finance lease.
Presented in the following table is information about CMS Energy’s and Consumers’ lease right-of-use assets and lease liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions, Except as Noted | | CMS Energy, including Consumers | | Consumers | December 31 | 2021 | 2020 | | 2021 | 2020 | Operating leases | | | | | | | | | | Right-of-use assets1 | | $ | 26 | | $ | 32 | | | $ | 22 | | $ | 28 | Lease liabilities | | | | | | | | | | Current lease liabilities2 | | 3 | | 7 | | | 3 | | 7 | Non-current lease liabilities3 | | 23 | | 25 | | | 19 | | 21 | Finance leases | | | | | | | | | | Right-of-use assets | | $ | 57 | | $ | 65 | | | $ | 57 | | $ | 65 | Lease liabilities4 | | | | | | | | | | Current lease liabilities | | 6 | | 7 | | | 6 | | 7 | Non-current lease liabilities | | 46 | | 53 | | | 46 | | 53 | Weighted-average remaining lease term (in years) | | | | | | | | | | Operating leases | | 23 | | 19 | | | 21 | | 18 | Finance leases | | 12 | | 12 | | | 12 | | 12 | Weighted-average discount rate | | | | | | | | | | Operating leases | | 4.0 | % | | 3.9 | % | | | 3.9 | % | | 3.8 | % | Finance leases5 | | 1.7 | % | | 1.8 | % | | | 1.7 | % | | 1.8 | % |
| | | | | | | | | | In Millions, Except as Noted | | December 31, 2019 | CMS Energy, including Consumers | | Consumers | | Operating leases | | | | | Right-of-use assets1 | | $ | 47 |
| | $ | 40 |
| Lease liabilities | | | | | Current lease liabilities2 | | 9 |
| | 8 |
| Non‑current lease liabilities3 | | 37 |
| | 32 |
| Finance leases | | | | | Right-of-use assets | | $ | 71 |
| | $ | 71 |
| Lease liabilities4 | | | | | Current lease liabilities | | 6 |
| | 6 |
| Non‑current lease liabilities | | 60 |
| | 60 |
| Weighted-average remaining lease term (in years) | | | | | Operating leases | | 17 |
| | 14 |
| Finance leases | | 12 |
| | 12 |
| Weighted-average discount rate | | | | | Operating leases | | 3.8 | % | | 3.7 | % | Finance leases5 | | 1.9 |
| | 1.9 |
|
1CMS Energy’s and Consumers’ operating right-of-use lease assets are reported as other non‑current assets on their consolidated balance sheets. | | 12The current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other current liabilities on their consolidated balance sheets. 3The non‑current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other non‑current liabilities on their consolidated balance sheets. 4Includes related-party lease liabilities of $25 million, of which less than $1 million was current, at December 31, 2021 and 2020. 5This rate excludes the impact of Consumers’ pipeline agreements and long-term PPAs accounted for as finance leases. The required capacity payments under these agreements, when compared to the underlying fair value of the leased assets, result in effective interest rates that exceed market rates for leases with similar terms. | CMS Energy’s and Consumers’ operating right-of-use lease assets are reported as other non‑current assets on their consolidated balance sheets.
|
| | 2
| The current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other current liabilities on their consolidated balance sheets. |
| | 3
| The non‑current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other non‑current liabilities on their consolidated balance sheets.
|
| | 4
| This includes $25 million for leases with related parties, of which less than $1 million is current. |
| | 5
| This rate excludes the impact of Consumers’ pipeline agreements and long-term PPAs accounted for as finance leases. The required capacity payments under these agreements, when compared to the underlying fair value of the leased assets, result in effective interest rates that exceed market rates for leases with similar terms. |
CMS Energy and Consumers report operating, variable, and short-term lease costs as operating expenses on their consolidated statements of income, except for certain amounts that may be capitalized to other assets. Presented in the following table is a summary of CMS Energy’s and Consumers’ total lease costs: | | | | | | | | | | In Millions | | Year Ended December 31, 2019 | CMS Energy, including Consumers | | Consumers | | Operating lease costs | | $ | 11 |
| | $ | 9 |
| Finance lease costs | | | | | Amortization of right-of-use assets | | 6 |
| | 6 |
| Interest on lease liabilities | | 18 |
| | 18 |
| Variable lease costs | | 95 |
| | 95 |
| Total lease costs | | $ | 130 |
| | $ | 128 |
|
| | | | | | | | | | | | | | | | | In Millions | | | Years Ended December 31 | 2021 | 2020 | | CMS Energy, including Consumers | | | | | | | Operating lease costs | | $ | 8 | | | $ | 9 | | | | Finance lease costs | | | | | | | Amortization of right-of-use assets | | 7 | | | 6 | | | | Interest on lease liabilities | | 16 | | | 17 | | | | Variable lease costs | | 90 | | | 94 | | | | Short-term lease costs | | 22 | | | 17 | | | | Total lease costs | | $ | 143 | | | $ | 143 | | | | Consumers | | | | | | | Operating lease costs | | $ | 8 | | | $ | 9 | | | | Finance lease costs | | | | | | | Amortization of right-of-use assets | | 7 | | | 6 | | | | Interest on lease liabilities | | 16 | | | 17 | | | | Variable lease costs | | 90 | | | 94 | | | | Short-term lease costs | | 21 | | | 16 | | | | Total lease costs | | $ | 142 | | | $ | 142 | | | |
Presented in the following table is cash flow information related to amounts paid on CMS Energy’s and Consumers’ lease liabilities: | | | | | | | | | | In Millions | | Year Ended December 31, 2019 | CMS Energy, including Consumers | | Consumers | | Cash paid for amounts included in the measurement of lease liabilities | | | | | Cash used in operating activities for operating leases | | $ | 11 |
| | $ | 9 |
| Cash used in operating activities for finance leases | | 18 |
| | 18 |
| Cash used in financing activities for finance leases | | 7 |
| | 7 |
|
| | | | | | | | | | | | | | | | | In Millions | | | Years Ended December 31 | 2021 | 2020 | | CMS Energy, including Consumers | | | | | | | Cash paid for amounts included in the measurement of lease liabilities | | | | | | | Cash used in operating activities for operating leases | | $ | 8 | | | $ | 11 | | | | Cash used in operating activities for finance leases | | 16 | | | 17 | | | | Cash used in financing activities for finance leases | | 7 | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | | Consumers | | | | | | | Cash paid for amounts included in the measurement of lease liabilities | | | | | | | Cash used in operating activities for operating leases | | $ | 8 | | | $ | 9 | | | | Cash used in operating activities for finance leases | | 16 | | | 17 | | | | Cash used in financing activities for finance leases | | 7 | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | |
Presented in the following table are the minimum rental commitments under CMS Energy’s and Consumers’ non‑cancelablenon-cancelable leases: | | | | | | | | | | | | | | | | | | In Millions | | | | | Finance Leases | December 31, 2019 | Operating Leases | Pipelines and PPAs | Other | Total | CMS Energy, including Consumers | | | | | | | | | 2020 | | $ | 11 |
| | $ | 17 |
| | $ | 6 |
| | $ | 23 |
| 2021 | | 11 |
| | 17 |
| | 6 |
| | 23 |
| 2022 | | 5 |
| | 14 |
| | 5 |
| | 19 |
| 2023 | | 3 |
| | 13 |
| | 5 |
| | 18 |
| 2024 | | 2 |
| | 13 |
| | 3 |
| | 16 |
| 2025 and thereafter | | 35 |
| | 78 |
| | 12 |
| | 90 |
| Total minimum lease payments | | $ | 67 |
| | $ | 152 |
| | $ | 37 |
| | $ | 189 |
| Less discount | | 21 |
| | 119 |
| | 4 |
| | 123 |
| Present value of minimum lease payments | | $ | 46 |
| | $ | 33 |
| | $ | 33 |
| | $ | 66 |
| Consumers | | | | | | | | | 2020 | | $ | 9 |
| | $ | 17 |
| | $ | 6 |
| | $ | 23 |
| 2021 | | 9 |
| | 17 |
| | 6 |
| | 23 |
| 2022 | | 4 |
| | 14 |
| | 5 |
| | 19 |
| 2023 | | 3 |
| | 13 |
| | 5 |
| | 18 |
| 2024 | | 2 |
| | 13 |
| | 3 |
| | 16 |
| 2025 and thereafter | | 29 |
| | 78 |
| | 12 |
| | 90 |
| Total minimum lease payments | | $ | 56 |
| | $ | 152 |
| | $ | 37 |
| | $ | 189 |
| Less discount | | 16 |
| | 119 |
| | 4 |
| | 123 |
| Present value of minimum lease payments | | $ | 40 |
| | $ | 33 |
| | $ | 33 |
| | $ | 66 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | | Finance Leases | December 31, 2021 | Operating Leases | Pipelines and PPAs | Other | Total | CMS Energy, including Consumers | | | | | | | | | 2022 | | $ | 5 | | | $ | 14 | | | $ | 5 | | | $ | 19 | | 2023 | | 2 | | | 13 | | | 5 | | | 18 | | 2024 | | 2 | | | 13 | | | 3 | | | 16 | | 2025 | | 1 | | | 13 | | | 1 | | | 14 | | 2026 | | 1 | | | 13 | | | 2 | | | 15 | | 2027 and thereafter | | 32 | | | 51 | | | 9 | | | 60 | | Total minimum lease payments | | $ | 43 | | | $ | 117 | | | $ | 25 | | | $ | 142 | | Less discount | | 17 | | | 88 | | | 2 | | | 90 | | Present value of minimum lease payments | | $ | 26 | | | $ | 29 | | | $ | 23 | | | $ | 52 | | Consumers | | | | | | | | | 2022 | | $ | 4 | | | $ | 14 | | | $ | 5 | | | $ | 19 | | 2023 | | 2 | | | 13 | | | 5 | | | 18 | | 2024 | | 1 | | | 13 | | | 3 | | | 16 | | 2025 | | 1 | | | 13 | | | 1 | | | 14 | | 2026 | | 1 | | | 13 | | | 2 | | | 15 | | 2027 and thereafter | | 27 | | | 51 | | | 9 | | | 60 | | Total minimum lease payments | | $ | 36 | | | $ | 117 | | | $ | 25 | | | $ | 142 | | Less discount | | 14 | | | 88 | | | 2 | | | 90 | | Present value of minimum lease payments | | $ | 22 | | | $ | 29 | | | $ | 23 | | | $ | 52 | |
Lessor CMS Energy and Consumers are the lessor under power sales and natural gas delivery agreements that are accounted for as leases. CMS Energy has power sales agreements that are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. For the year ended December 31, 2019, CMS Energy’s2021, lease revenue from itsthese power sales agreements was $174$194 million, which included variable lease payments of $119$138 million. For the year ended December 31, 2020, lease revenue from these power sales agreements was $148 million, which included variable lease payments of $93 million.
Presented in the following table are the minimum rental payments to be received under CMS Energy’s non‑cancelable operating leases: | | | | | | In Millions | | December 31, 2019 | | | 2020 | | $ | 55 |
| 2021 | | 55 |
| 2022 | | 48 |
| 2023 | | 43 |
| 2024 | | 43 |
| 2025 and thereafter | | 62 |
| Total minimum lease payments | | $ | 306 |
|
| | | | | | | | | In Millions | December 31, 2021 | | | 2022 | | $ | 48 | | 2023 | | 43 | | 2024 | | 43 | | 2025 | | 44 | | 2026 | | 18 | | | | | Total minimum lease payments | | $ | 196 | |
Consumers has an agreement to build, own, operate, and maintain a compressed natural gas fueling station through December 2038. This agreement is accounted for as a direct finance lease, under which the lessee has the option to purchase the natural gas fueling station at the end of the lease term. Fixed monthly payments escalate annually with inflation. Beginning in December 2018, Consumers andhas a natural gas transportation agreement with a subsidiary of CMS Energy executed a 20‑year natural gas transportation agreement,that extends through 2038, related to a pipeline owned by Consumers. This agreement is accounted for as a direct finance lease and will automatically extend annually unless terminated by either party. The effects of the lease are eliminated on CMS Energy’s consolidated financial statements.
Minimum rental payments to be received under Consumers’ direct financing leases are $1 million for each of the next five years and $19$17 million for the years thereafter. The lease receivable was $10 million as of December 31, 2019,2021, which does not include unearned income of $14$12 million. Minimum rental payments to be received under CMS Energy’s direct finance lease are less than $1 million for each of the next five years and $10$6 million for the years thereafter. The lease receivable was $5 million as of December 31, 2019,2021, which does not include unearned income of $5$4 million. Palisades Financing In 2007, Consumers sold Palisades to Entergy and entered into a 15-year PPA to purchase virtually all of the capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. Consumers accounted for this transaction as a financing because of its continuing involvement with Palisades through security provided to Entergy for the PPA obligation and other arrangements. Palisades has therefore remained on Consumers’ consolidated balance sheets and Consumers has continued to depreciate it. At the time of the sale, Consumers recorded the sales proceeds as a financing obligation, and has subsequently recorded a portion of the payments under the PPA as interest expense and as a reduction of the financing obligation. Total amortization and interest charges under the financing were $14 million for the years ended December 31, 2021 and 2020, and $15 million for the year ended December 31, 2019, $16 million for the year ended December 31, 2018, and $17 million for the year ended December 31, 2017.2019. At December 31, 2019,2021, the Palisades asset and financing obligation both had a balance of $29$3 million.
Presented in the following table are the The finance obligation reflects Consumers’ remaining minimum Palisades PPA payments included in the financing obligation:payments.
| | | | | | In Millions | | December 31, 2019 | | | 2020 | | $ | 14 |
| 2021 | | 14 |
| 2022 | | 3 |
| Total minimum payments | | $ | 31 |
| Less discount | | 2 |
| Financing obligation | | $ | 29 |
| Less current portion | | 13 |
| Non-current portion | | $ | 16 |
|
137
9: Asset Retirement Obligations | | 11: | Asset Retirement Obligations |
CMS Energy and Consumers record the fair value of the cost to remove assets at the end of their useful lives, if there is a legal obligation to remove them. If a reasonable estimate of fair value cannot be made in the period in which the ARO is incurred, such as for assets with indeterminate lives, the liability is recognized when a reasonable estimate of fair value can be made. CMS Energy and Consumers have not recorded liabilities associated with the closure of certain gas wells that have an indeterminate life. CMS Energy and Consumers have not recorded liabilities for assets that have immaterial cumulative disposal costs, such as substation batteries. CMS Energy and Consumers calculate the fair value of ARO liabilities using an expected present-value technique that reflects assumptions about costs and inflation, and uses a credit-adjusted risk-free rate to discount the expected cash flows. CMS Energy’s ARO liabilities are primarily at Consumers. Presented below are the categories of assets that CMS Energy and Consumers have legal obligations to remove at the end of their useful lives and for which they have an ARO liability recorded: | | | | | | | | | Company and ARO Description | In-Service Date | Long-Lived Assets | CMS Energy, including Consumers | | | Closure of gas treating plant and gas wells | various | Gas transmission and storage | Closure of coal ash disposal areas | various | Generating plants coal ash areas | Gas distribution cut, purge, and cap | various | Gas distribution mains and services | Asbestos abatement | 1973 | Electric and gas utility plant | Closure of renewable generation assets | various | Wind and solar generation facilities | Gas wells plug and abandon | various | Gas transmission and storage | Consumers | | | Closure of coal ash disposal areas | various | Generating plants coal ash areas | Gas distribution cut, purge, and cap | various | Gas distribution mains and services | Asbestos abatement | 1973 | Electric and gas utility plant | Closure of renewable generation assets | various | Wind and solar generation facilities | Gas wells plug and abandon | various | Gas transmission and storage |
No assets have been restricted for purposes of settling AROs.
Presented in the following tables are the changes in CMS Energy’s and Consumers’ ARO liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | Company and ARO Description | ARO Liability 12/31/2020 | Incurred | Settled | Accretion | Cash Flow Revisions | ARO Liability 12/31/2021 | CMS Energy, including Consumers | | | | | | | | | Consumers | | $ | 530 | | | $ | 71 | | | $ | (53) | | | $ | 24 | | | $ | 33 | | | $ | 605 | | Renewable generation assets | | 23 | | | — | | | — | | | — | | | — | | | 23 | | Total CMS Energy | | $ | 553 | | | $ | 71 | | | $ | (53) | | | $ | 24 | | | $ | 33 | | | $ | 628 | | Consumers | | | | | | | | | | | | | Coal ash disposal areas | | $ | 148 | | | $ | — | | | $ | (34) | | | $ | 5 | | | $ | 38 | | | $ | 157 | | Gas distribution cut, purge, and cap | | 240 | | | 39 | | | (10) | | | 13 | | | — | | | 282 | | Asbestos abatement | | 36 | | | — | | | — | | | 2 | | | — | | | 38 | | Renewable generation assets | | 74 | | | 16 | | | — | | | 3 | | | — | | | 93 | | Gas wells plug and abandon | | 32 | | | 16 | | | (9) | | | 1 | | | (5) | | | 35 | | Total Consumers | | $ | 530 | | | $ | 71 | | | $ | (53) | | | $ | 24 | | | $ | 33 | | | $ | 605 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | Company and ARO Description | ARO Liability 12/31/2019 | Incurred | Settled | Accretion | Cash Flow Revisions | ARO Liability 12/31/2020 | CMS Energy, including Consumers | | | | | | | | | Consumers | | $ | 474 | | | $ | 46 | | | $ | (41) | | | $ | 23 | | | $ | 28 | | | $ | 530 | | Renewable generation assets | | 3 | | | 19 | | | — | | | 1 | | | — | | | 23 | | Total CMS Energy | | $ | 477 | | | $ | 65 | | | $ | (41) | | | $ | 24 | | | $ | 28 | | | $ | 553 | | Consumers | | | | | | | | | | | | | Coal ash disposal areas | | $ | 166 | | | $ | — | | | $ | (24) | | | $ | 6 | | | $ | — | | | $ | 148 | | Gas distribution cut, purge, and cap | | 231 | | | 1 | | | (5) | | | 13 | | | — | | | 240 | | Asbestos abatement | | 34 | | | — | | | — | | | 2 | | | — | | | 36 | | Renewable generation assets | | 21 | | | 24 | | | — | | | 1 | | | 28 | | | 74 | | Gas wells plug and abandon | | 22 | | | 16 | | | (7) | | | 1 | | | — | | | 32 | | Cable under Straits of Mackinac | | — | | | 5 | | | (5) | | | — | | | — | | | — | | Total Consumers | | $ | 474 | | | $ | 46 | | | $ | (41) | | | $ | 23 | | | $ | 28 | | | $ | 530 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | Company and ARO Description | ARO Liability 12/31/2018 | | Incurred | | Settled | | Accretion | | Cash Flow Revisions | | ARO Liability 12/31/2019 | | CMS Energy, including Consumers | Consumers | | $ | 428 |
| | $ | 55 |
| | $ | (37 | ) | | $ | 21 |
| | $ | 7 |
| | $ | 474 |
| Gas treating plant and gas wells | | 1 |
| | — |
| | (1 | ) | | — |
| | — |
| | — |
| Renewable generation assets | | 3 |
| | — |
| | — |
| | — |
| | — |
| | 3 |
| Total CMS Energy | | $ | 432 |
| | $ | 55 |
| | $ | (38 | ) | | $ | 21 |
| | $ | 7 |
| | $ | 477 |
| Consumers | | | | | | | | | | | | | Coal ash disposal areas | | $ | 179 |
| | $ | — |
| | $ | (27 | ) | | $ | 7 |
| | $ | 7 |
| | $ | 166 |
| Gas distribution cut, purge, and cap | | 205 |
| | 22 |
| | (8 | ) | | 12 |
| | — |
| | 231 |
| Asbestos abatement | | 33 |
| | — |
| | (1 | ) | | 2 |
| | — |
| | 34 |
| Renewable generation assets | | 11 |
| | 10 |
| | — |
| | — |
| | — |
| | 21 |
| Gas wells plug and abandon | | — |
| | 23 |
| | (1 | ) | | — |
| | — |
| | 22 |
| Total Consumers | | $ | 428 |
| | $ | 55 |
| | $ | (37 | ) | | $ | 21 |
| | $ | 7 |
| | $ | 474 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | Company and ARO Description | ARO Liability 12/31/2017 | | Incurred | | Settled | | Accretion | | Cash Flow Revisions | | ARO Liability 12/31/2018 | | CMS Energy, including Consumers | Consumers | | $ | 429 |
| | $ | 17 |
| | $ | (40 | ) | | $ | 22 |
| | $ | — |
| | $ | 428 |
| Gas treating plant and gas wells | | 1 |
| | — |
| | — |
| | — |
| | — |
| | 1 |
| Renewable generation assets | | — |
| | 3 |
| | — |
| | — |
| | — |
| | 3 |
| Total CMS Energy | | $ | 430 |
| | $ | 20 |
| | $ | (40 | ) | | $ | 22 |
| | $ | — |
| | $ | 432 |
| Consumers | | | | | | | | | | | | | Coal ash disposal areas | | $ | 191 |
| | $ | — |
| | $ | (20 | ) | | $ | 8 |
| | $ | — |
| | $ | 179 |
| Gas distribution cut, purge, and cap | | 186 |
| | 17 |
| | (9 | ) | | 11 |
| | — |
| | 205 |
| Asbestos abatement | | 42 |
| | — |
| | (11 | ) | | 2 |
| | — |
| | 33 |
| Renewable generation assets | | 10 |
| | — |
| | — |
| | 1 |
| | — |
| | 11 |
| Total Consumers | | $ | 429 |
| | $ | 17 |
| | $ | (40 | ) | | $ | 22 |
| | $ | — |
| | $ | 428 |
|
10: Retirement Benefits
Benefit Plans: CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans. These plans include: •non‑contributory, qualified DB Pension Plans (closed to new non‑union participants as of July 1, 2003 and closed to new union participants as of September 1, 2005) •a non‑contributory, qualified DCCP for employees hired on or after July 1, 2003 •benefits to certain management employees under a non‑contributory, nonqualified DB SERP (closed to new participants as of March 31, 2006) •a non‑contributory, nonqualified DC SERP for certain management employees hired or promoted on or after April 1, 2006 •a contributory, qualified defined contribution 401(k) plan •health care and life insurance benefits under an OPEB Plan DB Pension Plans: Participants in the pension plans include present and former employees of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries. Pension plan trust assets are not distinguishable by company. Effective December 31, 2017, CMS Energy’s and Consumers’ then-existing pension plan was amended to include only retired and former employees already covered; this amended plan is referred to as DB Pension Plan B. Also effective December 31, 2017, active employees were moved to a newly created pension plan, referred to as DB Pension Plan A, whose benefits mirror those provided under DB Pension Plan B. Maintaining separate plans for the two groups allows CMS Energy and Consumers to employ a more targeted investment strategy and provides additional opportunities to mitigate risk and volatility. In November 2021, CMS Energy and Consumers determined that 2021 lump-sum payments to retired employees under DB Pension Plan A would exceed the plan’s service cost and interest cost components of net periodic cost for the year. These lump-sum payments constitute pension plan liability settlements; once such settlements meet the service and interest cost threshold, recognition in earnings is required. As a result, in accordance with GAAP, CMS Energy, including Consumers, performed a remeasurement of DB Pension Plan A as of October 31, 2021 and recognized a settlement loss of $18 million; $18 million of this amount was recognized by Consumers and deferred as a regulatory asset. At December 31, 2021, CMS Energy, including Consumers, recognized an additional settlement loss of $4 million for the period November 1, 2021 to December 31, 2021; $3 million of this amount was recognized by Consumers and deferred as a regulatory asset. CMS Energy and Consumers will amortize the regulatory asset over eight years. DCCP: CMS Energy and Consumers provide an employer contribution to the DCCP 401(k) plan for employees hired on or after July 1, 2003. The contribution ranges from 5 percent to 710 percent of base pay, depending on years of service.service and employee class. Employees are not required to contribute in order to receive the plan’s employer contribution. DCCP expense for CMS Energy, including Consumers, was $30$41 million for the year ended December 31, 2019, $262021, $31 million for the year ended December 31, 2018,2020, and $23$29 million for the year ended December 31, 2017.2019. DCCP expense for Consumers was $41 million for the year ended December 31, 2021, $31 million for the year ended December 31, 2020, and $28 million for the year ended December 31, 2019, $25 million for the year ended December 31, 2018, and $22 million for the year ended December 31, 2017.2019.
DB SERP: The DB SERP is a nonqualified plan as defined by the Internal Revenue Code. DB SERP benefits are paid from a rabbi trust established in 1988. The trust assets are not considered plan assets under ASC 715. DB SERP rabbi trust earnings are taxable. Presented in the following table are the fair values of trust assets, ABO, and contributions for CMS Energy’s and Consumers’ DB SERP: | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | Trust assets | | $ | 143 |
| | $ | 147 |
| ABO | | 149 |
| | 137 |
| Contributions | | — |
| | 8 |
| Consumers | | | | | Trust assets | | $ | 104 |
| | $ | 106 |
| ABO | | 107 |
| | 98 |
| Contributions | | — |
| | 5 |
|
| | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | CMS Energy, including Consumers | | | | | Trust assets | | $ | 142 | | | $ | 146 | | ABO | | 149 | | | 159 | | Contributions | | — | | | 8 | | Consumers | | | | | Trust assets | | $ | 104 | | | $ | 107 | | ABO | | 108 | | | 115 | | Contributions | | — | | | 5 | |
DC SERP: On April 1, 2006, CMS Energy and Consumers implemented a DC SERP and froze further new participation in the DB SERP. The DC SERP provides participants benefits ranging from 5 percent to 15 percent of total compensation. The DC SERP requires a minimum of five years of participation before vesting. CMS Energy’s and Consumers’ contributions to the plan, if any, are placed in a grantor trust. For CMS Energy and Consumers, trust assets were $8$13 million at December 31, 20192021 and $5$11 million at December 31, 2018.2020. DC SERP assets are included in other non‑current assets on CMS Energy’s and Consumers’ consolidated balance sheets. CMS Energy’s and Consumers’ DC SERP expense was $2 million for the year ended December 31, 2019, and $1 million for each of the years ended December 31, 20182021, 2020, and 2017.2019. 401(k) Plan: The 401(k) plan employer match equals 100 percent of eligible contributions up to the first 3 percent of an employee’s wages and 50 percent of eligible contributions up to the next 2 percent of an employee’s wages. The total 401(k) plan cost for CMS Energy, including Consumers, was $31 million for the year ended December 31, 2021, $29 million for the year ended December 31, 2020, and $28 million for the year ended December 31, 2019,2019. The total 401(k) plan cost for Consumers was $31 million for the year ended December 31, 2021, $29 million for the year ended December 31, 2020, and $27 million for the year ended December 31, 2018, and $26 million for the year ended December 31, 2017. The total 401(k) plan cost for Consumers was $27 million for the year ended December 31, 2019, $26 million for the year ended December 31, 2018, and $25 million for the year ended December 31, 2017.2019. OPEB Plan: Participants in the OPEB Plan include all regular full-time employees covered by the employee health care plan on the day before retirement from either CMS Energy or Consumers at age 55 or older with at least ten full years of applicable continuous service. Regular full-time employees who qualify for disability retirement under the DB Pension Plans or are disabled and covered by the DCCP and who have 15 years of applicable continuous service may also participate in the OPEB Plan. Retiree health care costs were based on the assumption that costs would increase 6.756.25 percent in 20202022 and 7.006.50 percent in 20192021 for those under 65 and would increase 7.256.75 percent in 20202022 and 7.757.00 percent in 20192021 for those over 65. The rate of increase was assumed to decline to 4.75 percent by 20272028 and thereafter for all retirees. In 2017, CMS Energy and Consumers approved certain amendments to the OPEB Plan. Under these amendments, effective January 1, 2019, certain Medicare-eligible retirees will purchase health care plans from private Medicare exchanges. CMS Energy and Consumers performed a remeasurement of the OPEB Plan as of October 31, 2017, resulting in a significant reduction in the benefit obligation. In July 2018, CMS Energy and Consumers approved an amendment to the OPEB Plan to improve survivor benefits for certain Medicare-eligible retirees, effective January 1, 2019, resulting in a $26 million increase in the benefit obligation.
Assumptions: Presented in the following table are the weighted-average assumptions used in CMS Energy’s and Consumers’ retirement benefitsbenefit plans to determine benefit obligations and net periodic benefit cost: | | | | | | | | | | | | December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | Weighted average for benefit obligations1 | | | | Discount rate2 | | | | DB Pension Plan A | 3.02 | % | 2.73 | % | 3.37 | % | DB Pension Plan B | 2.79 | | 2.41 | | 3.17 | | DB SERP | 2.78 | | 2.40 | | 3.15 | | OPEB Plan | 2.99 | | 2.69 | | 3.32 | | Rate of compensation increase | | | | DB Pension Plan A | 3.60 | | 3.70 | | 3.50 | | DB SERP | 5.50 | | 5.50 | | 5.50 | | Weighted average for net periodic benefit cost1 | | | | Service cost discount rate2,3 | | | | DB Pension Plan A | 2.83 | % | 3.44 | % | 4.55 | % | DB SERP | 2.84 | | 3.46 | | 4.58 | | OPEB Plan | 3.03 | | 3.57 | | 4.63 | | Interest cost discount rate2,3 | | | | DB Pension Plan A | 1.97 | | 2.92 | | 4.08 | | DB Pension Plan B | 1.70 | | 2.74 | | 3.93 | | DB SERP | 1.72 | | 2.74 | | 3.94 | | OPEB Plan | 1.99 | | 2.88 | | 4.03 | | Expected long-term rate of return on plan assets4 | | | | DB Pension Plans | 6.75 | | 6.75 | | 7.00 | | OPEB Plan | 6.75 | | 6.75 | | 7.00 | | Rate of compensation increase | | | | DB Pension Plan A | 3.70 | | 3.50 | | 3.50 | | DB SERP | 5.50 | | 5.50 | | 5.50 | |
| | | | | | | | December 31 | 2019 |
| 2018 |
| 2017 |
| CMS Energy, including Consumers | | | | Weighted average for benefit obligations1 | | | | Discount rate2 | | | | DB Pension Plan A | 3.37 | % | 4.48 | % | 3.78 | % | DB Pension Plan B | 3.17 |
| 4.32 |
| 3.64 |
| DB SERP | 3.15 |
| 4.32 |
| 3.65 |
| OPEB Plan | 3.32 |
| 4.42 |
| 3.74 |
| Rate of compensation increase | | | | DB Pension Plan A | 3.50 |
| 3.50 |
| 3.50 |
| DB SERP | 5.50 |
| 5.50 |
| 5.50 |
| Weighted average for net periodic benefit cost1 | | | | Service cost discount rate2,3 | | | | DB Pension Plan A4 | 4.55 |
| 3.85 |
|
|
| DB SERP | 4.58 |
| 3.83 |
| 4.51 |
| OPEB Plan | 4.63 |
| 3.93 |
| 4.89 |
| Interest cost discount rate2,3 | | | | DB Pension Plan A4 | 4.08 |
| 3.39 |
| | DB Pension Plan B4 | 3.93 |
| 3.24 |
|
|
| DB SERP | 3.94 |
| 3.26 |
| 3.51 |
| OPEB Plan | 4.03 |
| 3.35 |
| 3.79 |
| Expected long-term rate of return on plan assets5 | | | | DB Pension Plans | 7.00 |
| 7.00 |
| 7.25 |
| OPEB Plan | 7.00 |
| 7.00 |
| 7.25 |
| Rate of compensation increase | | | | DB Pension Plan A4 | 3.50 |
| 3.50 |
|
|
| DB SERP | 5.50 |
| 5.50 |
| 5.50 |
|
1The mortality assumption for benefit obligations was based on the Pri-2012 Mortality Table, with improvement scales MP-2021 for 2021, MP-2020 for 2020, and MP-2019 for 2019. The mortality assumption for net periodic benefit cost was based on the Pri-2012 Mortality Table for 2021 and 2020 and the RP-2014 Mortality Table for 2019, with improvement scales MP-2020 for 2021, MP-2019 for 2020, and MP-2018 for 2019. | | 12The discount rate reflects the rate at which benefits could be effectively settled and is equal to the equivalent single rate resulting from a yield-curve analysis. This analysis incorporated the projected benefit payments specific to CMS Energy’s and Consumers’ DB Pension Plans and OPEB Plan and the yields on high-quality corporate bonds rated Aa or better. 3CMS Energy and Consumers have elected to use a full-yield-curve approach in the estimation of service cost and interest cost; this approach applies individual spot rates along the yield curve to future projected benefit payments based on the time of payment. 4CMS Energy and Consumers determined the long-term rate of return using historical market returns, the present and expected future economic environment, the capital market principles of risk and return, and the | The mortality assumption for benefit obligations was based on the Pri-2012 mortality table for 2019 and on the RP-2014 mortality table for 2018 and 2017, with projection scales MP-2019 for 2019, MP-2018 for 2018, and MP-2017 for 2017. The mortality assumption for net periodic benefit cost for 2019, 2018, and 2017 was based on the RP-2014 mortality table, with projection scales MP-2018 for 2019, MP-2017 for 2018, and MP-2016 for 2017. |
| | 2
| The discount rate reflects the rate at which benefits could be effectively settled and is equal to the equivalent single rate resulting from a yield-curve analysis. This analysis incorporated the projected benefit payments specific to CMS Energy’s and Consumers’ DB Pension Plans and OPEB Plan and the yields on high-quality corporate bonds rated Aa or better. |
| | 3
| CMS Energy and Consumers have elected to use a full-yield-curve approach in the estimation of service cost and interest cost; this approach applies individual spot rates along the yield curve to future projected benefit payments based on the time of payment. |
| | 4
| Effective December 31, 2017, CMS Energy’s and Consumers’ existing defined benefit pension plan was amended to include only retired or inactive employees; this amended plan is referred to as DB Pension Plan B. Active employees were moved to a newly created pension plan, referred to as DB Pension Plan A. |
expert opinions of individuals and firms with financial market knowledge. CMS Energy and Consumers considered the asset allocation of the portfolio in forecasting the future expected total return of the portfolio. The assumptionsgoal was to determine a long-term rate of return that could be incorporated into the planning of future cash flow requirements in conjunction with the change in the liability. Annually, CMS Energy and Consumers review for reasonableness and appropriateness the forecasted returns for various classes of assets used to measureconstruct an expected return model. CMS Energy’s and Consumers’ expected long-term rate of return on the plan costassets of the previous defined benefit pension plan at December 31, 2017 were:DB Pension Plans was 6.75 percent in 2021. The actual return on the assets of the DB Pension Plans was 12.0 percent in 2021, 13.6 percent in 2020, and 21.0 percent in 2019. | | • | service cost discount rate of 4.53 percent
|
| | • | interest cost discount rate of 3.56 percent
|
| | • | weighted-average rate of compensation increase of 3.60 percent
|
| | 5
| CMS Energy and Consumers determined the long-term rate of return using historical market returns, the present and expected future economic environment, the capital market principles of risk and return, and the expert opinions of individuals and firms with financial market knowledge. CMS Energy and Consumers considered the asset allocation of the portfolio in forecasting the future expected total return of the portfolio. The goal was to determine a long-term rate of return that could be incorporated into the planning of future cash flow requirements in conjunction with the change in the liability. Annually, CMS Energy and Consumers review for reasonableness and appropriateness the forecasted returns for various classes of assets used to construct an expected return model. CMS Energy’s and Consumers’ expected long-term rate of return on the assets of the DB Pension Plans was 7.00 percent in 2019. The actual return (loss) on the assets of the DB Pension Plans was 21.0 percent in 2019, (6.7) percent in 2018, and 18.0 percent in 2017. |
Costs: Presented in the following table are the costs (credits) and other changes in plan assets and benefit obligations incurred in CMS Energy’s and Consumers’ retirement benefitsbenefit plans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | | | | | DB Pension Plans and DB SERP | | | | | | | OPEB Plan | | | | | | | | | Years Ended December 31 | | | | 2021 | 2020 | 2019 | | | | | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | Net periodic cost (credit) | | | Service cost | | | | | | | $ | 53 | | | $ | 50 | | | $ | 41 | | | | | | | | | $ | 18 | | | $ | 16 | | | $ | 14 | | Interest cost | | | | | | | 63 | | | 83 | | | 103 | | | | | | | | | 23 | | | 33 | | | 41 | | Settlement loss | | | | | | | 1 | | | 1 | | | — | | | | | | | | | — | | | — | | | — | | Expected return on plan assets | | | | | | | (208) | | | (191) | | | (162) | | | | | | | | | (109) | | | (100) | | | (88) | | Amortization of: | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | | | | | 100 | | | 95 | | | 50 | | | | | | | | | 8 | | | 15 | | | 26 | | Prior service cost (credit) | | | | | | | 4 | | | 1 | | | 1 | | | | | | | | | (53) | | | (56) | | | (62) | | Settlement loss | | | | | | | 6 | | | 2 | | | — | | | | | | | | | — | | | — | | | — | | Net periodic cost (credit) | | | | | | | $ | 19 | | | $ | 41 | | | $ | 33 | | | | | | | | | $ | (113) | | | $ | (92) | | | $ | (69) | | Consumers | | | | | | | | | | | | | | | | | | | | | | | | Net periodic cost (credit) | | | Service cost | | | | | | | $ | 51 | | | $ | 49 | | | $ | 40 | | | | | | | | | $ | 17 | | | $ | 15 | | | $ | 13 | | Interest cost | | | | | | | 59 | | | 78 | | | 97 | | | | | | | | | 23 | | | 31 | | | 40 | | Expected return on plan assets | | | | | | | (197) | | | (181) | | | (153) | | | | | | | | | (102) | | | (93) | | | (82) | | Amortization of: | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | | | | | 96 | | | 90 | | | 47 | | | | | | | | | 8 | | | 15 | | | 26 | | Prior service cost (credit) | | | | | | | 4 | | | 1 | | | 1 | | | | | | | | | (51) | | | (54) | | | (61) | | Settlement loss | | | | | | | 6 | | | 2 | | | — | | | | | | | | | — | | | — | | | — | | Net periodic cost (credit) | | | | | | | $ | 19 | | | $ | 39 | | | $ | 32 | | | | | | | | | $ | (105) | | | $ | (86) | | | $ | (64) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | DB Pension Plans and DB SERP | | OPEB Plan | Years Ended December 31 | 2019 | | 2018 | | 2017 | | | 2019 | | 2018 | | 2017 | | CMS Energy, including Consumers | | | | | | | | | | | | | | Net periodic cost (credit) | | | | | | | | | | | | | | Service cost | | $ | 41 |
| | $ | 48 |
| | $ | 45 |
| | | $ | 14 |
| | $ | 17 |
| | $ | 19 |
| Interest cost | | 103 |
| | 95 |
| | 93 |
| | | 41 |
| | 34 |
| | 51 |
| Expected return on plan assets | | (162 | ) | | (149 | ) | | (153 | ) | | | (88 | ) | | (97 | ) | | (90 | ) | Amortization of: | | | | | | | | | | | | | | Net loss | | 50 |
| | 76 |
| | 82 |
| | | 26 |
| | 15 |
| | 29 |
| Prior service cost (credit) | | 1 |
| | 3 |
| | 5 |
| | | (62 | ) | | (67 | ) | | (40 | ) | Net periodic cost (credit) | | $ | 33 |
| | $ | 73 |
| | $ | 72 |
| | | $ | (69 | ) | | $ | (98 | ) | | $ | (31 | ) | Consumers | | | | | | | | | | | | | | Net periodic cost (credit) | | | | | | | | | | | | | | Service cost | | $ | 40 |
| | $ | 47 |
| | $ | 44 |
| | | $ | 13 |
| | $ | 16 |
| | $ | 19 |
| Interest cost | | 97 |
| | 88 |
| | 90 |
| | | 40 |
| | 33 |
| | 49 |
| Expected return on plan assets | | (153 | ) | | (139 | ) | | (149 | ) | | | (82 | ) | | (91 | ) | | (84 | ) | Amortization of: | | | | | | | | | | | | | | Net loss | | 47 |
| | 73 |
| | 79 |
| | | 26 |
| | 16 |
| | 29 |
| Prior service cost (credit) | | 1 |
| | 3 |
| | 4 |
| | | (61 | ) | | (65 | ) | | (39 | ) | Net periodic cost (credit) | | $ | 32 |
| | $ | 72 |
| | $ | 68 |
| | | $ | (64 | ) | | $ | (91 | ) | | $ | (26 | ) |
CMS Energy and Consumers amortize net gains and losses in excess of 10 percent of the greater of the PBO or the MRV over the average remaining service period for DB Pension Plan A and the OPEB Plan and began in 2018, over the average remaining life expectancy of participants for DB Pension Plan B.
For DB Pension Plan A, the estimated period of amortization of gains and losses was nineeight years for the years ended December 31, 20192021 and 2018.2020, and nine years for the year ended December 31, 2019. For DB Pension Plan B, the estimated period of amortization of gains and losses was 2018 years for the years ended December 31, 2019 and 2018. The estimated period of amortization for gains and losses for CMS Energy and Consumers was ten years for the DB Pension Plans for the year ended December 31, 2017.2021, 19 years for the year ended December 31, 2020, and 20 years for the year ended December 31, 2019. For the OPEB Plan, the estimated amortization period was nine years for the years ended December 31, 2021 and 2020, and ten years for the year ended December 31, 2019 and 2018 and 11 years for the year ended December 31, 2017.2019. Prior service cost (credit) amortization is established in the year in which the prior service cost (credit) first occurred, and is based on the same amortization period for all future years until the prior service cost
(credit) is fully amortized. CMS Energy and Consumers had new prior service costs (credits) for OPEBDB Pension Plan A in 2018 and 2017.2020. The estimated period of amortization of these new prior service costs (credits) for CMS Energy and Consumers is nineeight years. CMS Energy and Consumers determine the MRV for the assets of the DB Pension Plans as the fair value of plan assets on the measurement date, adjusted by the gains or losses that will not be admitted into the MRV until future years. CMS Energy and Consumers reflect each year’s gain or loss in the MRV in equal amounts over a five-year period beginning on the date the original amount was determined. CMS Energy and Consumers determine the MRV for OPEB Plan assets as the fair value of assets on the measurement date.
Reconciliations: Presented in the following table are reconciliations of the funded status of CMS Energy’s and Consumers’ retirement benefitsbenefit plans with their retirement benefitsbenefit plans’ liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | DB Pension Plans | | DB SERP | | OPEB Plan | Years Ended December 31 | 2021 | 2020 | | 2021 | 2020 | | 2021 | 2020 | | CMS Energy, including Consumers | | | | | | | | | | | | Benefit obligation at beginning of period | | $ | 3,266 | | | $ | 2,973 | | | | $ | 160 | | | $ | 150 | | | | $ | 1,205 | | | $ | 1,165 | | | Service cost | | 53 | | | 50 | | | | — | | | — | | | | 18 | | | 16 | | | Interest cost | | 60 | | | 79 | | | | 3 | | | 4 | | | | 23 | | | 33 | | | Plan amendments | | — | | | 24 | | | | — | | | — | | | | 5 | | | — | | | Actuarial loss (gain) | | (108) | | 1 | 355 | | 1 | | (4) | | | 16 | | | | (32) | | 1 | 39 | | 1 | Benefits paid | | (201) | | | (215) | | | | (10) | | | (10) | | | | (53) | | | (48) | | | Benefit obligation at end of period | | $ | 3,070 | | | $ | 3,266 | | | | $ | 149 | | | $ | 160 | | | | $ | 1,166 | | | $ | 1,205 | | | Plan assets at fair value at beginning of period | | $ | 3,402 | | | $ | 2,546 | | | | $ | — | | | $ | — | | | | $ | 1,645 | | | $ | 1,509 | | | Actual return on plan assets | | 398 | | | 371 | | | | — | | | — | | | | 194 | | | 182 | | | Company contribution | | — | | | 700 | | | | 10 | | | 10 | | | | — | | | 1 | | | Actual benefits paid | | (201) | | | (215) | | | | (10) | | | (10) | | | | (52) | | | (47) | | | Plan assets at fair value at end of period | | $ | 3,599 | | | $ | 3,402 | | | | $ | — | | | $ | — | | | | $ | 1,787 | | | $ | 1,645 | | | Funded status | | $ | 529 | | 2 | $ | 136 | | 2 | | $ | (149) | | | $ | (160) | | | | $ | 621 | | | $ | 440 | | | Consumers | | | | | | | | | | | | | | | | Benefit obligation at beginning of period | | | | | | | $ | 117 | | | $ | 109 | | | | $ | 1,158 | | | $ | 1,120 | | | Service cost | | | | | | | — | | | — | | | | 17 | | | 15 | | | Interest cost | | | | | | | 2 | | | 3 | | | | 23 | | | 31 | | | Plan amendments | | | | | | | — | | | — | | | | 5 | | | — | | | Actuarial loss (gain) | | | | | | | (3) | | | 12 | | | | (30) | | 1 | 37 | | 1 | Benefits paid | | | | | | | (7) | | | (7) | | | | (51) | | | (45) | | | Benefit obligation at end of period | | | | | | | $ | 109 | | | $ | 117 | | | | $ | 1,122 | | | $ | 1,158 | | | Plan assets at fair value at beginning of period | | | | | | | $ | — | | | $ | — | | | | $ | 1,535 | | | $ | 1,410 | | | Actual return on plan assets | | | | | | | — | | | — | | | | 182 | | | 169 | | | Company contribution | | | | | | | 7 | | | 7 | | | | — | | | 1 | | | Actual benefits paid | | | | | | | (7) | | | (7) | | | | (49) | | | (45) | | | Plan assets at fair value at end of period | | | | | | | $ | — | | | $ | — | | | | $ | 1,668 | | | $ | 1,535 | | | Funded status | | | | | | | $ | (109) | | | $ | (117) | | | | $ | 546 | | | $ | 377 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | DB Pension Plans | | DB SERP | | OPEB Plan | Years Ended December 31 | 2019 | | 2018 | | | 2019 | | 2018 | | | 2019 | | 2018 | | | CMS Energy, including Consumers | Benefit obligation at beginning of period | | $ | 2,512 |
| | $ | 2,780 |
| | | $ | 140 |
| | $ | 154 |
| | | $ | 1,045 |
| | $ | 1,097 |
| | Service cost | | 41 |
| | 48 |
| | | — |
| | — |
| | | 14 |
| | 17 |
| | Interest cost | | 98 |
| | 90 |
| | | 5 |
| | 5 |
| | | 41 |
| | 34 |
| | Plan amendments | | — |
| | — |
| | | — |
| | — |
| | | — |
| | 26 |
| | Actuarial loss (gain) | | 476 |
| 1 | (258 | ) | 1 | | 15 |
| | (10 | ) | | | 110 |
| 1 | (74 | ) | 1 | Benefits paid | | (154 | ) | | (148 | ) | | | (10 | ) | | (9 | ) | | | (45 | ) | | (55 | ) | | Benefit obligation at end of period | | $ | 2,973 |
| | $ | 2,512 |
| | | $ | 150 |
| | $ | 140 |
| | | $ | 1,165 |
| | $ | 1,045 |
| | Plan assets at fair value at beginning of period | | $ | 2,247 |
| | $ | 2,305 |
| | | $ | — |
| | $ | — |
| | | $ | 1,280 |
| | $ | 1,420 |
| | Actual return on plan assets | | 453 |
| | (150 | ) | | | — |
| | — |
| | | 273 |
| | (86 | ) | | Company contribution | | — |
| | 240 |
| | | 10 |
| | 9 |
| | | — |
| | — |
| | Actual benefits paid | | (154 | ) | | (148 | ) | | | (10 | ) | | (9 | ) | | | (44 | ) | | (54 | ) | | Plan assets at fair value at end of period | | $ | 2,546 |
| | $ | 2,247 |
| | | $ | — |
| | $ | — |
| | | $ | 1,509 |
| | $ | 1,280 |
| | Funded status | | $ | (427 | ) | 2 | $ | (265 | ) | 2 | | $ | (150 | ) | | $ | (140 | ) | | | $ | 344 |
| | $ | 235 |
| | Consumers | | | | | | | | | | | | | | | | Benefit obligation at beginning of period | | | | | | | $ | 101 |
| | $ | 112 |
| | | $ | 1,004 |
| | $ | 1,053 |
| | Service cost | | | | | | | — |
| | — |
| | | 13 |
| | 16 |
| | Interest cost | | | | | | | 4 |
| | 4 |
| | | 40 |
| | 33 |
| | Plan amendments | | | | | | | — |
| | — |
| | | — |
| | 25 |
| | Actuarial loss (gain) | | | | | | | 11 |
| | (8 | ) | | | 106 |
| 1 | (70 | ) | 1 | Benefits paid | | | | | | | (7 | ) | | (7 | ) | | | (43 | ) | | (53 | ) | | Benefit obligation at end of period | | | | | | | $ | 109 |
| | $ | 101 |
| | | $ | 1,120 |
| | $ | 1,004 |
| | Plan assets at fair value at beginning of period | | | | | | | $ | — |
| | $ | — |
| | | $ | 1,197 |
| | $ | 1,329 |
| | Actual return on plan assets | | | | | | | — |
| | — |
| | | 255 |
| | (80 | ) | | Company contribution | | | | | | | 7 |
| | 7 |
| | | — |
| | — |
| | Actual benefits paid | | | | | | | (7 | ) | | (7 | ) | | | (42 | ) | | (52 | ) | | Plan assets at fair value at end of period | | | | | | | $ | — |
| | $ | — |
| | | $ | 1,410 |
| | $ | 1,197 |
| | Funded status | | | | | | | $ | (109 | ) | | $ | (101 | ) | | | $ | 290 |
| | $ | 193 |
| |
1The actuarial gains for 2021 for the DB Pension Plans and OPEB Plan were primarily the result of higher discount rates. The actuarial loss for 2020 for the DB Pension Plans was primarily the result of lower discount rates and lower interest rates used to calculate the value of lump-sum payments. The actuarial loss for 2020 for the OPEB Plan was primarily the result of lower discount rates. | | 12The total funded status of the DB Pension Plans attributable to Consumers, based on an allocation of expenses, was $510 million at December 31, 2021 and $138 million at December 31, 2020. | The actuarial loss for 2019 for the DB Pension Plans was primarily the result of lower discount rates and lower interest rates used to calculate the value of lump-sum payments. The actuarial gain for 2018 was primarily the result of higher discount rates. The actuarial loss for 2019 for the OPEB Plan was primarily the result of lower discount rates. The actuarial gain for 2018 was primarily the result of higher discount rates. |
| | 2
| The total funded status of the DB Pension Plans attributable to Consumers, based on an allocation of expenses, was $408 million at December 31, 2019 and $246 million at December 31, 2018. |
Presented in the following table is the classification of CMS Energy’s and Consumers’ retirement benefit plans’ assets and liabilities: | | | | | | | | | | In Millions | | December 31 | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | Non‑current assets | | | | | DB Pension Plans | | $ | 104 |
| | $ | 38 |
| OPEB Plan | | 344 |
| | 235 |
| Current liabilities | | | | | DB SERP | | 10 |
| | 10 |
| Non‑current liabilities | | | | | DB Pension Plans | | 531 |
| | 303 |
| DB SERP | | 140 |
| | 130 |
| Consumers | | | | | Non‑current assets | | | | | DB Pension Plans | | $ | 109 |
| | $ | 49 |
| OPEB Plan | | 290 |
| | 193 |
| Current liabilities | | | | | DB SERP | | 7 |
| | 7 |
| Non‑current liabilities | | | | | DB Pension Plans | | 517 |
| | 295 |
| DB SERP | | 102 |
| | 94 |
|
| | | | | | | | | | | | | | | In Millions | December 31 | 2021 | 2020 | CMS Energy, including Consumers | | | | | Non-current assets | | | | | DB Pension Plans | | $ | 529 | | | $ | 136 | | OPEB Plan | | 621 | | | 440 | | Current liabilities | | | | | DB SERP | | 10 | | | 10 | | Non-current liabilities | | | | | | | | | | DB SERP | | 139 | | | 150 | | | | | | | Consumers | | | | | Non-current assets | | | | | DB Pension Plans | | $ | 510 | | | $ | 138 | | OPEB Plan | | 546 | | | 377 | | Current liabilities | | | | | DB SERP | | 7 | | | 7 | | Non-current liabilities | | | | | | | | | | DB SERP | | 102 | | | 110 | | | | | | |
The ABO for the DB Pension Plans was $2.6$2.7 billion at December 31, 20192021 and $2.2$2.9 billion at December 31, 2018. Presented in2020. At December 31, 2021 and 2020, the following table is information related toPBO and ABO did not exceed plan assets for any of the defined benefit pension plan for which the PBO and the ABO exceed plan assets:plans. | | | | | | | | | | In Millions | | December 31 | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | PBO | | $ | 1,736 |
| | $ | 1,363 |
| ABO | | 1,398 |
| | 1,091 |
| Fair value of plan assets | | 1,205 |
| | 1,059 |
|
146
Items Not Yet Recognized as a Component of Net Periodic Benefit Cost: Presented in the following table are the amounts recognized in regulatory assets, regulatory liabilities, and AOCI that have not been recognized as components of net periodic benefit cost. For additional details on regulatory assets and regulatory liabilities, see Note 3,2, Regulatory Matters. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | DB��Pension Plans and DB SERP | | OPEB Plan | December 31 | 2021 | 2020 | | 2021 | 2020 | CMS Energy, including Consumers | | | | | | | | | | Regulatory assets (liabilities) | | | | | | | | | | Net loss | | $ | 812 | | | $ | 1,194 | | | | $ | 136 | | | $ | 254 | | Prior service cost (credit) | | 25 | | | 29 | | | | (190) | | | (246) | | Regulatory assets (liabilities) | | $ | 837 | | | $ | 1,223 | | | | $ | (54) | | | $ | 8 | | AOCI | | | | | | | | | | Net loss (gain) | | 94 | | | 120 | | | | (17) | | | (10) | | Prior service cost (credit) | | — | | | 1 | | | | (5) | | | (6) | | Total amounts recognized in regulatory assets (liabilities) and AOCI | | $ | 931 | | | $ | 1,344 | | | | $ | (76) | | | $ | (8) | | Consumers | | | | | | | | | | Regulatory assets (liabilities) | | | | | | | | | | Net loss | | $ | 812 | | | $ | 1,194 | | | | $ | 136 | | | $ | 254 | | Prior service cost (credit) | | 25 | | | 29 | | | | (190) | | | (246) | | Regulatory assets (liabilities) | | $ | 837 | | | $ | 1,223 | | | | $ | (54) | | | $ | 8 | | AOCI | | | | | | | | | | Net loss | | 41 | | | 47 | | | | — | | | — | | Total amounts recognized in regulatory assets (liabilities) and AOCI | | $ | 878 | | | $ | 1,270 | | | | $ | (54) | | | $ | 8 | |
| | | | | | | | | | | | | | | | | | | In Millions | | | DB Pension Plans and DB SERP | | OPEB Plan | Years Ended December 31 | 2019 | | 2018 | | | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | | | | | | Regulatory assets | | | | | | | | | | Net loss | | $ | 1,114 |
| | $ | 978 |
| | | $ | 308 |
| | $ | 402 |
| Prior service cost (credit) | | 8 |
| | 9 |
| | | (300 | ) | | (361 | ) | Regulatory assets | | $ | 1,122 |
| | $ | 987 |
| | | $ | 8 |
| | $ | 41 |
| AOCI | | | | | | | | | | Net loss (gain) | | 105 |
| | 90 |
| | | (6 | ) | | 2 |
| Prior service credit | | — |
| | — |
| | | (8 | ) | | (9 | ) | Total amounts recognized in regulatory assets and AOCI | | $ | 1,227 |
| | $ | 1,077 |
| | | $ | (6 | ) | | $ | 34 |
| Consumers | | | | | | | | | | Regulatory assets | | | | | | | | | | Net loss | | $ | 1,114 |
| | $ | 978 |
| | | $ | 308 |
| | $ | 402 |
| Prior service cost (credit) | | 8 |
| | 9 |
| | | (300 | ) | | (361 | ) | Regulatory assets | | $ | 1,122 |
| | $ | 987 |
| | | $ | 8 |
| | $ | 41 |
| AOCI | | | | | | | | | | Net loss | | 36 |
| | 27 |
| | | — |
| | — |
| Total amounts recognized in regulatory assets and AOCI | | $ | 1,158 |
| | $ | 1,014 |
| | | $ | 8 |
| | $ | 41 |
|
Plan Assets: Presented in the following tables are the fair values of the assets of CMS Energy’s DB Pension Plans and OPEB Plan, by asset category and by level within the fair value hierarchy. For additional details regarding the fair value hierarchy, see Note 6,5, Fair Value Measurements. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | DB Pension Plans | | December 31, 2021 | | December 31, 2020 | | Total | Level 1 | Level 2 | | Total | Level 1 | Level 2 | CMS Energy, including Consumers | Cash and short-term investments | | $ | 30 | | | $ | 30 | | | $ | — | | | | $ | 115 | | | $ | 115 | | | $ | — | | U.S. government and agencies securities | | 209 | | | — | | | 209 | | | | 150 | | | — | | | 150 | | Corporate debt | | 595 | | | — | | | 595 | | | | 540 | | | — | | | 540 | | State and municipal bonds | | 13 | | | — | | | 13 | | | | 11 | | | — | | | 11 | | Foreign corporate bonds | | 66 | | | — | | | 66 | | | | 41 | | | — | | | 41 | | Mutual funds | | 785 | | | 785 | | | — | | | | 971 | | | 971 | | | — | | | | $ | 1,698 | | | $ | 815 | | | $ | 883 | | | | $ | 1,828 | | | $ | 1,086 | | | $ | 742 | | Pooled funds | | 1,901 | | | | | | | | 1,574 | | | | | | Total | | $ | 3,599 | | | | | | | | $ | 3,402 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | DB Pension Plans | | December 31, 2019 | | December 31, 2018 | | Total | | Level 1 | | Level 2 | | | Total | | Level 1 | | Level 2 | | CMS Energy, including Consumers | Cash and short-term investments | | $ | 44 |
| | $ | 44 |
| | $ | — |
| | | $ | 242 |
| | $ | 242 |
| | $ | — |
| U.S. government and agencies securities | | 66 |
| | — |
| | 66 |
| | | 11 |
| | — |
| | 11 |
| Corporate debt | | 493 |
| | — |
| | 493 |
| | | 400 |
| | — |
| | 400 |
| State and municipal bonds | | 17 |
| | — |
| | 17 |
| | | 6 |
| | — |
| | 6 |
| Foreign corporate bonds | | 33 |
| | — |
| | 33 |
| | | 35 |
| | — |
| | 35 |
| Mutual funds | | 640 |
| | 640 |
| | — |
| | | 552 |
| | 552 |
| | — |
| | | $ | 1,293 |
| | $ | 684 |
| | $ | 609 |
| | | $ | 1,246 |
| | $ | 794 |
| | $ | 452 |
| Pooled funds | | 1,253 |
| | | | | | | 1,001 |
| | | | | Total | | $ | 2,546 |
| | | | | | | $ | 2,247 |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | OPEB Plan | | December 31, 2019 | | December 31, 2018 | | Total | | Level 1 | | Level 2 | | | Total | | Level 1 | | Level 2 | | CMS Energy, including Consumers | Cash and short-term investments | | $ | 9 |
| | $ | 9 |
| | $ | — |
| | | $ | 36 |
| | $ | 36 |
| | $ | — |
| U.S. government and agencies securities | | 10 |
| | — |
| | 10 |
| | | 2 |
| | — |
| | 2 |
| Corporate debt | | 71 |
| | — |
| | 71 |
| | | 55 |
| | — |
| | 55 |
| State and municipal bonds | | 2 |
| | — |
| | 2 |
| | | 1 |
| | — |
| | 1 |
| Foreign corporate bonds | | 5 |
| | — |
| | 5 |
| | | 5 |
| | — |
| | 5 |
| Common stocks | | 55 |
| | 55 |
| | — |
| | | 41 |
| | 41 |
| | — |
| Mutual funds | | 713 |
| | 713 |
| | — |
| | | 594 |
| | 594 |
| | — |
| | | $ | 865 |
| | $ | 777 |
| | $ | 88 |
| | | $ | 734 |
| | $ | 671 |
| | $ | 63 |
| Pooled funds | | 644 |
| | | | | | | 546 |
| | | | | Total | | $ | 1,509 |
| | | | | | | $ | 1,280 |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | OPEB Plan | | December 31, 2021 | | December 31, 2020 | | Total | Level 1 | Level 2 | | Total | Level 1 | Level 2 | CMS Energy, including Consumers | Cash and short-term investments | | $ | 21 | | | $ | 21 | | | $ | — | | | | $ | 33 | | | $ | 33 | | | $ | — | | U.S. government and agencies securities | | 25 | | | — | | | 25 | | | | 18 | | | — | | | 18 | | Corporate debt | | 73 | | | — | | | 73 | | | | 64 | | | — | | | 64 | | State and municipal bonds | | 2 | | | — | | | 2 | | | | 2 | | | — | | | 2 | | Foreign corporate bonds | | 8 | | | — | | | 8 | | | | 5 | | | — | | | 5 | | Common stocks | | 85 | | | 85 | | | — | | | | 66 | | | 66 | | | — | | Mutual funds | | 941 | | | 941 | | | — | | | | 807 | | | 807 | | | — | | | | $ | 1,155 | | | $ | 1,047 | | | $ | 108 | | | | $ | 995 | | | $ | 906 | | | $ | 89 | | Pooled funds | | 632 | | | | | | | | 650 | | | | | | Total | | $ | 1,787 | | | | | | | | $ | 1,645 | | | | | |
Cash and Short-Term Investments: Cash and short-term investments consist of money market funds with daily liquidity. U.S. Government and Agencies Securities: U.S. government and agencies securities consist of U.S. Treasury notes and other debt securities backed by the U.S. government and related agencies. These securities are valued based on quoted market prices. Corporate Debt: Corporate debt investments consist of investment grade bonds of U.S. issuers from diverse industries. These securities are valued based on quoted market prices, when available, or yields available on comparable securities of issuers with similar credit ratings.
State and Municipal Bonds: State and municipal bonds are valued using a matrix-pricing model that incorporates Level 2 market-based information. The fair value of the bonds is derived from various observable inputs, including benchmark yields, reported securities trades, broker/dealer quotes, bond ratings, and general information on market movements for investment grade state and municipal securities normally considered by market participants when pricing such debt securities. Foreign Corporate Bonds: Foreign corporate debt securities are valued based on quoted market prices, when available, or on yields available on comparable securities of issuers with similar credit ratings. Common Stocks: Common stocks in the OPEB Plan consist of equity securities that are actively managed and tracked to the S&P 500 Index. These securities are valued at their quoted closing prices. Mutual Funds: Mutual funds represent shares in registered investment companies that are priced based on the daily quoted net asset values that are publicly available and are the basis for transactions to buy or sell shares in the funds. Pooled Funds: Pooled funds include both common and collective trust funds as well as special funds that contain only employee benefit plan assets from two or more unrelated benefit plans. These funds primarily consist of U.S. and foreign equity securities, but also include U.S. and foreign fixed-income securities and multi-asset investments. Since these investments are valued at their net asset value as a practical expedient, they are not classified in the fair value hierarchy.
Asset Allocations: Presented in the following table are the investment components of the assets of CMS Energy’s DB Pension Plans and OPEB Plan as of December 31, 2019:2021: | | | | | | | | | DB Pension Plans | | OPEB Plan | | Equity securities | | 55 | % | | 48 | % | Fixed-income securities | | 39 |
| | 33 |
| Multi-asset investments | | 6 |
| | 19 |
| | | 100 | % | | 100 | % |
| | | | | | | | | | | | | | | | DB Pension Plans | OPEB Plan | Equity securities | | 54.0 | % | | 55.0 | % | Fixed-income securities | | 28.0 | | | 28.0 | | Real asset investments | | 12.0 | | | 12.0 | | Multi-asset investments | | 5.0 | | | 4.0 | | Cash and Cash Equivalents | | 1.0 | | | 1.0 | | | | 100.0 | % | | 100.0 | % |
CMS Energy’s target 2021 asset allocation for the assets of the DB Pension Plans iswas 54 percent equity, 29 percent fixed income, 12 percent real assets, and 5 percent multi-asset investments. CMS Energy established union and non‑union VEBA trusts to fund future retiree health and life insurance benefits. These trusts are funded through the ratemaking process for Consumers and through direct contributions from the non‑utility subsidiaries. CMS Energy’s target 2021 asset allocation for the health trusts was 55 percent equity, 30 percent fixed income, 12 percent real assets, and 3 percent multi-asset investments. CMS Energy’s target asset allocation for the life trusts was 53 percent equity, 3532 percent fixed income, and 1215 percent multi-asset investments. This The goal of these target asset allocation is expected to continueallocations was to maximize the long-term return on plan assets, while maintaining a prudent level of risk. The level of acceptable risk is a function of the liabilities of the plan.plans. Equity investments are diversified mostly across the S&P 500 Index, with lesser allocations to the S&P MidCap and SmallCap Indexes and Foreign Equity Funds. Fixed-income investments are diversified across investment grade instruments of government and corporate issuers, as well as high-yield and global bond funds. Multi-assetsReal asset investments are diversified across absolute return investment approaches and global tactical asset allocation, such as inflation protected securities, real estate investment trusts, commodities, currency,public infrastructure, and preferred stock. public resource equity. Multi-asset investments are global tactical asset allocations.
CMS Energy uses annual liability measurements, quarterly portfolio reviews, and periodic asset/liability studies to evaluate the need for adjustments to the portfolio allocation. CMS Energy established union and non‑union VEBA trusts to fund future retiree health and life insurance benefits. These trusts are funded through the ratemaking process for Consumers and through direct contributions from the non‑utility subsidiaries. CMS Energy’s target asset allocation for the health trusts is 50 percent equity, 30 percent fixed income, and 20 percent multi-asset investments. CMS Energy’s target asset allocation for the life trusts is 42 percent equity, 28 percent fixed income, and 30 percent multi-asset investments. These target allocations are expected to continue to maximize the long-term return on plan assets, while maintaining a prudent level of risk. The level of acceptable risk is a function of the liabilities of the plans. Equity investments are diversified mostly across the S&P 500 Index, with lesser allocations to the S&P SmallCap Index and Foreign Equity Funds. Fixed-income investments are diversified across investment grade instruments of government and corporate issuers. Multi-assets are diversified across absolute return investment approaches and global tactical asset allocation, such as inflation protected securities, real estate investment trusts, commodities, currency and preferred stock. CMS Energy uses annual liability measurements, quarterly portfolio reviews, and periodic asset/liability studies to evaluate the need for adjustments to the portfolio allocation.allocations.
Contributions: Presented in the following table are the contributions to CMS Energy’s and Consumers’ DB Pension Plans:Plans and OPEB Plan: | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | DB Pension Plans | | $ | — |
| | $ | 240 |
| Consumers | | | | | DB Pension Plans | | $ | — |
| | $ | 234 |
|
| | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | CMS Energy, including Consumers | | | | | DB Pension Plans | | $ | — | | | $ | 700 | | OPEB Plan | | — | | | 1 | | Consumers | | | | | DB Pension Plans | | $ | — | | | $ | 682 | | OPEB Plan | | — | | | 1 | |
Contributions comprise required amounts and discretionary contributions. Neither CMS Energy nor Consumers contributedplans to the OPEB Plan in 2019 and 2018. CMS Energy, including Consumers, contributed $531 millioncontribute to the DB Pension Plans in January 2020. Consumers contributed $518 million
to the DB Pension Plans in January 2020. Neither CMS Energy nor Consumers plans to contribute to theor OPEB Plan in 2020.2022. Actual future contributions will depend on future investment performance, discount rates, and various factors related to the participants of the DB Pension Plans and OPEB Plan. CMS Energy and Consumers will, at a minimum, contribute to the plans as needed to comply with federal funding requirements.
Benefit Payments: Presented in the following table are the expected benefit payments for each of the next five years and the five-year period thereafter: | | | | | | | | | | | | | | In Millions | | | DB Pension Plans | | DB SERP | | OPEB Plan | | CMS Energy, including Consumers | | | | | | | 2020 | | $ | 174 |
| | $ | 10 |
| | $ | 58 |
| 2021 | | 176 |
| | 10 |
| | 60 |
| 2022 | | 177 |
| | 10 |
| | 62 |
| 2023 | | 177 |
| | 10 |
| | 63 |
| 2024 | | 175 |
| | 10 |
| | 64 |
| 2025-2029 | | 870 |
| | 46 |
| | 319 |
| Consumers | | | | | | | 2020 | | $ | 165 |
| | $ | 7 |
| | $ | 56 |
| 2021 | | 166 |
| | 7 |
| | 58 |
| 2022 | | 167 |
| | 7 |
| | 59 |
| 2023 | | 167 |
| | 7 |
| | 60 |
| 2024 | | 166 |
| | 7 |
| | 61 |
| 2025-2029 | | 825 |
| | 32 |
| | 305 |
|
| | | | | | | | | | | | | | | | | | | | | In Millions | | DB Pension Plans | DB SERP | OPEB Plan | CMS Energy, including Consumers | | | | | | | 2022 | | $ | 185 | | | $ | 10 | | | $ | 52 | | 2023 | | 181 | | | 10 | | | 54 | | 2024 | | 178 | | | 10 | | | 56 | | 2025 | | 180 | | | 10 | | | 58 | | 2026 | | 178 | | | 9 | | | 59 | | 2027-2031 | | 876 | | | 45 | | | 308 | | Consumers | | | | | | | 2022 | | $ | 175 | | | $ | 7 | | | $ | 49 | | 2023 | | 171 | | | 7 | | | 52 | | 2024 | | 169 | | | 7 | | | 54 | | 2025 | | 170 | | | 7 | | | 55 | | 2026 | | 169 | | | 6 | | | 56 | | 2027-2031 | | 830 | | | 31 | | | 294 | |
Collective Bargaining Agreements: At December 31, 2019,2021, unions represented 3541 percent of CMS Energy’s employees and 3742 percent of Consumers’ employees. The UWUA represents Consumers’ operating, maintenance, construction, and callcustomer contact center employees. The USW represents Zeeland plant employees. UnionThe UWUA and USW agreements expired and new agreements were ratified in 2020. These union contracts expire in 2020.2025.
| | 13: | Stock-Based Compensation |
11: Stock-Based Compensation CMS Energy and Consumers provide a PISP to officers, employees, and non‑employee directors based on their contributions to the successful management of the company. The PISP has a ten-year term, expiring in May 2024.2030. In 2019,2021, all awards were in the form of restricted stock or restricted stock units. The PISP also allows for unrestricted common stock, stock options, stock appreciation rights, phantom shares, performance units, and incentive options, none of which was granted in 2019, 2018,2021, 2020, or 2017.2019. Shares awarded or subject to stock options, phantom shares, or performance units may not exceed 6.5 million shares from June 20142020 through May 2024, nor may such awards to any recipient exceed 500,000 shares in any calendar year.2030. CMS Energy and Consumers may issue awards of up to 3,258,0005,927,297 shares of common stock under the PISP as of December 31, 2019.2021. Shares for which payment or exercise is in cash, as well as shares that expire, terminate, or are canceled or forfeited, may be awarded or granted again under the PISP.
All awards under the PISP vest fully upon death. Upon a change of control of CMS Energy or termination under an officer separation agreement, the awards will vest in accordance with specific officer agreements. If stated in the award, for restricted stock recipients who terminate employment due to retirement or disability, a pro-rata portion of the award will vest upon termination, with any market-based award also contingent upon the outcome of the market condition and any performance-based award contingent upon the outcome of the performance condition. The pro-rata portion is equal to the portion of the service period served between the award grant date and the employee’s termination date. The remaining portion of the awards will be forfeited. All awards for directors vest fully upon retirement. Restricted shares may be forfeited if employment terminates for any other reason or if the minimum service requirements are not met, as described in the award document. Restricted Stock Awards: Restricted stock awards for employees under the PISP are in the form of performance-based, market-based, and time-lapse restricted stock. Award recipients receive shares of CMS Energy common stock that have dividend and voting rights. The dividends on time-lapse restricted stock are paid in cash or in CMS Energy common stock. The dividends on performance-based and market-based restricted stock are paid in restricted shares equal to the value of the dividends. These additional restricted shares are subject to the same vesting conditions as the underlying restricted stock shares. Performance-based restricted stock vesting is contingent on meeting at least a 36-month service requirement and a performance condition. The performance condition is based on an adjusted measure of CMS Energy’s EPS growth relative to a peer group over a three-year period. The awards granted in 2019, 2018,2021, 2020, and 20172019 require a 38-month service period. Market-based restricted stock vesting is generally contingent on meeting a three-year service requirement and a market condition. The market condition is based on a comparison of CMS Energy’s total shareholder return with the median total shareholder return of a peer group over the same three-year period. Depending on the outcome of the performance condition or the market condition, a recipient may earn a total award ranging from 0zero to 200 percent of the initial grant. Time-lapse restricted stock generally vests after a service period of three years. Restricted Stock Units: In 2019, 2018,2021, 2020, and 2017,2019, CMS Energy and Consumers granted restricted stock units to certain non‑employee directors who elected to defer their restricted stock awards. The restricted stock units generally vest after a service period of one year or, if earlier, at the next annual meeting. The restricted stock units will be distributed to the recipients as shares in accordance with the directors’ deferral agreements. Restricted stock units do not have voting rights, but do have dividend rights. In lieu of cash dividend payments, the dividends on restricted stock units are paid in additional units equal to the value of the dividends. These additional restricted stock units are subject to the same vesting and
distribution conditions as the underlying restricted stock units. NaNNo restricted stock units were forfeited during 2019.
2021.
Presented in the following tables is the activity for restricted stock and restricted stock units under the PISP: | | | | | | | | | | | | | | | | | | | | | | | | | CMS Energy, including Consumers | | Consumers | Year Ended December 31, 2021 | Number of Shares | Weighted-Average Grant Date Fair Value per Share | | Number of Shares | Weighted-Average Grant Date Fair Value per Share | Nonvested at beginning of period | 817,357 | | | $ | 51.68 | | | 781,531 | | | $ | 51.73 | | Granted | | | | | | | | Restricted stock | 547,201 | | | 43.52 | | | 517,141 | | | 42.85 | | Restricted stock units | 13,867 | | | 54.11 | | | 13,093 | | | 53.93 | | Vested | | | | | | | | Restricted stock | (408,011) | | | 29.46 | | | (388,009) | | | 29.55 | | Restricted stock units | (15,577) | | | 48.15 | | | (14,891) | | | 48.09 | | Forfeited – restricted stock | (22,264) | | | 57.90 | | | (21,780) | | | 58.01 | | Nonvested at end of period | 932,573 | | | $ | 56.56 | | | 887,085 | | | $ | 56.19 | |
| | | | | | | | | | | | | | | | | CMS Energy, including Consumers | | Consumers | Year Ended December 31, 2019 | | Number of Shares |
| Weighted-Average Grant Date Fair Value per Share | | | Number of Shares |
| Weighted-Average Grant Date Fair Value per Share | | Nonvested at beginning of period | | 1,211,229 |
| | $ | 39.70 |
| | 1,158,836 |
| | $ | 39.71 |
| Granted | | | | | | | | | Restricted stock | | 488,594 |
| | 43.57 |
| | 464,485 |
| | 43.57 |
| Restricted stock units | | 14,899 |
| | 50.35 |
| | 14,050 |
| | 51.15 |
| Vested | | | | | | | | | Restricted stock | | (468,308 | ) | | 31.09 |
| | (447,214 | ) | | 31.11 |
| Restricted stock units | | (12,503 | ) | | 41.59 |
| | (11,836 | ) | | 42.35 |
| Forfeited – restricted stock | | (46,949 | ) | | 45.81 |
| | (40,139 | ) | | 45.69 |
| Nonvested at end of period | | 1,186,962 |
| | $ | 44.56 |
| | 1,138,182 |
| | $ | 44.57 |
|
| | | | | | Year Ended December 31, 2019 | CMS Energy, including Consumers |
| Consumers |
| Granted | | | Time-lapse awards | 119,167 |
| 113,627 |
| Market-based awards | 144,963 |
| 137,636 |
| Performance-based awards | 144,963 |
| 137,636 |
| Director restricted stock units | 13,575 |
| 13,005 |
| Dividend equivalents on market-based awards | 12,779 |
| 12,176 |
| Dividend equivalents on performance-based awards | 15,899 |
| 15,145 |
| Dividend equivalents on restricted stock units | 1,324 |
| 1,045 |
| Additional market-based shares based on achievement of condition | 15,320 |
| 14,550 |
| Additional performance-based shares based on achievement of condition | 35,503 |
| 33,715 |
| Total granted | 503,493 |
| 478,535 |
|
| | | | | | | | | Year Ended December 31, 2021 | CMS Energy, including Consumers | Consumers | Granted | | | Time-lapse awards | 118,290 | | 112,128 | | Market-based awards | 143,843 | | 135,638 | | Performance-based awards | 143,843 | | 135,638 | | Restricted stock units | 11,725 | | 11,035 | | Dividends on market-based awards | 15,661 | | 14,890 | | Dividends on performance-based awards | 15,964 | | 15,175 | | Dividends on restricted stock units | 2,142 | | 2,058 | | Additional market-based shares based on achievement of condition | 59,736 | | 56,505 | | Additional performance-based shares based on achievement of condition | 49,864 | | 47,167 | | Total granted | 561,068 | | 530,234 | |
CMS Energy and Consumers charge the fair value of the restricted stock awards to expense over the required service period and charge the fair value of the restricted stock units to expense immediately. For performance-based awards, CMS Energy and Consumers estimate the number of shares expected to vest at the end of the performance period based on the probable achievement of the performance objective. Performance-based and market-based restricted stock awards have graded vesting features for retirement-eligible employees, and CMS Energy and Consumers recognize expense for those awards on a graded vesting schedule over the required service period. Expense for performance-based and market-based restricted stock awards for non‑retirement-eligible employees and time-lapse awards is recognized on a straight-line basis over the required service period. The fair value of performance-based and time-lapse restricted stock and restricted stock units is based on the price of CMS Energy’s common stock on the grant date. The fair value of market-based restricted stock awards is calculated on the grant date using a Monte Carlo simulation. CMS Energy and Consumers
base expected volatilities on the historical volatility of the price of CMS Energy common stock. The risk-free rate for valuation of the market-based restricted stock awards was based on the three-year U.S. Treasury yield at the award grant date.
Presented in the following table are the most importantsignificant assumptions used to estimate the fair value of the market-based restricted stock awards: | | | | | | | | Years Ended December 31 | 2019 |
| 2018 |
| 2017 |
| Expected volatility | 14.9 | % | 16.7 | % | 18.0 | % | Expected dividend yield | 2.8 |
| 2.8 |
| 3.0 |
| Risk-free rate | 2.5 |
| 2.1 |
| 1.5 |
|
| | | | | | | | | | | | Years Ended December 31 | 2021 | 2020 | 2019 | Expected volatility | 27.6 | % | 14.2 | % | 14.9 | % | Expected dividend yield | 2.8 | | 2.4 | | 2.8 | | Risk-free rate | 0.2 | | 1.6 | | 2.5 | |
Presented in the following table is the weighted-average grant-date fair value of all awards under the PISP: | | | | | | | | | | | | | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | CMS Energy, including Consumers | | | | | | | Weighted-average grant-date fair value per share | | | | | | | Restricted stock granted | | $ | 43.57 |
| | $ | 26.49 |
| | $ | 28.61 |
| Restricted stock units granted | | 50.35 |
| | 41.77 |
| | 41.98 |
| Consumers | | | | | | | Weighted-average grant-date fair value per share | | | | | | | Restricted stock granted | | $ | 43.57 |
| | $ | 26.51 |
| | $ | 28.67 |
| Restricted stock units granted | | 51.15 |
| | 42.01 |
| | 41.97 |
|
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | Weighted-average grant-date fair value per share | | | | | | | Restricted stock granted | | $ | 43.52 | | | $ | 45.56 | | | $ | 43.57 | | Restricted stock units granted | | 54.11 | | | 49.76 | | | 50.35 | | Consumers | | | | | | | Weighted-average grant-date fair value per share | | | | | | | Restricted stock granted | | $ | 42.85 | | | $ | 45.53 | | | $ | 43.57 | | Restricted stock units granted | | 53.93 | | | 49.70 | | | 51.15 | |
Presented in the following table are amounts related to restricted stock awards and restricted stock units: | | | | | | | | | | | | | | In Millions | | Years Ended December 31 | | 2019 |
| | 2018 |
| | 2017 |
| CMS Energy, including Consumers | | | | | | | Fair value of shares that vested during the year | | $ | 26 |
| | $ | 27 |
| | $ | 37 |
| Compensation expense recognized | | 22 |
| | 17 |
| | 17 |
| Income tax benefit recognized | | 1 |
| | 1 |
| | 7 |
| Consumers | | | | | | | Fair value of shares that vested during the year | | $ | 25 |
| | $ | 26 |
| | $ | 35 |
| Compensation expense recognized | | 21 |
| | 16 |
| | 16 |
| Income tax benefit recognized | | 1 |
| | 1 |
| | 7 |
|
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | Fair value of shares that vested during the year | | $ | 25 | | | $ | 22 | | | $ | 26 | | Compensation expense recognized | | 22 | | | 11 | | | 22 | | Income tax benefit recognized | | 1 | | | 3 | | | 1 | | Consumers | | | | | | | Fair value of shares that vested during the year | | $ | 24 | | | $ | 21 | | | $ | 25 | | Compensation expense recognized | | 21 | | | 10 | | | 21 | | Income tax benefit recognized | | 1 | | | 3 | | | 1 | |
At December 31, 2019, $21.72021, $24.1 million of total unrecognized compensation cost was related to restricted stock for CMS Energy, including Consumers, and $20.8$22.9 million of total unrecognized compensation cost was related to restricted stock for Consumers. CMS Energy and Consumers expect to recognize this cost over a weighted-average period of two years.
12: Income Taxes
CMS Energy and its subsidiaries file a consolidated U.S. federal income tax return as well as a Michigan Corporate Income Tax return for the unitary business group and various other state unitary group combined income tax returns. Income taxes are allocated based on each company’s separate taxable income in accordance with the CMS Energy tax sharing agreement. In December 2017, the TCJA was enacted, which changed existing federal tax law and included numerous provisions that affect businesses, with the primary impact being a reduction of the corporate tax rate from 35 percent to 21 percent.
Presented in the following table is the difference between actual income tax expense on continuing operations and income tax expense computed by applying the statutory U.S. federal income tax rate: | | | | | | | | | | | | | | | | | | | | | | | | | In Millions, Except Tax Rate | Years Ended December 31 | | 2021 | | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | | | | | Income from continuing operations before income taxes | | | | $ | 823 | | | | | $ | 809 | | | $ | 764 | | | | | | | | | | | | | Income tax expense at statutory rate | | | | 173 | | | | | 170 | | | 160 | | Increase (decrease) in income taxes from: | | | | | | | | | | | State and local income taxes, net of federal effect | | | | 39 | | | | | 44 | | | 46 | | TCJA excess deferred taxes1 | | | | (50) | | | | | (35) | | | (31) | | Production tax credits | | | | (40) | | | | | (28) | | | (20) | | Accelerated flow-through of regulatory tax benefits2 | | | | (28) | | | | | (13) | | | (13) | | Research and development tax credits, net3 | | | | (3) | | | | | (11) | | | (2) | | Refund of alternative minimum tax sequestration4 | | | | — | | | | | (9) | | | — | | Other, net | | | | 4 | | | | | (3) | | | (9) | | Income tax expense | | | | $ | 95 | | | | | $ | 115 | | | $ | 131 | | Effective tax rate | | | | 11.5 | % | | | | 14.2 | % | | 17.1 | % | Consumers | | | | | | | | | | | Income from continuing operations before income taxes | | | | $ | 1,024 | | | | | $ | 989 | | | $ | 928 | | | | | | | | | | | | | Income tax expense at statutory rate | | | | 215 | | | | | 208 | | | 195 | | Increase (decrease) in income taxes from: | | | | | | | | | | | State and local income taxes, net of federal effect | | | | 54 | | | | | 47 | | | 53 | | TCJA excess deferred taxes1 | | | | (50) | | | | | (35) | | | (31) | | | | | | | | | | | | | Accelerated flow-through of regulatory tax benefits2 | | | | (28) | | | | | (13) | | | (13) | | Production tax credits | | | | (33) | | | | | (19) | | | (12) | | Research and development tax credits, net3 | | | | (3) | | | | | (11) | | | (2) | | Other, net | | | | 1 | | | | | (4) | | | (5) | | Income tax expense | | | | $ | 156 | | | | | $ | 173 | | | $ | 185 | | Effective tax rate | | | | 15.2 | % | | | | 17.5 | % | | 19.9 | % |
| | | | | | | | | | | | | | In Millions, Except Tax Rate | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | CMS Energy, including Consumers | | | | | | | Income from continuing operations before income taxes | | $ | 829 |
| | $ | 774 |
| | $ | 886 |
| Income tax expense at statutory rate | | 174 |
| | 163 |
| | 310 |
| Increase (decrease) in income taxes from: | | | | | | | State and local income taxes, net of federal effect1 | | 48 |
| | 46 |
| | 26 |
| TCJA excess deferred taxes2 | | (31 | ) | | (26 | ) | | — |
| Production tax credits | | (20 | ) | | (14 | ) | | (8 | ) | Accelerated flow-through of regulatory tax benefits3 | | (13 | ) | | (39 | ) | | (39 | ) | Research and development tax credits, net4 | | (2 | ) | | (11 | ) | | (1 | ) | Impact of the TCJA5 | | — |
| | (4 | ) | | 148 |
| Other, net | | (9 | ) | | — |
| | (12 | ) | Income tax expense | | $ | 147 |
| | $ | 115 |
| | $ | 424 |
| Effective tax rate | | 17.7 | % | | 14.9 | % | | 47.9 | % | Consumers | | | | | | | Income from continuing operations before income taxes | | $ | 928 |
| | $ | 847 |
| | $ | 971 |
| Income tax expense at statutory rate | | 195 |
| | 178 |
| | 340 |
| Increase (decrease) in income taxes from: | | | | | | | State and local income taxes, net of federal effect1 | | 53 |
| | 51 |
| | 30 |
| TCJA excess deferred taxes2 | | (31 | ) | | (26 | ) | | — |
| Accelerated flow-through of regulatory tax benefits3 | | (13 | ) | | (39 | ) | | (39 | ) | Production tax credits | | (12 | ) | | (12 | ) | | (8 | ) | Research and development tax credits, net4 | | (2 | ) | | (11 | ) | | (1 | ) | Impact of the TCJA5 | | — |
| | 1 |
| | 33 |
| Other, net | | (5 | ) | | — |
| | (16 | ) | Income tax expense | | $ | 185 |
| | $ | 142 |
| | $ | 339 |
| Effective tax rate | | 19.9 | % | | 16.8 | % | | 34.9 | % |
1In September 2020, the MPSC authorized Consumers to accelerate the amortization of a regulatory liability associated with unprotected, non‑property-related excess deferred income taxes resulting from the TCJA. The regulatory liability, which was previously scheduled to be amortized through 2029, will now be fully amortized by the end of 2022. | | 12In September 2020, the MPSC authorized Consumers to accelerate the amortization of income tax benefits associated with the cost to remove gas plant assets. These tax benefits, which were previously scheduled to be amortized through 2025, will now be fully amortized by the end of 2022. | In 2017, CMS Energy completed the evaluation of its methodology for the state apportionment of Consumers’ electricity sales to MISO, taking into account recent state tax law developments in the electric utility sector. To recognize the anticipated refund and the impact of the expected lower effective tax rate on their deferred state tax liabilities, CMS Energy, including Consumers, recorded a $14 million income tax benefit in 2017. These tax benefits were net of reserves for uncertain tax positions and primarily |
attributable to Consumers. 3In 2018,March 2020, CMS Energy amendedfinalized a study of research and development tax credits for tax years 2012 through 2018. As a result, in 2020, CMS Energy, including Consumers, recognized a $9 million increase in the credit, net of reserves for uncertain tax positions. Of this amount, $8 million was recognized at Consumers.
4In January 2020, the IRS issued a decision restoring alternative minimum tax credit refunds sequestered in years prior to 2018. As a result, in 2020, CMS Energy recognized a $9 million income tax benefit for sequestered amounts related to its 2013 Michigan Corporate Income Tax return and submitted a refund claim for taxes previously paid. The refund claim was denied by the State of Michigan. In 2019,2017 tax return. CMS Energy received an unfavorable informal conference decision and filed a petition with the Michigan Tax Tribunal. A trial is anticipatedrefund in April 2020. CMS Energy’s uncertain tax position on this matter remains unchanged. | | 2
| In December 2017, Consumers remeasured its deferred tax assets and liabilities at the new federal tax rate enacted by the TCJA and recorded a net $1.6 billion regulatory liability. As a result of an order received in September 2019, Consumers began refunding these excess deferred taxes to customers. For additional details on the order received, see Note 3, Regulatory Matters.
|
| | 3
| In 2013, the MPSC issued an order authorizing Consumers to accelerate the flow-through to electric and gas customers of certain income tax benefits associated primarily with the cost of removal of plant placed in service before 1993. Consumers implemented this regulatory treatment beginning in 2014, with the electric portion ending in 2018 and the gas portion continuing through 2025. |
| | 4
| In March 2018, Consumers finalized a study of research and development tax credits for the tax years 2012 through 2016. As a result, Consumers recognized an $8 million increase in the credit, net of reserves for uncertain tax positions, at that time. |
| | 5
| In December 2017, CMS Energy and Consumers recorded a reasonable estimate to measure and account for the impact of the TCJA. In December 2018, CMS Energy recorded a true-up of their estimate and eliminated the $9 million valuation allowance on the sequestration of alternative minimum tax credits.
|
Presented in the following table are the significant components of income tax expense on continuing operations: | | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | CMS Energy, including Consumers | | | | | | | Current income taxes | | | | | | | Federal | | $ | (31 | ) | | $ | (67 | ) | | $ | — |
| State and local | | 28 |
| | — |
| | 6 |
| | | $ | (3 | ) | | $ | (67 | ) | | $ | 6 |
| Deferred income taxes | | | | | | | Federal | | $ | 97 |
| | $ | 112 |
| | $ | 368 |
| State and local | | 32 |
| | 58 |
| | 36 |
| | | $ | 129 |
| | $ | 170 |
| | $ | 404 |
| Deferred income tax credit | | 21 |
| | 12 |
| | 14 |
| Tax expense | | $ | 147 |
| | $ | 115 |
| | $ | 424 |
| Consumers | | | | | | | Current income taxes | | | | | | | Federal | | $ | 107 |
| | $ | 6 |
| | $ | 159 |
| State and local | | 41 |
| | 13 |
| | 17 |
| | | $ | 148 |
| | $ | 19 |
| | $ | 176 |
| Deferred income taxes | | | | | | | Federal | | $ | (10 | ) | | $ | 60 |
| | $ | 120 |
| State and local | | 26 |
| | 51 |
| | 29 |
| | | $ | 16 |
| | $ | 111 |
| | $ | 149 |
| Deferred income tax credit | | 21 |
| | 12 |
| | 14 |
| Tax expense | | $ | 185 |
| | $ | 142 |
| | $ | 339 |
|
For the year ended December 31, 2017, the impact of the TCJA was a $148 million increase in deferred income tax expense at CMS Energy, including Consumers, and a $33 million increase in deferred income tax expense at Consumers. The TCJA had no impact on current income tax expense in 2017.
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | Current income taxes | | | | | | | Federal | | $ | (1) | | | $ | (35) | | | $ | (31) | | State and local | | 1 | | | (2) | | | 28 | | | | $ | — | | | $ | (37) | | | $ | (3) | | Deferred income taxes | | | | | | | Federal | | 49 | | | 100 | | | 84 | | State and local | | 49 | | | 57 | | | 29 | | | | $ | 98 | | | $ | 157 | | | $ | 113 | | Deferred income tax credit | | (3) | | | (5) | | | 21 | | Tax expense | | $ | 95 | | | $ | 115 | | | $ | 131 | | Consumers | | | | | | | Current income taxes | | | | | | | Federal | | $ | (13) | | | $ | 3 | | | $ | 107 | | State and local | | 15 | | | (7) | | | 41 | | | | $ | 2 | | | $ | (4) | | | $ | 148 | | Deferred income taxes | | | | | | | Federal | | 103 | | | 115 | | | (10) | | State and local | | 54 | | | 67 | | | 26 | | | | $ | 157 | | | $ | 182 | | | $ | 16 | | Deferred income tax credit | | (3) | | | (5) | | | 21 | | Tax expense | | $ | 156 | | | $ | 173 | | | $ | 185 | |
Presented in the following table are the principal components of deferred income tax assets (liabilities) recognized: | | | | | | | | | | In Millions | | December 31 | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | Deferred income tax assets | | | | | Tax loss and credit carryforwards | | $ | 239 |
| | $ | 385 |
| Net regulatory tax liability | | 385 |
| | 395 |
| Reserves and accruals | | 43 |
| | 39 |
| Total deferred income tax assets | | $ | 667 |
| | $ | 819 |
| Valuation allowance | | (2 | ) | | (8 | ) | Total deferred income tax assets, net of valuation allowance | | $ | 665 |
| | $ | 811 |
| Deferred income tax liabilities | | | | | Plant, property, and equipment | | $ | (2,033 | ) | | $ | (1,955 | ) | Employee benefits | | (172 | ) | | (165 | ) | Securitized costs | | (59 | ) | | (65 | ) | Gas inventory | | (32 | ) | | (35 | ) | Other | | (24 | ) | | (78 | ) | Total deferred income tax liabilities | | $ | (2,320 | ) | | $ | (2,298 | ) | Total net deferred income tax liabilities | | $ | (1,655 | ) | | $ | (1,487 | ) | Consumers | | | | | Deferred income tax assets | | | | | Net regulatory tax liability | | $ | 385 |
| | $ | 395 |
| Tax loss and credit carryforwards | | 20 |
| | 64 |
| Reserves and accruals | | 24 |
| | 21 |
| Total deferred income tax assets | | $ | 429 |
| | $ | 480 |
| Deferred income tax liabilities | | | | | Plant, property, and equipment | | $ | (1,995 | ) | | $ | (1,943 | ) | Employee benefits | | (178 | ) | | (172 | ) | Securitized costs | | (59 | ) | | (65 | ) | Gas inventory | | (32 | ) | | (35 | ) | Other | | (29 | ) | | (74 | ) | Total deferred income tax liabilities | | $ | (2,293 | ) | | $ | (2,289 | ) | Total net deferred income tax liabilities | | $ | (1,864 | ) | | $ | (1,809 | ) |
| | | | | | | | | | | | | | | In Millions | December 31 | 2021 | 2020 | CMS Energy, including Consumers | | | | | Deferred income tax assets | | | | | Tax loss and credit carryforwards | | $ | 332 | | | $ | 483 | | Net regulatory tax liability | | 349 | | | 372 | | Reserves and accruals | | 32 | | | 62 | | Total deferred income tax assets | | $ | 713 | | | $ | 917 | | Valuation allowance | | (2) | | | (1) | | Total deferred income tax assets, net of valuation allowance | | $ | 711 | | | $ | 916 | | Deferred income tax liabilities | | | | | Plant, property, and equipment | | $ | (2,395) | | | $ | (2,287) | | Employee benefits | | (399) | | | (364) | | Securitized costs | | (46) | | | (53) | | Gas inventory | | (22) | | | (24) | | Other | | (59) | | | (51) | | Total deferred income tax liabilities | | $ | (2,921) | | | $ | (2,779) | | Total net deferred income tax liabilities | | $ | (2,210) | | | $ | (1,863) | | Consumers | | | | | Deferred income tax assets | | | | | Net regulatory tax liability | | $ | 349 | | | $ | 372 | | Tax loss and credit carryforwards | | 134 | | | 216 | | Reserves and accruals | | 24 | | | 24 | | | | | | | | | | | | Total deferred income tax assets | | $ | 507 | | | $ | 612 | | Deferred income tax liabilities | | | | | Plant, property, and equipment | | $ | (2,341) | | | $ | (2,230) | | Employee benefits | | (388) | | | (365) | | Securitized costs | | (46) | | | (53) | | Gas inventory | | (22) | | | (24) | | Other | | (50) | | | (34) | | Total deferred income tax liabilities | | $ | (2,847) | | | $ | (2,706) | | Total net deferred income tax liabilities | | $ | (2,340) | | | $ | (2,094) | |
Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary differences between the tax basis of assets or liabilities and the reported amounts on CMS Energy’s and Consumers’ consolidated financial statements.
Presented in the following table are the tax loss and credit carryforwards at December 31, 2019:2021: | | | | | | | | | | | In Millions | | Gross Amount | | Tax Attribute | | Expiration | CMS Energy, including Consumers | | | | | | Local net operating loss carryforwards | | $ | 389 |
| | $ | 4 |
| 2023 – 2036 | General business credits | | 206 |
| | 206 |
| 2026 – 2039 | Alternative minimum tax credits | | 29 |
| | 29 |
| Not applicable | Total tax attributes | | | | $ | 239 |
| | Consumers | | | | | | General business credits | | $ | 20 |
| | $ | 20 |
| 2027 – 2039 | Total tax attributes | | | | $ | 20 |
| |
| | | | | | | | | | | | | | In Millions | | | Tax Attribute | Expiration | CMS Energy, including Consumers | | | | | | Federal net operating loss carryforwards | | | | $ | 3 | | None | State net operating loss carryforwards | | | | 55 | | 2030 | Local net operating loss carryforwards | | | | 3 | | 2024 – 2040 | General business credits | | | | 264 | | 2034 – 2041 | | | | | | | Federal charitable contribution carryforwards | | | | 6 | | 2025 | State charitable contribution carryforwards | | | | 1 | | 2025 | Total tax attributes | | | | $ | 332 | | | Consumers | | | | | | Federal net operating loss carryforwards | | | | $ | 2 | | None | State net operating loss carryforwards | | | | 43 | | 2030 | | | | | | | General business credits | | | | 83 | | 2034-2041 | Federal charitable contribution carryforwards | | | | 5 | | 2025 | State charitable contribution carryforwards | | | | 1 | | 2025 | Total tax attributes | | | | $ | 134 | | |
CMS Energy has provided a valuation allowance of $2 million for the local tax loss carryforward. The TCJA repealed the corporate alternative minimum tax and requires companies to recover (through offsets of regular tax and through cash refunds) all alternative minimum tax credits over the four-year period ending in 2021. Therefore, for the year ended December 31, 2019, CMS Energy reclassified $31 million of alternative minimum tax credits to a current receivable. CMS Energy and Consumers expect to utilize fully their tax loss and credit carryforwards for which no valuation allowance has been provided. It is reasonably possible that further adjustments will be made to the valuation allowances within one year. In 2021, the sale of EnerBank to Regions Bank resulted in utilization of most of the federal net operating loss carryforwards. EnerBank is not included in CMS Energy’s Michigan tax filing, therefore state net operating loss carryforwards were not impacted by the sale of EnerBank. Presented in the following table is a reconciliation of the beginning and ending amount of uncertain tax benefits: | | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | Balance at beginning of period | | $ | 25 | | | $ | 23 | | | $ | 19 | | Additions for current-year tax positions | | 2 | | | 1 | | | 1 | | Additions for prior-year tax positions | | — | | | 3 | | | 3 | | Reductions for prior-year tax positions | | — | | | (2) | | | — | | | | | | | | | Balance at end of period | | $ | 27 | | | $ | 25 | | | $ | 23 | | Consumers | | | | | | | Balance at beginning of period | | $ | 31 | | | $ | 34 | | | $ | 28 | | Additions for current-year tax positions | | 3 | | | 1 | | | 1 | | Additions for prior-year tax positions | | — | | | 4 | | | 5 | | Reductions for prior-year tax positions | | — | | | (8) | | | — | | | | | | | | | Balance at end of period | | $ | 34 | | | $ | 31 | | | $ | 34 | |
| | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | CMS Energy, including Consumers | | | | | | | Balance at beginning of period | | $ | 19 |
| | $ | 14 |
| | $ | 5 |
| Additions for current-year tax positions | | 1 |
| | 1 |
| | 10 |
| Additions for prior-year tax positions | | 3 |
| | 4 |
| | — |
| Reductions for prior-year tax positions | | — |
| | — |
| | (1 | ) | Balance at end of period | | $ | 23 |
| | $ | 19 |
| | $ | 14 |
| Consumers | | | | | | | Balance at beginning of period | | $ | 28 |
| | $ | 21 |
| | $ | 5 |
| Additions for current-year tax positions | | 1 |
| | 2 |
| | 17 |
| Additions for prior-year tax positions | | 5 |
| | 5 |
| | — |
| Reductions for prior-year tax positions | | — |
| | — |
| | (1 | ) | Balance at end of period | | $ | 34 |
| | $ | 28 |
| | $ | 21 |
|
If recognized, all of these uncertain tax benefits would affect CMS Energy’s and Consumers’ annual effective tax rates in future years. A trial is anticipated in 2022 with the Michigan Tax Tribunal related to the methodology of state apportionment for Consumers’ electricity sales to MISO; however, a final conclusion is not anticipated in the next 12 months. CMS Energy and Consumers recognize accrued interest and penalties, where applicable, as part of income tax expense. CMS Energy, including Consumers, recognized 0no interest or penalties for each of the years ended December 31, 2019, 2018,2021, 2020, or 2017.
2019.
The amount of income taxes paid is subject to ongoing audits by federal, state, local, and foreign tax authorities, which can result in proposed assessments. CMS Energy’s federal income tax returns for 20162018 and subsequent years remain subject to examination by the IRS. CMS Energy’s Michigan Corporate Income Tax returns for 2013 and subsequent years remain subject to examination by the State of Michigan. CMS Energy’s and Consumers’ estimate of the potential outcome for any uncertain tax issue is highly judgmental. CMS Energy and Consumers believe that their accrued tax liabilities at December 31, 20192021 were adequate for all years. | | 15: | Earnings Per Share—CMS Energy |
13: Earnings Per Share—CMS Energy Presented in the following table are CMS Energy’s basic and diluted EPS computations based on net income:income from continuing operations: | | | | | | | | | | | | | | In Millions, Except Per Share Amounts | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Income available to common stockholders | | | | | | | Net income | | $ | 682 |
| | $ | 659 |
| | $ | 462 |
| Less income attributable to noncontrolling interests | | 2 |
| | 2 |
| | 2 |
| Net income available to common stockholders – basic and diluted | | $ | 680 |
| | $ | 657 |
| | $ | 460 |
| Average common shares outstanding | | | | | | | Weighted-average shares – basic | | 283.0 |
| | 282.2 |
| | 280.0 |
| Add dilutive nonvested stock awards | | 0.7 |
| | 0.7 |
| | 0.8 |
| Add dilutive forward equity sale contracts | | 0.6 |
| | — |
| | — |
| Weighted-average shares – diluted | | 284.3 |
| | 282.9 |
| | 280.8 |
| Net income per average common share available to common stockholders | | | | | | | Basic | | $ | 2.40 |
| | $ | 2.33 |
| | $ | 1.64 |
| Diluted | | 2.39 |
| | 2.32 |
| | 1.64 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | In Millions, Except Per Share Amounts | | | | | Years Ended December 31 | | | | 2021 | 2020 | 2019 | Income available to common stockholders | | | | | | | | | | | | Income from continuing operations | | | | | | | $ | 728 | | | $ | 694 | | | $ | 633 | | Less income (loss) attributable to noncontrolling interests | | | | | | | (23) | | | (3) | | | 2 | | Less preferred stock dividends | | | | | | | 5 | | | — | | | — | | Income from continuing operations available to common stockholders – basic and diluted | | | | | | | $ | 746 | | | $ | 697 | | | $ | 631 | | Average common shares outstanding | | | | | | | | | | | | Weighted-average shares – basic | | | | | | | 289.0 | | | 285.0 | | | 283.0 | | Add dilutive nonvested stock awards | | | | | | | 0.5 | | | 0.7 | | | 0.7 | | Add dilutive forward equity sale contracts | | | | | | | — | | | 0.6 | | | 0.6 | | Weighted-average shares – diluted | | | | | | | 289.5 | | | 286.3 | | | 284.3 | | Income from continuing operations per average common share available to common stockholders | | | | | | | | | | | | Basic | | | | | | | $ | 2.58 | | | $ | 2.45 | | | $ | 2.23 | | Diluted | | | | | | | 2.58 | | | 2.44 | | | 2.22 | |
Nonvested Stock Awards CMS Energy’s nonvested stock awards are composed of participating and non‑participating securities. The participating securities accrue cash dividends when common stockholders receive dividends. Since the recipient is not required to return the dividends to CMS Energy if the recipient forfeits the award, the nonvested stock awards are considered participating securities. As such, the participating nonvested stock awards were included in the computation of basic EPS. The non‑participating securities accrue stock dividends that vest concurrently with the stock award. If the recipient forfeits the award, the stock dividends accrued on the non‑participating securities are also forfeited. Accordingly, the non‑participating
awards and stock dividends were included in the computation of diluted EPS, but not in the computation of basic EPS. Forward Equity Sale Contracts In November 2018 and February 2019, CMS Energy has entered into forward equity sale contracts. These forward equity sale contracts are non‑participating securities. While the forward sale price in the forward equity sale contract is decreased on certain dates by certain predetermined amounts to reflect expected dividend payments, these price adjustments were set upon inception of the agreement and the forward contract does not give the owner the right to participate in undistributed earnings. Accordingly, the forward equity sale contracts were included in the computation of diluted EPS, but not in the computation
of basic EPS. For further details on the forward equity sale contracts, see Note 5,4, Financings and Capitalization.
14: Revenue Presented in the following tables are the components of operating revenue: | | In Millions | In Millions | | In Millions | Year Ended December 31, 2019 | Electric Utility | | Gas Utility | | Enterprises1 | | EnerBank | | Consolidated | | | Year Ended December 31, 2021 | | Year Ended December 31, 2021 | Electric Utility | Gas Utility | Enterprises1 | | Consolidated | CMS Energy, including Consumers | CMS Energy, including Consumers | CMS Energy, including Consumers | Consumers utility revenue | | $ | 4,407 |
| | $ | 1,922 |
| | $ | — |
| | $ | — |
| | $ | 6,329 |
| Consumers utility revenue | | $ | 4,915 | | | $ | 2,046 | | | $ | — | | | | $ | 6,961 | | Other | | — |
| | — |
| | 74 |
| | — |
| | 74 |
| Other | | — | | | — | | | 114 | | | | 114 | | Revenue recognized from contracts with customers | | $ | 4,407 |
| | $ | 1,922 |
| | $ | 74 |
| | $ | — |
| | $ | 6,403 |
| Revenue recognized from contracts with customers | | $ | 4,915 | | | $ | 2,046 | | | $ | 114 | | | | $ | 7,075 | | Leasing income | | — |
| | — |
| | 174 |
| | — |
| | 174 |
| Leasing income | | — | | | — | | | 194 | | | | 194 | | Financing income | | 9 |
| | 5 |
| | — |
| | 221 |
| | 235 |
| Financing income | | 10 | | | 5 | | | — | | | | 15 | | Consumers alternative-revenue programs | | 23 |
| | 10 |
| | — |
| | — |
| | 33 |
| Consumers alternative-revenue programs | | 33 | | | 12 | | | — | | | | 45 | | | Total operating revenue – CMS Energy | | $ | 4,439 |
| | $ | 1,937 |
| | $ | 248 |
| | $ | 221 |
| | $ | 6,845 |
| Total operating revenue – CMS Energy | | $ | 4,958 | | | $ | 2,063 | | | $ | 308 | | | | $ | 7,329 | | Consumers | Consumers | Consumers | Consumers utility revenue | | | | | | | | | | | Consumers utility revenue | | | | Residential | | $ | 1,988 |
| | $ | 1,316 |
| | $ | — |
| | $ | — |
| | $ | 3,304 |
| Residential | | $ | 2,402 | | | $ | 1,396 | | | | | $ | 3,798 | | Commercial | | 1,502 |
| | 372 |
| | — |
| | — |
| | 1,874 |
| Commercial | | 1,573 | | | 396 | | | | | 1,969 | | Industrial | | 669 |
| | 51 |
| | — |
| | — |
| | 720 |
| Industrial | | 624 | | | 54 | | | | | 678 | | Other | | 248 |
| | 183 |
| | — |
| | — |
| | 431 |
| Other | | 316 | | | 200 | | | | | 516 | | Revenue recognized from contracts with customers | | $ | 4,407 |
| | $ | 1,922 |
| | $ | — |
| | $ | — |
| | $ | 6,329 |
| Revenue recognized from contracts with customers | | $ | 4,915 | | | $ | 2,046 | | | | | $ | 6,961 | | | Financing income | | 9 |
| | 5 |
| | — |
| | — |
| | 14 |
| Financing income | | 10 | | | 5 | | | | | 15 | | Alternative-revenue programs | | 23 |
| | 10 |
| | — |
| | — |
| | 33 |
| Alternative-revenue programs | | 33 | | | 12 | | | | | 45 | | | Total operating revenue – Consumers | | $ | 4,439 |
| | $ | 1,937 |
| | $ | — |
| | $ | — |
| | $ | 6,376 |
| Total operating revenue – Consumers | | $ | 4,958 | | | $ | 2,063 | | | | | $ | 7,021 | |
| | 11Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. | Amounts represent the enterprises segment’s operating revenue from independent power production and CMS ERM’s sales of energy commodities in support of the independent power production portfolio. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | Year Ended December 31, 2020 | Electric Utility | Gas Utility | Enterprises1 | | Consolidated | CMS Energy, including Consumers | Consumers utility revenue | | $ | 4,348 | | | $ | 1,809 | | | $ | — | | | | | $ | 6,157 | | Other | | — | | | — | | | 81 | | | | | 81 | | Revenue recognized from contracts with customers | | $ | 4,348 | | | $ | 1,809 | | | $ | 81 | | | | | $ | 6,238 | | Leasing income | | — | | | — | | | 148 | | | | | 148 | | Financing income | | 11 | | | 6 | | | — | | | | | 17 | | Consumers alternative-revenue programs | | 29 | | | 14 | | | — | | | | | 43 | | Consumers revenues to be refunded | | (16) | | | (12) | | | — | | | | | (28) | | Total operating revenue – CMS Energy | | $ | 4,372 | | | $ | 1,817 | | | $ | 229 | | | | | $ | 6,418 | | Consumers | Consumers utility revenue | | | | | | | | | | | Residential | | $ | 2,109 | | | $ | 1,232 | | | | | | | $ | 3,341 | | Commercial | | 1,444 | | | 337 | | | | | | | 1,781 | | Industrial | | 570 | | | 46 | | | | | | | 616 | | Other | | 225 | | | 194 | | | | | | | 419 | | Revenue recognized from contracts with customers | | $ | 4,348 | | | $ | 1,809 | | | | | | | $ | 6,157 | | | | | | | | | | | | | Financing income | | 11 | | | 6 | | | | | | | 17 | | Alternative-revenue programs | | 29 | | | 14 | | | | | | | 43 | | Revenues to be refunded | | (16) | | | (12) | | | | | | | (28) | | Total operating revenue – Consumers | | $ | 4,372 | | | $ | 1,817 | | | | | | | $ | 6,189 | |
1Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. | | | | | | | | | | | | | | | | | | | | | | In Millions | | Year Ended December 31, 2018 | Electric Utility | | Gas Utility | | Enterprises1 | | EnerBank | | Consolidated | | CMS Energy, including Consumers | Consumers utility revenue | | $ | 4,528 |
| | $ | 1,882 |
| | $ | — |
| | $ | — |
| | $ | 6,410 |
| Other | | — |
| | — |
| | 92 |
| | — |
| | 92 |
| Revenue recognized from contracts with customers | | $ | 4,528 |
| | $ | 1,882 |
| | $ | 92 |
| | $ | — |
| | $ | 6,502 |
| Leasing income | | — |
| | — |
| | 160 |
| | — |
| | 160 |
| Financing income | | 10 |
| | 5 |
| | — |
| | 157 |
| | 172 |
| Consumers alternative-revenue programs | | 23 |
| | 16 |
| | — |
| | — |
| | 39 |
| Total operating revenue – CMS Energy | | $ | 4,561 |
| | $ | 1,903 |
| | $ | 252 |
| | $ | 157 |
| | $ | 6,873 |
| Consumers | Consumers utility revenue | | | | | | | | | | | Residential | | $ | 2,049 |
| | $ | 1,284 |
| | $ | — |
| | $ | — |
| | $ | 3,333 |
| Commercial | | 1,545 |
| | 367 |
| | — |
| | — |
| | 1,912 |
| Industrial | | 674 |
| | 55 |
| | — |
| | — |
| | 729 |
| Other | | 260 |
| | 176 |
| | — |
| | — |
| | 436 |
| Revenue recognized from contracts with customers | | $ | 4,528 |
| | $ | 1,882 |
| | $ | — |
| | $ | — |
| | $ | 6,410 |
| Financing income | | 10 |
| | 5 |
| | — |
| | — |
| | 15 |
| Alternative-revenue programs | | 23 |
| | 16 |
| | — |
| | ��� |
| | 39 |
| Total operating revenue – Consumers | | $ | 4,561 |
| | $ | 1,903 |
| | $ | — |
| | $ | — |
| | $ | 6,464 |
|
161
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | Year Ended December 31, 2019 | Electric Utility | Gas Utility | Enterprises1 | | | Consolidated | CMS Energy, including Consumers | Consumers utility revenue | | $ | 4,407 | | | $ | 1,922 | | | $ | — | | | | | | | $ | 6,329 | | Other | | — | | | — | | | 74 | | | | | | | 74 | | Revenue recognized from contracts with customers | | $ | 4,407 | | | $ | 1,922 | | | $ | 74 | | | | | | | $ | 6,403 | | Leasing income | | — | | | — | | | 174 | | | | | | | 174 | | Financing income | | 9 | | | 5 | | | — | | | | | | | 14 | | Consumers alternative-revenue programs | | 23 | | | 10 | | | — | | | | | | | 33 | | | | | | | | | | | | | | | Total operating revenue – CMS Energy | | $ | 4,439 | | | $ | 1,937 | | | $ | 248 | | | | | | | $ | 6,624 | | Consumers | Consumers utility revenue | | | | | | | | | | | | | Residential | | $ | 1,988 | | | $ | 1,316 | | | | | | | | | $ | 3,304 | | Commercial | | 1,502 | | | 372 | | | | | | | | | 1,874 | | Industrial | | 669 | | | 51 | | | | | | | | | 720 | | Other | | 248 | | | 183 | | | | | | | | | 431 | | Revenue recognized from contracts with customers | | $ | 4,407 | | | $ | 1,922 | | | | | | | | | $ | 6,329 | | | | | | | | | | | | | | | Financing income | | 9 | | | 5 | | | | | | | | | 14 | | Alternative-revenue programs | | 23 | | | 10 | | | | | | | | | 33 | | | | | | | | | | | | | | | Total operating revenue – Consumers | | $ | 4,439 | | | $ | 1,937 | | | | | | | | | $ | 6,376 | |
1Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. 1
| Amounts represent the enterprises segment’s operating revenue from independent power production and CMS ERM’s sales of energy commodities in support of the independent power production portfolio. |
Electric and Gas Utilities Consumers Utility Revenue: Consumers recognizes revenue primarily from the sale of electric and gas utility services at tariff-based rates regulated by the MPSC. Consumers’ customer base consists of a mix of residential, commercial, and diversified industrial customers. Consumers’ tariff-based sales performance obligations are described below. •Consumers has performance obligations for the service of standing ready to deliver electricity or natural gas to customers, and it satisfies these performance obligations over time. Consumers recognizes revenue at a fixed rate as it provides these services. These arrangements generally do not have fixed terms and remain in effect as long as the customer consumes the utility service. The rates are set by the MPSC through the rate-making process and represent the stand-alone selling price of Consumers’ service to stand ready to deliver. •Consumers has performance obligations for the service of delivering the commodity of electricity or natural gas to customers, and it satisfies these performance obligations upon delivery. Consumers recognizes revenue at a price per unit of electricity or natural gas delivered, based on the tariffs established by the MPSC. These arrangements generally do not have fixed terms and remain in effect as long as the customer consumes the utility service. The rates are set by the MPSC through the rate-making process and represent the stand-alone selling price of a bundled product comprising the commodity, electricity or natural gas, and the service of delivering such commodity.
In some instances, Consumers has specific fixed-term contracts with large commercial and industrial customers to provide electricity or gas at certain tariff rates or to provide gas transportation services at contracted rates. The amount of electricity and gas to be delivered under these contracts and the associated future revenue to be received are generally dependent on the customers’ needs. Accordingly, Consumers recognizes revenues at the tariff or contracted rate as electricity or gas is delivered to the customer. Consumers also has other miscellaneous contracts with customers related to pole and other property rentals, appliance service plans, and utility contract work. Generally, these contracts are short term or evergreen in nature. Accounts Receivable and Unbilled Revenues: Accounts receivable comprise trade receivables and unbilled receivables. CMS Energy and Consumers record their accounts receivable at cost which approximates fair value.less an allowance for uncollectible accounts. The allowance is increased for uncollectible accounts expense and decreased for account write-offs net of recoveries. CMS Energy and Consumers establish anthe allowance for uncollectible accounts based on historical losses, management’s assessment of existing economic conditions, customer payment trends, and other factors.reasonable and supported forecast information. CMS Energy and Consumers assess late payment fees on trade receivables based on contractual past-due terms established with customers. Accounts are written off when deemed uncollectible, which is generally when they become six months past due. CMS Energy and Consumers charge offrecorded uncollectible accounts deemed uncollectible to operating expense. Uncollectible expense for CMS Energy and Consumers was $29of $22 million for the year ended December 31, 20192021, $33 million for the year ended December 31, 2020, and $29 million for the year ended December 31, 2018.2019. Consumers’ customers are billed monthly in cycles having billing dates that do not generally coincide with the end of a calendar month. This results in customers having received electricity or natural gas that they have not been billed for as of the month-end. Consumers estimates its unbilled revenues by applying an average billed rate to total unbilled deliveries for each customer class. Unbilled revenues, which are recorded as accounts receivable and accrued revenue on CMS Energy’s and Consumers’ consolidated balance sheets, were $426$486 million at December 31, 20192021 and $409$437 million at December 31, 2018.2020. Alternative‑Revenue Programs: TheConsumers accounts for its energy waste reduction incentive mechanism provides aand financial incentive if the energy savings of Consumers’ customers exceed annual targets established by the MPSC.compensation mechanism as alternative-revenue programs. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizingrecognizes revenue related to the energy waste reduction incentive as soon as energy savings exceed the annual targets established by the MPSC.MPSC and recognizes revenue related to the financial compensation mechanism as payments are made on MPSC-approved PPAs. For additional information on these mechanisms, see Note 2, Regulatory Matters. Under a gas revenue decoupling mechanism authorized by the MPSC, Consumers is allowed to adjust future gas rates for differences between Consumers’ actual weather‑normalized, non‑fuel revenues and the revenues approved by the MPSC. Consumers accounts for this program as an alternative‑revenue program that meets the criteria for recognizing the effects of decoupling adjustments on revenue as gas is delivered. Consumers does not reclassify revenue from its alternative-revenue program to revenue from contracts with customers at the time the amounts are collected from customers.
Revenues to Be Refunded: In December 2020, the MPSC issued an order authorizing Consumers to refund $28 million voluntarily to utility customers. For additional information, see Note 2, Regulatory Matters.
165
15: Other Income and Other Expense
| | 17: | Other Income and Other Expense |
Other income was not significant for any of the periods presented except for a $14 million gain on the sale of CMS Energy common stock by Consumers in 2017. This gain was eliminated on CMS Energy’s consolidated statements of income. presented. Presented in the following table are the components of other expense at CMS Energy and Consumers: | | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | CMS Energy, including Consumers | | | | | | | Donations | | $ | (3 | ) | | $ | (13 | ) | | $ | (31 | ) | Civic and political expenditures | | (6 | ) | | (6 | ) | | (27 | ) | Loss on reacquired and extinguished debt | | — |
| | (16 | ) | | (18 | ) | All other | | (4 | ) | | (13 | ) | | — |
| Total other expense – CMS Energy | | $ | (13 | ) | | $ | (48 | ) | | $ | (76 | ) | Consumers | | | | | | | Donations | | $ | (3 | ) | | $ | (13 | ) | | $ | (31 | ) | Civic and political expenditures | | (6 | ) | | (6 | ) | | (27 | ) | All other | | (4 | ) | | (11 | ) | | — |
| Total other expense – Consumers | | $ | (13 | ) | | $ | (30 | ) | | $ | (58 | ) |
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other expense | | | | | | | Donations | | $ | (6) | | | $ | (35) | | | $ | (3) | | Civic and political expenditures | | (5) | | | (5) | | | (6) | | Loss on reacquired and extinguished debt | | — | | | (16) | | | — | | | | | | | | | All other | | (7) | | | (6) | | | (4) | | Total other expense – CMS Energy | | $ | (18) | | | $ | (62) | | | $ | (13) | | Consumers | | | | | | | Other expense | | | | | | | Donations | | $ | (6) | | | $ | (33) | | | $ | (3) | | Civic and political expenditures | | (5) | | | (5) | | | (6) | | | | | | | | | All other | | (7) | | | (5) | | | (4) | | Total other expense – Consumers | | $ | (18) | | | $ | (43) | | | $ | (13) | |
| | 18: | Cash and Cash Equivalents |
16: Cash and Cash Equivalents Presented in the following table are the components of total cash and cash equivalents, including restricted amounts, and their location on CMS Energy’s and Consumers’ consolidated balance sheets: | | | | | | | | | | In Millions | | December 31 | 2019 | | 2018 | | CMS Energy, including Consumers | | | | | Cash and cash equivalents | | $ | 140 |
| | $ | 153 |
| Restricted cash and cash equivalents | | 17 |
| | 21 |
| Other non‑current assets | | — |
| | 1 |
| Cash and cash equivalents, including restricted amounts | | $ | 157 |
| | $ | 175 |
| Consumers | | | | | Cash and cash equivalents | | $ | 11 |
| | $ | 39 |
| Restricted cash and cash equivalents | | 17 |
| | 17 |
| Cash and cash equivalents, including restricted amounts | | $ | 28 |
| | $ | 56 |
|
| | | | | | | | | | | | | | | In Millions | December 31 | 2021 | 2020 | CMS Energy, including Consumers | | | | | Cash and cash equivalents | | $ | 452 | | | $ | 32 | | Restricted cash and cash equivalents | | 24 | | | 17 | | Current assets held for sale | | — | | | 136 | | Cash and cash equivalents, including restricted amounts – CMS Energy | | $ | 476 | | | $ | 185 | | Consumers | | | | | Cash and cash equivalents | | $ | 22 | | | $ | 20 | | Restricted cash and cash equivalents | | 22 | | | 15 | | Cash and cash equivalents, including restricted amounts – Consumers | | $ | 44 | | | $ | 35 | |
Cash and Cash Equivalents: Cash and cash equivalents include short-term, highly liquid investments with original maturities of three months or less. Restricted Cash and Cash Equivalents: Restricted cash and cash equivalents are held primarily for the repayment of securitization bonds and funds held in escrow. Cash and cash equivalents may also be restricted to pay other contractual obligations such as leasing of coal railcars. These amounts are classified as current assets since they relate to payments that could or will occur within one year.
Current Assets Held for Sale: On October 1, 2021, EnerBank was acquired by Regions Bank. EnerBank’s cash and cash equivalents are presented as assets held for sale on CMS Energy’s consolidated balance sheets at December 31, 2020. For information regarding the sale of EnerBank, see Note 20, Exit Activities and Discontinued Operations.
17: Reportable Segments Reportable segments consist of business units defined by the products and services they offer. CMS Energy and Consumers evaluate the performance of each segment based on its contribution to net income available to CMS Energy’s common stockholders. Accounting policies for CMS Energy’s and Consumers’ segments are as described in Note 1, Significant Accounting Policies. The consolidated financial statements reflect the assets, liabilities, revenues, and expenses of the individual segments when appropriate. Accounts are allocated among the segments when common accounts are attributable to more than one segment. The allocations are based on certain measures of business activities, such as revenue, labor dollars, customers, other operating and maintenance expense, construction expense, leased property, taxes, or functional surveys. For example, customer receivables are allocated based on revenue, and pension provisions are allocated based on labor dollars. Inter-segment sales and transfers are accounted for at current market prices and are eliminated in consolidated net income available to common stockholders by segment. Inter-segment sales and transfers were immaterial for all periods presented. CMS Energy The segments reported for CMS Energy are: •electric utility, consisting of regulated activities associated with the generation, purchase, transmission, distribution, and sale of electricity in Michigan •gas utility, consisting of regulated activities associated with the purchase, transmission, storage, distribution, and sale of natural gas in Michigan •enterprises, consisting of various subsidiaries engaging in domestic independent power production, including the development and operation of renewable generation, and the marketing of independent power production On October 1, 2021, EnerBank was acquired by Regions Bank. As a Utah state-chartered, FDIC-insured industrial bank providing unsecured consumer installment loans, largelyresult, EnerBank is no longer included in the composition of CMS Energy’s reportable segments. EnerBank’s results of operations through the date of the sale are presented as income from discontinued operations on CMS Energy’s consolidated statements of income for financing home improvementsthe years ended December 31, 2021, 2020, and 2019. The assets and liabilities of EnerBank are presented as held for sale on CMS Energy’s consolidated balance sheet at December 31, 2020. For information regarding the sale of EnerBank, see Note 20, Exit Activities and Discontinued Operations. CMS Energy presents corporate interest and other expenses, discontinued operations, and Consumers’ other consolidated entities within other reconciling items. In 2019, EnerBank’s assets exceeded ten percentBeginning in 2021, CMS Land, which holds the environmental remediation obligations at Bay Harbor, will be included within other reconciling items rather than within the enterprises segment. This change was not material and was made to align segment reporting with the legal organization and internal reporting of CMS Energy’s consolidated assets.Energy.
Consumers The segments reported for Consumers are: •electric utility, consisting of regulated activities associated with the generation, purchase, transmission, distribution, and sale of electricity in Michigan •gas utility, consisting of regulated activities associated with the purchase, transmission, storage, distribution, and sale of natural gas in Michigan Consumers’ other consolidated entities are presented within other reconciling items.
Presented in the following tables is financial information by segment: | | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | CMS Energy, including Consumers | | | | | | | Operating revenue | | | | | | | Electric utility | | $ | 4,439 |
| | $ | 4,561 |
| | $ | 4,448 |
| Gas utility | | 1,937 |
| | 1,903 |
| | 1,774 |
| Enterprises | | 248 |
| | 252 |
| | 229 |
| EnerBank | | 221 |
| | 157 |
| | 132 |
| Total operating revenue – CMS Energy | | $ | 6,845 |
| | $ | 6,873 |
| | $ | 6,583 |
| Consumers | | | | | | | Operating revenue | | | | | | | Electric utility | | $ | 4,439 |
| | $ | 4,561 |
| | $ | 4,448 |
| Gas utility | | 1,937 |
| | 1,903 |
| | 1,774 |
| Total operating revenue – Consumers | | $ | 6,376 |
| | $ | 6,464 |
| | $ | 6,222 |
| CMS Energy, including Consumers | | | | | | | Depreciation and amortization | | | | | | | Electric utility | | $ | 713 |
| | $ | 682 |
| | $ | 654 |
| Gas utility | | 261 |
| | 239 |
| | 218 |
| Enterprises | | 14 |
| | 8 |
| | 6 |
| EnerBank | | 3 |
| | 4 |
| | 3 |
| Other reconciling items | | 1 |
| | — |
| | — |
| Total depreciation and amortization – CMS Energy | | $ | 992 |
| | $ | 933 |
| | $ | 881 |
| Consumers | | | | | | | Depreciation and amortization | | | | | | | Electric utility | | $ | 713 |
| | $ | 682 |
| | $ | 654 |
| Gas utility | | 261 |
| | 239 |
| | 218 |
| Other reconciling items | | 1 |
| | — |
| | — |
| Total depreciation and amortization – Consumers | | $ | 975 |
| | $ | 921 |
| | $ | 872 |
| CMS Energy, including Consumers | | | | | | | Income from equity method investees¹ | | | | | | | Enterprises | | $ | 10 |
| | $ | 9 |
| | $ | 15 |
| Total income from equity method investees – CMS Energy | | $ | 10 |
| | $ | 9 |
| | $ | 15 |
| CMS Energy, including Consumers | | | | | | | Interest charges | | | | | | | Electric utility | | $ | 213 |
| | $ | 209 |
| | $ | 201 |
| Gas utility | | 83 |
| | 79 |
| | 74 |
| Enterprises | | 7 |
| | 2 |
| | — |
| EnerBank | | 59 |
| | 32 |
| | 19 |
| Other reconciling items | | 157 |
| | 136 |
| | 144 |
| Total interest charges – CMS Energy | | $ | 519 |
| | $ | 458 |
| | $ | 438 |
|
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | Operating revenue | | | | | | | Electric utility | | $ | 4,958 | | | $ | 4,372 | | | $ | 4,439 | | Gas utility | | 2,063 | | | 1,817 | | | 1,937 | | Enterprises | | 308 | | | 229 | | | 248 | | | | | | | | | | | | | | | | Total operating revenue – CMS Energy | | $ | 7,329 | | | $ | 6,418 | | | $ | 6,624 | | Consumers | | | | | | | Operating revenue | | | | | | | Electric utility | | $ | 4,958 | | | $ | 4,372 | | | $ | 4,439 | | Gas utility | | 2,063 | | | 1,817 | | | 1,937 | | | | | | | | | Total operating revenue – Consumers | | $ | 7,021 | | | $ | 6,189 | | | $ | 6,376 | | CMS Energy, including Consumers | | | | | | | Depreciation and amortization | | | | | | | Electric utility | | $ | 772 | | | $ | 739 | | | $ | 713 | | Gas utility | | 304 | | | 283 | | | 261 | | Enterprises | | 37 | | | 20 | | | 14 | | | | | | | | | Other reconciling items | | 1 | | | 1 | | | 1 | | Total depreciation and amortization – CMS Energy | | $ | 1,114 | | | $ | 1,043 | | | $ | 989 | | Consumers | | | | | | | Depreciation and amortization | | | | | | | Electric utility | | $ | 772 | | | $ | 739 | | | $ | 713 | | Gas utility | | 304 | | | 283 | | | 261 | | Other reconciling items | | 1 | | | 1 | | | 1 | | Total depreciation and amortization – Consumers | | $ | 1,077 | | | $ | 1,023 | | | $ | 975 | |
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | Income from equity method investees1 | | | | | | | Enterprises | | $ | 10 | | | $ | 5 | | | $ | 10 | | | | | | | | | Total income from equity method investees – CMS Energy | | $ | 10 | | | $ | 5 | | | $ | 10 | | CMS Energy, including Consumers | | | | | | | Interest charges | | | | | | | Electric utility | | $ | 207 | | | $ | 217 | | | $ | 213 | | Gas utility | | 104 | | | 102 | | | 83 | | Enterprises | | 6 | | | 7 | | | 7 | | | | | | | | | Other reconciling items | | 183 | | | 179 | | | 157 | | Total interest charges – CMS Energy | | $ | 500 | | | $ | 505 | | | $ | 460 | | Consumers | | | | | | | Interest charges | | | | | | | Electric utility | | $ | 207 | | | $ | 217 | | | $ | 213 | | Gas utility | | 104 | | | 102 | | | 83 | | Other reconciling items | | — | | | 1 | | | 1 | | Total interest charges – Consumers | | $ | 311 | | | $ | 320 | | | $ | 297 | | CMS Energy, including Consumers | | | | | | | Income tax expense (benefit) | | | | | | | Electric utility | | $ | 117 | | | $ | 115 | | | $ | 134 | | Gas utility | | 39 | | | 58 | | | 51 | | Enterprises | | (2) | | | (4) | | | 2 | | | | | | | | | Other reconciling items | | (59) | | | (54) | | | (56) | | Total income tax expense – CMS Energy | | $ | 95 | | | $ | 115 | | | $ | 131 | | Consumers | | | | | | | Income tax expense | | | | | | | Electric utility | | $ | 117 | | | $ | 115 | | | $ | 134 | | Gas utility | | 39 | | | 58 | | | 51 | | | | | | | | | Total income tax expense – Consumers | | $ | 156 | | | $ | 173 | | | $ | 185 | |
| | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Consumers | | | | | | | Interest charges | | | | | | | Electric utility | | $ | 213 |
| | $ | 209 |
| | $ | 201 |
| Gas utility | | 83 |
| | 79 |
| | 74 |
| Other reconciling items | | 1 |
| | 1 |
| | 1 |
| Total interest charges – Consumers | | $ | 297 |
| | $ | 289 |
| | $ | 276 |
| CMS Energy, including Consumers | | | | | | | Income tax expense (benefit) | | | | | | | Electric utility | | $ | 134 |
| | $ | 109 |
| | $ | 245 |
| Gas utility | | 51 |
| | 33 |
| | 96 |
| Enterprises | | 2 |
| | 2 |
| | 72 |
| EnerBank | | 16 |
| | 12 |
| | 22 |
| Other reconciling items | | (56 | ) | | (41 | ) | | (11 | ) | Total income tax expense – CMS Energy | | $ | 147 |
| | $ | 115 |
| | $ | 424 |
| Consumers | | | | | | | Income tax expense (benefit) | | | | | | | Electric utility | | $ | 134 |
| | $ | 109 |
| | $ | 245 |
| Gas utility | | 51 |
| | 33 |
| | 96 |
| Other reconciling items | | — |
| | — |
| | (2 | ) | Total income tax expense – Consumers | | $ | 185 |
| | $ | 142 |
| | $ | 339 |
| CMS Energy, including Consumers | | | | | | | Net income (loss) available to common stockholders | | | | | | | Electric utility | | $ | 509 |
| | $ | 535 |
| | $ | 455 |
| Gas utility | | 233 |
| | 169 |
| | 173 |
| Enterprises | | 33 |
| | 34 |
| | (27 | ) | EnerBank | | 49 |
| | 38 |
| | 28 |
| Other reconciling items | | (144 | ) | | (119 | ) | | (169 | ) | Total net income available to common stockholders – CMS Energy | | $ | 680 |
| | $ | 657 |
| | $ | 460 |
| Consumers | | | | | | | Net income (loss) available to common stockholder | | | | | | | Electric utility | | $ | 509 |
| | $ | 535 |
| | $ | 455 |
| Gas utility | | 233 |
| | 169 |
| | 173 |
| Other reconciling items | | (1 | ) | | (1 | ) | | 2 |
| Total net income available to common stockholder – Consumers | | $ | 741 |
| | $ | 703 |
| | $ | 630 |
| CMS Energy, including Consumers | | | | | | | Plant, property, and equipment, gross | | | | | | | Electric utility2,3 | | $ | 16,158 |
| | $ | 16,027 |
| | $ | 15,221 |
| Gas utility² | | 8,785 |
| | 7,919 |
| | 7,080 |
| Enterprises | | 405 |
| | 412 |
| | 167 |
| EnerBank | | 22 |
| | 25 |
| | 21 |
| Other reconciling items | | 20 |
| | 17 |
| | 17 |
| Total plant, property, and equipment, gross – CMS Energy | | $ | 25,390 |
| | $ | 24,400 |
| | $ | 22,506 |
|
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | Net income (loss) available to common stockholders | | | | | | | Electric utility | | $ | 565 | | | $ | 554 | | | $ | 509 | | Gas utility | | 302 | | | 261 | | | 233 | | Enterprises | | 23 | | | 36 | | | 33 | | | | | | | | | Other reconciling items | | 458 | | | (96) | | | (95) | | Total net income available to common stockholders – CMS Energy | | $ | 1,348 | | | $ | 755 | | | $ | 680 | | Consumers | | | | | | | Net income (loss) available to common stockholder | | | | | | | Electric utility | | $ | 565 | | | $ | 554 | | | $ | 509 | | Gas utility | | 302 | | | 261 | | | 233 | | Other reconciling items | | (1) | | | (1) | | | (1) | | Total net income available to common stockholder – Consumers | | $ | 866 | | | $ | 814 | | | $ | 741 | | CMS Energy, including Consumers | | | | | | | Plant, property, and equipment, gross | | | | | | | Electric utility2 | | $ | 18,147 | | | $ | 17,155 | | | $ | 16,158 | | Gas utility2 | | 10,601 | | | 9,581 | | | 8,785 | | Enterprises | | 1,122 | | | 1,113 | | | 405 | | | | | | | | | Other reconciling items | | 23 | | | 21 | | | 20 | | Total plant, property, and equipment, gross – CMS Energy | | $ | 29,893 | | | $ | 27,870 | | | $ | 25,368 | | Consumers | | | | | | | Plant, property, and equipment, gross | | | | | | | Electric utility2 | | $ | 18,147 | | | $ | 17,155 | | | $ | 16,158 | | Gas utility2 | | 10,601 | | | 9,581 | | | 8,785 | | Other reconciling items | | 23 | | | 21 | | | 20 | | Total plant, property, and equipment, gross – Consumers | | $ | 28,771 | | | $ | 26,757 | | | $ | 24,963 | | CMS Energy, including Consumers | | | | | | | Investments in equity method investees1 | | | | | | | Enterprises | | $ | 71 | | | $ | 70 | | | $ | 71 | | | | | | | | | Total investments in equity method investees – CMS Energy | | $ | 71 | | | $ | 70 | | | $ | 71 | |
| | | | | | | | | | | | | | In Millions | | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Consumers | | | | | | | Plant, property, and equipment, gross | | | | | | | Electric utility2,3 | | $ | 16,158 |
| | $ | 16,027 |
| | $ | 15,221 |
| Gas utility² | | 8,785 |
| | 7,919 |
| | 7,080 |
| Other reconciling items | | 20 |
| | 17 |
| | 17 |
| Total plant, property, and equipment, gross – Consumers | | $ | 24,963 |
| | $ | 23,963 |
| | $ | 22,318 |
| CMS Energy, including Consumers | | | | | | | Investments in equity method investees¹ | | | | | | | Enterprises | | $ | 71 |
| | $ | 69 |
| | $ | 64 |
| Total investments in equity method investees – CMS Energy | | $ | 71 |
| | $ | 69 |
| | $ | 64 |
| CMS Energy, including Consumers | | | | | | | Total assets | | | | | | | Electric utility² | | $ | 14,911 |
| | $ | 14,079 |
| | $ | 13,906 |
| Gas utility² | | 8,659 |
| | 7,806 |
| | 7,139 |
| Enterprises | | 527 |
| | 540 |
| | 342 |
| EnerBank | | 2,692 |
| | 2,006 |
| | 1,453 |
| Other reconciling items | | 48 |
| | 98 |
| | 210 |
| Total assets – CMS Energy | | $ | 26,837 |
| | $ | 24,529 |
| | $ | 23,050 |
| Consumers | | | | | | | Total assets | | | | | | | Electric utility² | | $ | 14,973 |
| | $ | 14,143 |
| | $ | 13,907 |
| Gas utility² | | 8,706 |
| | 7,853 |
| | 7,139 |
| Other reconciling items | | 20 |
| | 29 |
| | 53 |
| Total assets – Consumers | | $ | 23,699 |
| | $ | 22,025 |
| | $ | 21,099 |
| CMS Energy, including Consumers | | | | | | | Capital expenditures4 | | | | | | | Electric utility5 | | $ | 1,162 |
| | $ | 865 |
| | $ | 882 |
| Gas utility5 | | 971 |
| | 958 |
| | 800 |
| Enterprises | | 5 |
| | 246 |
| | 33 |
| EnerBank | | 8 |
| | 10 |
| | 6 |
| Other reconciling items | | 1 |
| | 2 |
| | 1 |
| Total capital expenditures – CMS Energy | | $ | 2,147 |
| | $ | 2,081 |
| | $ | 1,722 |
| Consumers | | | | | | | Capital expenditures4 | | | | | | | Electric utility5 | | $ | 1,162 |
| | $ | 865 |
| | $ | 882 |
| Gas utility5 | | 971 |
| | 958 |
| | 800 |
| Other reconciling items | | 1 |
| | 2 |
| | 1 |
| Total capital expenditures – Consumers | | $ | 2,134 |
| | $ | 1,825 |
| | $ | 1,683 |
|
| | 1
| Consumers had no significant equity method investments. |
| | 2
| Amounts include a portion of Consumers’ other common assets attributable to both the electric and gas utility businesses. |
| | | | | | | | | | | | | | | | | | | | | In Millions | Years Ended December 31 | 2021 | 2020 | 2019 | CMS Energy, including Consumers | | | | | | | Total assets | | | | | | | Electric utility2 | | $ | 16,493 | | | $ | 15,829 | | | $ | 14,911 | | Gas utility2 | | 10,517 | | | 9,429 | | | 8,659 | | Enterprises | | 1,312 | | | 1,276 | | | 527 | | | | | | | | | Other reconciling items | | 431 | | | 3,132 | | | 2,740 | | Total assets – CMS Energy | | $ | 28,753 | | | $ | 29,666 | | | $ | 26,837 | | Consumers | | | | | | | Total assets | | | | | | | Electric utility2 | | $ | 16,555 | | | $ | 15,893 | | | $ | 14,973 | | Gas utility2 | | 10,564 | | | 9,477 | | | 8,706 | | Other reconciling items | | 21 | | | 29 | | | 20 | | Total assets – Consumers | | $ | 27,140 | | | $ | 25,399 | | | $ | 23,699 | | CMS Energy, including Consumers | | | | | | | Capital expenditures3 | | | | | | | Electric utility4 | | $ | 1,153 | | | $ | 1,281 | | | $ | 1,162 | | Gas utility4 | | 989 | | | 885 | | | 971 | | Enterprises | | 17 | | | 108 | | | 5 | | | | | | | | | Other reconciling items | | 2 | | | 1 | | | 1 | | Total capital expenditures – CMS Energy | | $ | 2,161 | | | $ | 2,275 | | | $ | 2,139 | | Consumers | | | | | | | Capital expenditures3 | | | | | | | Electric utility4 | | $ | 1,153 | | | $ | 1,281 | | | $ | 1,162 | | Gas utility4 | | 989 | | | 885 | | | 971 | | Other reconciling items | | 2 | | | 1 | | | 1 | | Total capital expenditures – Consumers | | $ | 2,144 | | | $ | 2,167 | | | $ | 2,134 | |
| | 31Consumers had no significant equity method investments. 2Amounts include a portion of Consumers’ other common assets attributable to both the electric and gas utility businesses. 3Amounts include assets placed under finance lease. 4Amounts include a portion of Consumers’ capital expenditures for plant and equipment attributable to both the electric and gas utility businesses.
18: Related-Party Transactions—Consumers | Costs related to coal-fueled electric generating units to be retired in 2023 were removed and recorded as a regulatory asset in June 2019. For additional details, see Note 3, Regulatory Matters. |
| | 4
| Amounts include finance lease additions. |
| | 5
| Amounts include a portion of Consumers’ capital expenditures for plant and equipment attributable to both the electric and gas utility businesses. |
| | 20: | Related-Party Transactions—Consumers |
Consumers enters into a number of transactions with related parties in the normal course of business. These transactions include:include but are not limited to: •purchases of electricity from affiliates of CMS Enterprises •payments to and from CMS Energy related to parent company overhead costs
Transactions involving power supply purchases from certain affiliates of CMS Enterprises are based on avoided costs under PURPA, state law, and competitive bidding. The payment of parent company overhead costs is based on the use of accepted industry allocation methodologies. These payments are for costs that occur in the normal course of business. Presented in the following table is Consumers’ expense recorded from related-party transactions for the years ended December 31: | | | | | | | | | | | | | | | In Millions | | Description | Related Party | 2019 | | 2018 | | 2017 | | Purchases of capacity and energy | Affiliates of CMS Enterprises | | $ | 75 |
| | $ | 83 |
| | $ | 90 |
|
| | | | | | | | | | | | | | | | | | | | | | | | In Millions | Description | Related Party | 2021 | 2020 | 2019 | Purchases of capacity and energy | Affiliates of CMS Enterprises | | $ | 77 | | | $ | 64 | | | $ | 75 | |
Amounts payable to related parties for purchased power and other services were $26$22 million at December 31, 20192021 and $20$13 million at December 31, 2018.2020. Accounts receivable from related parties were $8$7 million at December 31, 20192021 and $13$16 million at December 31, 2018.2020. In 2018, CMS Energy and Consumers sold the DB SERP debt securities and CMS Energy issuedhas a demand note payable to the DB SERP rabbi trust. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028.The portion of the demand note attributable to Consumers was recorded as a note receivable – related party on Consumers’ consolidated balance sheets at December 31, 20192021 and December 31, 2018. For additional details about the note receivable – related party, see Note 7, Financial Instruments and Note 8, Notes Receivable.2020.
Beginning in December 2018, Consumers andhas a natural gas transportation agreement with a subsidiary of CMS Energy executed a 20‑year natural gas transportation agreement,that extends through 2038, related to a pipeline owned by Consumers. For additional details about the agreement, see Note 10,8, Leases and Palisades Financing.
In June 2021, Consumers owned sharesentered into an agreement with DIG, CMS Generation Michigan Power, and CMS ERM to purchase the enterprises segment’s three natural gas-fueled generating units, totaling 1,001 MW of CMS Energy common stock with a fair value of $1nameplate capacity for $515 million, at December 31, 2019 and December 31, 2018.subject to certain adjustments. The parties plan to close the sale, which is dependent upon regulatory approvals, in 2025. In January 2020,December 2021, Consumers renewed a short-term credit agreement with CMS Energy, permitting Consumers to borrow up to $300$500 million. At December 31, 2019, there were 0 outstanding loans underFor additional details about the agreement.agreement, see Note 4, Financings and Capitalization.
19: Variable Interest Entities CMS Enterprises has a 51-percent ownership interest in Aviator Wind Equity Holdings, which holds a Class B membership interest in Aviator Wind, a 525-MW wind generation project in Coke County, Texas. The Class A membership interest in Aviator Wind is held by a tax equity investor, BHE Renewables, LLC, a subsidiary of Berkshire Hathaway Energy Company. Earnings, tax attributes, and cash flows generated by Aviator Wind are allocated among and distributed to the membership classes in accordance with the ratios specified in the associated limited liability company operating agreement;
these ratios change over time and are not representative of the ownership interest percentages of each membership class.
| | 21: | Variable Interest Entities |
Aviator Wind Equity Holdings and Aviator Wind represent VIEs. In accordance with the associated limited liability company operating agreement, the tax equity investor is guaranteed preferred returns from Aviator Wind. However, CMS Enterprises manages and controls the operating activities of Aviator Wind Equity Holdings and, ultimately, Aviator Wind. As a result, CMS Enterprises is the primary beneficiary of Aviator Wind Equity Holdings and Aviator Wind, as it has the power to direct the activities that most significantly impact the economic performance of the companies, as well as the obligation to absorb losses or the right to receive benefits from the companies. CMS Enterprises consolidates Aviator Wind Equity Holdings and Aviator Wind and presents the Class A membership interest and 49 percent of the Class B membership interest in Aviator Wind as noncontrolling interests. Presented in the following table are the carrying values of the VIEs’ assets and liabilities included on CMS Energy’s consolidated balance sheets: | | | | | | | | | | | | | | | In Millions | December 31 | 2021 | 2020 | Current | | | | | Cash and cash equivalents | | $ | 20 | | | $ | 7 | | | | | | | Accounts receivable | | 3 | | | 5 | | Prepayments and other current assets | | 1 | | | 1 | | Non-current | | | | | Plant, property, and equipment, net | | 671 | | | 692 | | Total assets1 | | $ | 695 | | | $ | 705 | | Current | | | | | Accounts payable | | $ | 15 | | | $ | 3 | | Non-current | | | | | Asset retirement obligations | | 20 | | | 19 | | Total liabilities | | $ | 35 | | | $ | 22 | |
1Assets may be used only to meet VIEs’ obligations and commitments. CMS Enterprises is obligated under certain indemnities that protect the tax equity investor against losses incurred as a result of breaches of representations and warranties provided by Aviator Wind Equity Holdings and its subsidiaries. For additional details on these indemnity obligations, see Note 3, Contingencies and Commitments—Guarantees. Since Aviator Wind’s income and cash flows are not distributed among its investors based on ownership interest percentages, CMS Enterprises allocates Aviator Wind’s income (loss) among its investors by applying the hypothetical liquidation at book value method. This method calculates each investor’s earnings based on a hypothetical liquidation of Aviator Wind at the net book value of its underlying net assets as of the balance sheet date. The liquidation tax gain (loss) is allocated to each investor’s capital account, resulting in income (loss) equal to the period change in the investor’s capital account balance. CMS Enterprises then receives 51 percent of the earnings, tax attributes, and cash flows that were allocated to Aviator Wind Equity Holdings. Other VIEs:CMS Energy has variable interests in T.E.S. Filer City, Grayling, Genesee, and Craven. While CMS Energy owns 50 percent of each partnership, it is not the primary beneficiary of any of these partnerships because decision making is shared among unrelated parties, and no one party has the ability
to direct the activities that most significantly impact the entities’ economic performance, such as operations and maintenance, plant dispatch, and fuel strategy. The partners must agree on all major decisions for each of the partnerships. Presented in the following table is information about these partnerships: | | | | | | | | | Name | Nature of the Entity | Nature of CMS Energy’s Involvement | T.E.S. Filer City | Coal-fueled power generator | Long-term PPA between partnership and Consumers | Employee assignment agreement | | Grayling | Wood waste-fueled power generator | Long-term PPA between partnership and Consumers | Reduced dispatch agreement with Consumers¹Consumers1 | Operating and management contract | | Genesee | Wood waste-fueled power generator | Long-term PPA between partnership and Consumers | Reduced dispatch agreement with Consumers¹Consumers1 | Operating and management contract | Guarantee of fixed rate debt² | Deferred collection of certain receivables³ | | Craven | Wood waste-fueled power generator | Operating and management contract | |
1Reduced dispatch agreements allow the facilities to be dispatched based on the market price of power compared with the cost of production of the plants. This results in fuel cost savings that each partnership shares with Consumers’ customers.
| | 1
| Reduced dispatch agreements allow the facilities to be dispatched based on the market price of power compared with the cost of production of the plants. This results in fuel cost savings that each partnership shares with Consumers’ customers. |
| | 2
| CMS Energy’s guarantee is capped at $3 million annually through 2021. For additional details on this guarantee, see Note 4, Contingencies and Commitments—Guarantees.
|
| | 3
| CMS Energy’s maximum exposure to loss from these receivables is $10 million.
|
The creditors of these partnerships do not have recourse to the general credit of CMS Energy or Consumers. CMS Energy and Consumers except as noted in the table above. Consumers hashave not provided any financial or other support during the periods presented that was not previously contractually required. CMS Energy’s investment in these partnerships is included in investments on its consolidated balance sheets in the amount of $71 million as ofat December 31, 20192021 and $69$70 million as ofat December 31, 2018.2020.
| | 22: | Asset Sales and20: Exit Activities |
Enterprises
In April 2019, DIG completed a sale of transmission equipment to ITC and recognized a pre-tax gain of $16 million within maintenance and other operating expenses on CMS Energy’s consolidated statements of income.
Consumers
Asset Sale: In September 2019, Consumers completed a sale of a portion of its electric utility’s substation transmission equipment to METC. In December 2019, Consumers filed an application with the MPSC requesting approval to share voluntarily half of the gain from the sale with customers. As a result, during 2019, Consumers recorded a regulatory liability of $17 million and recognized a pre-tax gain of $17 million within maintenance and other operating expenses on its consolidated statements of income. For additional details on the sharing of the gain with customers, see Note 3, Regulatory Matters.Discontinued Operations
Exit Activities: Under its Clean Energy Plan, Consumers plans to retire the D.E. Karn 1 & 2 coal-fueled electric generating units in 2023. For additional details on Consumers’ plans to request recovery of the remaining book value of the 2 units upon their retirement, see Note 3, Regulatory Matters. In October 2019, Consumers announced a retention incentive program to ensure necessary staffing at the D.E. Karn generating complex through the anticipated retirement of the coal-fueled electric generating units. Based on the number of employees that have chosen to participate, the aggregate cost of the program through 2023 is estimated to be $35 million.$35 million. In its order in Consumers’ 2020 electric rate case, the MPSC approved deferred accounting treatment for these costs; Consumers will seek recovery ofbegan deferring these costs from customers. In 2019, Consumers’ electric utility recognized $6 millionas a regulatory asset in 2021. Within its 2021 IRP, Consumers proposes to retire the J.H. Campbell coal-fueled generating units. No retention incentive costs related to this retirement will be recognized unless Consumers’ 2021 IRP is approved by the MPSC.
As of December 31, 2021, the cumulative cost incurred and charged to expense related to the D.E. Karn retention incentive program was $16 million. Additionally, an amount of $4 million has been capitalized as a cost of plant, property, and severance benefits within maintenanceequipment and an amount of $7 million has been deferred as a regulatory asset. Presented in the following table is a reconciliation of the retention benefit liability recorded in other operating expensesliabilities on Consumers’ consolidated statementsbalance sheets: | | | | | | | | | | | | | | | | | | | | In Millions | | | | | Years Ended December 31 | | | | 2021 | 2020 | Retention benefit liability at beginning of period | | | | | | | $ | 11 | | | $ | 4 | | Costs incurred and charged to maintenance and other operating expenses | | | | | | | — | | | 13 | | Costs deferred as a regulatory asset | | | | | | | 7 | | | — | | Costs incurred and capitalized | | | | | | | 1 | | | 2 | | Costs paid or settled | | | | | | | (5) | | | (8) | | Retention benefit liability at the end of the period1 | | | | | | | $ | 14 | | | $ | 11 | |
1Includes current portion of income. The amount was reported as other liabilities on its consolidated balance sheetsof $5 million at December 31, 2019, which2021 and $3 million at December 31, 2020. Discontinued Operations: On October 1, 2021, EnerBank was acquired by Regions Bank. CMS Energy received proceeds of over $1 billion from the transaction and recognized a pre-tax gain of $657 million. CMS Energy intends to use the proceeds from the sale to fund key initiatives in its core energy business related to safety, reliability, and its clean energy transformation. In December 2021, CMS Energy submitted a notice of disagreement to Regions Bank relating to a $36 million negative post-closing purchase price adjustment that it believes is inconsistent with the merger agreement. In accordance with the merger agreement, the disputed adjustment will be submitted to a mutually agreed upon independent accounting firm for final determination. While CMS Energy does not believe material loss is probable, it cannot predict the outcome of this matter. EnerBank’s results of operations through the date of the sale are presented as income from discontinued operations on CMS Energy’s consolidated statements of income for the years ended December 31, 2021, 2020, and 2019. The assets and liabilities of EnerBank are presented as held for sale on CMS Energy’s consolidated balance sheet at December 31, 2020. The table below presents the financial results of EnerBank included $2 million of current liabilities.in income from discontinued operations:
| | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | | | | | Years Ended December 31 | | | | 2021 | 2020 | 2019 | Operating revenue | | | | | | | $ | 209 | | | $ | 262 | | | $ | 221 | | Expenses | | | | | | | | | | | | Operating expenses | | | | | | | 60 | | | 130 | | | 97 | | | | | | | | | | | | | | Interest expense | | | | | | | 34 | | | 56 | | | 59 | | Income before income taxes | | | | | | | $ | 115 | | | $ | 76 | | | $ | 65 | | Gain on sale | | | | | | | 657 | | | — | | | — | | Income from discontinued operations before income taxes | | | | | | | $ | 772 | | | $ | 76 | | | $ | 65 | | Income tax expense | | | | | | | 170 | | | 18 | | | 16 | | Income from discontinued operations, net of tax | | | | | | | $ | 602 | | | $ | 58 | | | $ | 49 | |
The table below presents the aggregate carrying amounts for the major classes of assets and liabilities held for sale related to EnerBank:
| | | | | | | | | | | 23:In Millions | December 31 | Quarterly Financial and Common Stock Information (Unaudited) | 2020 |
| | | | | | | | | | | | | | | | | | In Millions, Except Per Share Amounts | | | 2019 | Quarters Ended | March 31 | | June 30 | | Sept 30 | | Dec 31 | | CMS Energy, including Consumers | | | | | | | | | Operating revenue | | $ | 2,059 |
| | $ | 1,445 |
| | $ | 1,546 |
| | $ | 1,795 |
| Operating income | | 359 |
| | 218 |
| | 351 |
| | 311 |
| Net income | | 213 |
| | 94 |
| | 207 |
| | 168 |
| Income attributable to noncontrolling interests | | — |
| | 1 |
| | — |
| | 1 |
| Net income available to common stockholders | | 213 |
| | 93 |
| | 207 |
| | 167 |
| Basic earnings per average common share¹ | | 0.75 |
| | 0.33 |
| | 0.73 |
| | 0.59 |
| Diluted earnings per average common share¹ | | 0.75 |
| | 0.33 |
| | 0.73 |
| | 0.58 |
| Consumers | | | | | | | | | Operating revenue | | $ | 1,943 |
| | $ | 1,334 |
| | $ | 1,429 |
| | $ | 1,670 |
| Operating income | | 328 |
| | 175 |
| | 319 |
| | 308 |
| Net income | | 226 |
| | 98 |
| | 213 |
| | 206 |
| Preferred stock dividends | | — |
| | 1 |
| | — |
| | 1 |
| Net income available to common stockholder | | 226 |
| | 97 |
| | 213 |
| | 205 |
|
Assets | | | | | 1Current
| The sum of the quarters may not equal annual EPS due to changes in the number of shares outstanding. |
| | | | | | | | | | | | | | | | | | In Millions, Except Per Share Amounts | | | 2018 | Quarters Ended | March 31 | | June 30 | | Sept 30 | | Dec 31 | | CMS Energy, including Consumers | | | | | | | | | Operating revenue | | $ | 1,953 |
| | $ | 1,492 |
| | $ | 1,599 |
| | $ | 1,829 |
| Operating income | | 363 |
| | 255 |
| | 294 |
| | 250 |
| Net income | | 241 |
| | 140 |
| | 169 |
| | 109 |
| Income attributable to noncontrolling interests | | — |
| | 1 |
| | — |
| | 1 |
| Net income available to common stockholders | | 241 |
| | 139 |
| | 169 |
| | 108 |
| Basic earnings per average common share¹ | | 0.86 |
| | 0.49 |
| | 0.60 |
| | 0.38 |
| Diluted earnings per average common share¹ | | 0.86 |
| | 0.49 |
| | 0.59 |
| | 0.38 |
| Consumers | | | | | | | | | Operating revenue | | $ | 1,855 |
| | $ | 1,395 |
| | $ | 1,502 |
| | $ | 1,712 |
| Operating income | | 334 |
| | 229 |
| | 271 |
| | 231 |
| Net income | | 242 |
| | 152 |
| | 180 |
| | 131 |
| Preferred stock dividends | | — |
| | 1 |
| | — |
| | 1 |
| Net income available to common stockholder | | 242 |
| | 151 |
| | 180 |
| | 130 |
|
| | | Cash and cash equivalents | | | | $ | 136 | | Accounts receivable and other current assets | | | | 18 | | Notes receivable, less allowance of $32 | | | | 275 | | Total current assets | | | 1
| The sum$ | 429 | | Non‑current | | | | | Plant, property, and equipment, net | | | | $ | 22 | | Notes receivable, less allowance of the quarters may not equal annual EPS due to changes in the number$91 | | | | 2,612 | | Other non‑current assets | | | | 46 | | Total non‑current assets | | |
| $ | 2,680 | | Total assets | | | | $ | 3,109 | | Liabilities | | | | | Current | | | | | Current portion of shares outstanding.long-term debt | | | | $ | 915 | | Accounts payable and other current liabilities | | | | 38 | | Total current liabilities | | |
| $ | 953 | | Non‑current | | | | | Long-term debt | | | | $ | 1,890 | | Other non‑current liabilities | | | | 4 | | Total non‑current liabilities | | |
| $ | 1,894 | | Total liabilities | | | | $ | 2,847 | |
174
21: Quarterly Financial and Common Stock Information (Unaudited) Presented in the table below are CMS Energy’s quarterly financial and common stock information. CMS Energy has reclassified certain prior period amounts to conform to the presentation in the present period. The most significant reclassification is related to the sale of EnerBank to Regions Bank. EnerBank’s results of operations through the date of the sale are presented as income from discontinued operations on CMS Energy’s consolidated statements of income for the years ended December 31, 2021 and 2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions, Except Per Share Amounts | | 2021 | Three Months Ended | March 31 | June 30 | September 30 | December 31 | CMS Energy, including Consumers | | | | | | | | | Operating revenue | | $ | 2,013 | | | $ | 1,558 | | | $ | 1,725 | | | $ | 2,033 | | Operating income | | 430 | | | 252 | | | 260 | | | 204 | | Income From Continuing Operations | | 308 | | | 153 | | | 153 | | | 114 | | Income From Discontinued Operations, Net of Tax | | 34 | | | 18 | | | 30 | | | 520 | | Net income | | 342 | | | 171 | | | 183 | | | 634 | | Loss attributable to noncontrolling interests | | (7) | | | (5) | | | (6) | | | (5) | | Net Income Attributable to CMS Energy | | 349 | | | 176 | | | 189 | | | 639 | | Preferred Stock Dividends | | — | | | — | | | 3 | | | 2 | | Net income available to common stockholders | | 349 | | | 176 | | | 186 | | | 637 | | Basic earnings per average common share | | | | | | | | | Income from continuing operations per average common share available to common stockholders1 | | 1.09 | | | 0.55 | | | 0.54 | | | 0.40 | | Income from discontinued operations per average common share available to common stockholders1 | | 0.12 | | | 0.06 | | | 0.10 | | | 1.80 | | Basic earnings per average common share1 | | 1.21 | | | 0.61 | | | 0.64 | | | 2.20 | | Diluted earnings per average common share | | | | | | | | | Income from continuing operations per average common share available to common stockholders1 | | 1.09 | | | 0.55 | | | 0.54 | | | 0.40 | | Income from discontinued operations per average common share available to common stockholders1 | | 0.12 | | | 0.06 | | | 0.10 | | | 1.80 | | Diluted earnings per average common share1 | | 1.21 | | | 0.61 | | | 0.64 | | | 2.20 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1The sum of the quarters may not equal annual EPS due to changes in the number of shares outstanding.
| | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions, Except Per Share Amounts | | 2020 | Three Months Ended | March 31 | June 30 | September 30 | December 31 | CMS Energy, including Consumers | | | | | | | | | Operating revenue | | $ | 1,802 | | | $ | 1,382 | | | $ | 1,507 | | | $ | 1,727 | | Operating income | | 335 | | | 248 | | | 340 | | | 307 | | Income From Continuing Operations | | 229 | | | 129 | | | 198 | | | 138 | | Income From Discontinued Operations, Net of Tax | | 14 | | | 8 | | | 12 | | | 24 | | Net income | | 243 | | | 137 | | | 210 | | | 162 | | Income (loss) attributable to noncontrolling interests | | — | | | 1 | | | (8) | | | 4 | | Net income available to common stockholders | | 243 | | | 136 | | | 218 | | | 158 | | Basic earnings per average common share | | | | | | | | | Income from continuing operations per average common share available to common stockholders1 | | 0.81 | | | 0.45 | | | 0.72 | | | 0.47 | | Income from discontinued operations per average common share available to common stockholders1 | | 0.05 | | | 0.03 | | | 0.04 | | | 0.08 | | Basic earnings per average common share1 | | 0.86 | | | 0.48 | | | 0.76 | | | 0.55 | | Diluted earnings per average common share | | | | | | | | | Income from continuing operations per average common share available to common stockholders1 | | 0.80 | | | 0.45 | | | 0.72 | | | 0.47 | | Income from discontinued operations per average common share available to common stockholders1 | | 0.05 | | | 0.03 | | | 0.04 | | | 0.08 | | Diluted earnings per average common share1 | | 0.85 | | | 0.48 | | | 0.76 | | | 0.55 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1The sum of the quarters may not equal annual EPS due to changes in the number of shares outstanding.
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Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of CMS Energy Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of CMS Energy Corporation and its subsidiaries (the “Company”) as of December 31, 20192021 and 2018,2020, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2019,2021, including the related notes and financial statement schedules of CMS Energy Corporation listed in the index appearing underafter Item 15 (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20192021 and 2018,2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20192021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Accounting for the Effects of New Regulatory Matters As described in Note 32 to the consolidated financial statements, the Company is a utility and must apply regulatory accounting when its rates are designed to recover specific costs of providing regulated services. Under regulatory accounting, the Company records regulatory assets or liabilities for certain transactions that would have been treated as expense or revenue by a non-regulated business. As of December 31, 2019,2021, the Company has recognized a total of $2,522$2,305 million of regulatory assets, and $3,829$3,948 million of regulatory liabilities.liabilities, $25 million of accrued revenue, and $12 million of accrued rate refunds. As described by management, there are multiple participants to rate case proceedings who often challenge various aspects of those proceedings, including the prudence of the Company’s policies and practices. These participants often seek cost disallowances and other relief and have appealed significant decisions reached by the regulators. The recovery of regulatory assets and the settlement of regulatory liabilities are contingent upon the outcomes of rate cases and regulatory proceedings. The principal considerations for our determination that performing procedures relating to management’s accounting for the effects of new regulatory matters is a critical audit matter are (i) there was athe high degree of auditor judgment and subjectivity applied to evaluate management’s assessment of the potential outcomes and related accounting impacts associated with pending rate case proceedings, (ii) in some cases, there wasthe significant audit effort necessary to assess contrary evidence from various parties involved in rate case proceedings, and (iii) there wasthe significant audit effort necessary to evaluate audit evidence related to the recovery of regulatory assets and the settlement of regulatory liabilities.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of regulatory proceedings, including the probability of recovering incurred costs and the related accounting and disclosure impacts. These procedures also included, among others, obtaining and evaluating the Company’s correspondence with regulators, evaluating the reasonableness of management’s assessment regarding whether recovery of regulatory assets and settlement of regulatory liabilities is probable and evaluating the sufficiency of the disclosures in the consolidated financial statements. Procedures were performed to evaluate the regulatory assets and liabilities, including those subject to pending rate cases, based on provisions and formulas outlined in rate orders, other regulatory correspondence, or application of relevant regulatory precedents. /s/ PricewaterhouseCoopers LLP Detroit, Michigan February 6, 202010, 2022 We have served as the Company’s auditor since 2007.
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Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholder of Consumers Energy Company Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Consumers Energy Company and its subsidiaries (the “Company”) as of December 31, 20192021 and 2018,2020, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2019,2021, including the related notes and financial statement schedule of Consumers Energy Company listed in the index appearing underafter Item 15 (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20192021 and 2018,2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20192021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Accounting for the Effects of New Regulatory Matters As described in Note 2 to the consolidated financial statements, the Company is a utility and must apply regulatory accounting when its rates are designed to recover specific costs of providing regulated services. Under regulatory accounting, the Company records regulatory assets or liabilities for certain transactions that would have been treated as expense or revenue by a non-regulated business. As of December 31, 2021, the Company has recognized a total of $2,305 million of regulatory assets, $3,948 million of regulatory liabilities, $25 million of accrued revenue, and $12 million of accrued rate refunds. As described by management, there are multiple participants to rate case proceedings who often challenge various aspects of those proceedings, including the prudence of the Company’s policies and practices. These participants often seek cost disallowances and other relief and have appealed significant decisions reached by the regulators. The recovery of regulatory assets and the settlement of regulatory liabilities are contingent upon the outcomes of rate cases and regulatory proceedings. The principal considerations for our determination that performing procedures relating to management’s accounting for the effects of new regulatory matters is a critical audit matter are (i) the high degree of auditor judgment and subjectivity applied to evaluate management’s assessment of the potential outcomes and related accounting impacts associated with pending rate case proceedings, (ii) in some cases, the significant audit effort necessary to assess contrary evidence from various parties involved in rate case proceedings, and (iii) the significant audit effort necessary to evaluate audit evidence related to the recovery of regulatory assets and the settlement of regulatory liabilities.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of regulatory proceedings, including the probability of recovering incurred costs and the related accounting and disclosure impacts. These procedures also included, among others, obtaining and evaluating the Company’s correspondence with regulators, evaluating the reasonableness of management’s assessment regarding whether recovery of regulatory assets and settlement of regulatory liabilities is probable and evaluating the sufficiency of the disclosures in the consolidated financial statements. Procedures were performed to evaluate the regulatory assets and liabilities, including those subject to pending rate cases, based on provisions and formulas outlined in rate orders, other regulatory correspondence, or application of relevant regulatory precedents. /s/ PricewaterhouseCoopers LLP Detroit, Michigan February 6, 202010, 2022 We have served as the Company’s auditor since 2007.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures CMS Energy Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures: Under the supervision and with the participation of management, including its CEO and CFO, CMS Energy conducted an evaluation of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on such evaluation, CMS Energy’s CEO and CFO have concluded that its disclosure controls and procedures were effective as of December 31, 2019.2021. Management’s Annual Report on Internal Control Over Financial Reporting: CMS Energy’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). CMS Energy’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that: •pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of CMS Energy •provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of CMS Energy are being made only in accordance with authorizations of management and directors of CMS Energy •provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of CMS Energy’s assets that could have a material effect on its financial statements Management, including its CEO and CFO, does not expect that its internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. In addition, any evaluation of the effectiveness of controls is subject to risks that those internal controls may become inadequate in future periods because of changes in business conditions, or that the degree of compliance with the policies or procedures deteriorates. Under the supervision and with the participation of management, including its CEO and CFO, CMS Energy conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2019.2021. In making this evaluation, management used the criteria set forth in the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, CMS Energy’s management concluded that its internal control over financial reporting was effective as of December 31, 2019.2021. The effectiveness of CMS Energy’s internal control over financial reporting as of December 31, 20192021 has been
been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under Item 8. Financial Statements and Supplementary Data. Changes in Internal Control overOver Financial Reporting: There have not been noany changes in CMS Energy’s internal control over financial reporting during the most recently completedlast fiscal quarter that have materially affected, or are reasonably likely to affect materially, its internal control over financial reporting. Consumers Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures: Under the supervision and with the participation of management, including its CEO and CFO, Consumers conducted an evaluation of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on such evaluation, Consumers’ CEO and CFO have concluded that its disclosure controls and procedures were effective as of December 31, 2019.2021. Management’s Annual Report on Internal Control Over Financial Reporting: Consumers’ management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Consumers’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that: •pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Consumers •provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of Consumers are being made only in accordance with authorizations of management and directors of Consumers •provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Consumers’ assets that could have a material effect on its financial statements Management, including its CEO and CFO, does not expect that its internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. In addition, any evaluation of the effectiveness of controls is subject to risks that those internal controls may become inadequate in future periods because of changes in business conditions, or that the degree of compliance with the policies or procedures deteriorates. Under the supervision and with the participation of management, including its CEO and CFO, Consumers conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2019.2021. In making this evaluation, management used the criteria set forth in the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, Consumers’ management concluded that its internal control over financial reporting was effective as of December 31, 2019.2021. The effectiveness of Consumers’ internal control over financial reporting as of December 31, 20192021 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under Item 8. Financial Statements and Supplementary Data.
Changes in Internal Control overOver Financial Reporting: There have not been noany changes in Consumers’ internal control over financial reporting during the most recently completedlast fiscal quarter that have materially affected, or are reasonably likely to affect materially, its internal control over financial reporting. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. Part III Item 10. Directors, Executive Officers and Corporate Governance CMS Energy Information that is required in Item 10 of this Form 10‑K regarding executive officers is included in the Item 1. Business—Information About CMS Energy’s and Consumers’ Executive Officers section, which is incorporated by reference herein. Information that is required in Item 10 of this Form 10‑K regarding directors, executive officers, and corporate governance is incorporated by reference from CMS Energy’s and Consumers’ definitive proxy statement for their 20202022 Annual Meetings of Shareholders to be held May 1, 2020.6, 2022. The proxy statement will be filed with the SEC, pursuant to Regulation 14A under the Exchange Act, within 120 days after the end of the fiscal year covered by this Form 10‑K, all of which information is hereby incorporated by reference in, and made part of, this Form 10‑K. Code of Ethics CMS Energy has adopted an employee code of ethics, entitled “CMS Energy 20202022 Code of Conduct”Conduct and Guide to Ethical Business Behavior” (“Employee Code”) that applies to its CEO, CFO, and CAO, as well as all other officers and employees of CMS Energy and its affiliates, except for EnerBank, which has its own code of conduct.affiliates. The Employee Code is administered by the Chief Compliance Officer of CMS Energy, who reports directly to the Audit Committee of the Board of Directors of CMS Energy. CMS Energy has also adopted a director code of ethics entitled “2020“2022 Board of Directors Code of Conduct”Conduct and Guide to Ethical Business Behavior” (“Director Code”) that applies to its directors. The Director Code is administered by the Audit Committee of the Board of Directors of CMS Energy. Any alleged violation of the Director Code by a director will be investigated by disinterested members of the Audit Committee of the Board of Directors of CMS Energy, or if none, by disinterested members of the entire Board of Directors of CMS Energy. The Employee Code and Director Code and any waivers of, or amendments or exceptions to, a provision of the Employee Code that applies to CMS Energy’s CEO, CFO, CAO or persons performing similar functions and any waivers of, or amendments or exceptions to, a provision of CMS Energy’s Director Code will be disclosed on CMS Energy’s website at www.cmsenergy.com/corporate-governance/compliance-and-ethics.
Consumers Information that is required in Item 10 of this Form 10‑K regarding executive officers is included in the Item 1. Business—Information About CMS Energy’s and Consumers’ Executive Officers section, which is incorporated by reference herein.
Information that is required in Item 10 of this Form 10‑K regarding directors, executive officers, and corporate governance is incorporated by reference from CMS Energy’s and Consumers’ definitive proxy statement for their 20202022 Annual Meetings of Shareholders to be held May 1, 2020.6, 2022. The proxy statement will be filed with the SEC, pursuant to Regulation 14A under the Exchange Act, within 120 days after the end of the fiscal year covered by this Form 10‑K, all of which information is hereby incorporated by reference in, and made part of, this Form 10‑K. Code of Ethics Consumers has adopted an employee code of ethics, entitled “CMS Energy 20202022 Code of Conduct”Conduct and Guide to Ethical Business Behavior” (“Employee Code”) that applies to its CEO, CFO, and CAO, as well as all other officers and employees of Consumers and its affiliates, except for EnerBank, which has its own code of conduct.affiliates. The Employee Code is administered by the Chief Compliance Officer of Consumers, who reports directly to the Audit Committee of the Board of Directors of Consumers. Consumers has also adopted a director code of ethics entitled “2020“2022 Board of Directors Code of Conduct”Conduct and Guide to Ethical Business Behavior” (“Director Code”) that applies to its directors. The Director Code is administered by the Audit Committee of the Board of Directors of Consumers. Any alleged violation of the Director Code by a director will be investigated by disinterested members of the Audit Committee of the Board of Directors of Consumers, or if none, by disinterested members of the entire Board of Directors of Consumers. The Employee Code and Director Code and any waivers of, or amendments or exceptions to, a provision of the Employee Code that applies to Consumers’ CEO, CFO, CAO or persons performing similar functions and any waivers of, or amendments or exceptions to, a provision of Consumers’ Director Code will be disclosed on Consumers’ website at www.cmsenergy.com/corporate-governance/compliance-and-ethics. Item 11. Executive Compensation See the note below.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Securities Authorized for Issuance Under Equity Compensation Plans Presented in the following table is information regarding CMS Energy’s equity compensation plans as of December 31, 2019: | | | | | | | | | | | | | | | | (a) |
(b) | (b) | | (c) |
| Plan Category | Number of securities to be issued upon exercise
of outstanding options,
warrants, and rights
| Weighted-average
| Weighted-average
exercise price of outstanding options,
warrants, and rights
| | Number of securities remaining available for future issuance under
equity compensation plans (excluding
securities reflected in column (a))
|
| Equity compensation plan approved by shareholders | — |
| | $ | — |
| 3,258,0005,927,297 |
|
Also see the note below.
Item 13. Certain Relationships and Related Transactions, and Director Independence See the note below. Item 14. Principal Accountant Fees and Services See the note below. NOTE: Information that is required by Part III—Items 11, 12, 13, and 14 of this Form 10‑K is incorporated by reference from CMS Energy’s and Consumers’ definitive proxy statement for their 20202022 Annual Meetings of Shareholders to be held May 1, 2020.6, 2022. The proxy statement will be filed with the SEC, pursuant to Regulation 14A under the Exchange Act, within 120 days after the end of the fiscal year covered by this Form 10‑K, all of which information is hereby incorporated by reference in, and made part of, this Form 10‑K.
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Part IV Item 15. Exhibits and Financial Statement Schedules The following financial statements are filed as part of this report under Item 8. Financial Statements and Supplementary Data: •Consolidated Statements of Income of CMS Energy for the years ended December 31, 2019, 2018,2021, 2020, and 20172019 •Consolidated Statements of Comprehensive Income of CMS Energy for the years ended December 31, 2019, 2018,2021, 2020, and 20172019 •Consolidated Statements of Cash Flows of CMS Energy for the years ended December 31, 2019, 2018,2021, 2020, and 20172019 | | •Consolidated Balance Sheets of CMS Energy at December 31, 2021 and 2020 • | Consolidated Balance Sheets of CMS Energy at December 31, 2019 and 2018
|
Consolidated Statements of Changes in Equity of CMS Energy for the years ended December 31, 2019, 2018,2021, 2020, and 20172019 •Consolidated Statements of Income of Consumers for the years ended December 31, 2019, 2018,2021, 2020, and 20172019 •Consolidated Statements of Comprehensive Income of Consumers for the years ended December 31, 2019, 2018,2021, 2020, and 20172019 •Consolidated Statements of Cash Flows of Consumers for the years ended December 31, 2019, 2018,2021, 2020, and 20172019 •Consolidated Balance Sheets of Consumers at December 31, 20192021 and 20182020 •Consolidated Statements of Changes in Equity of Consumers for the years ended December 31, 2019, 2018,2021, 2020, and 20172019 •Notes to the Consolidated Financial Statements | | • | •Report of Independent Registered Public Accounting Firm for CMS Energy •Report of Independent Registered Public Accounting Firm for CMS Energy |
| | • | Report of Independent Registered Public Accounting Firm for Consumers
|
The following financial statement schedules are included below: | | • | •Schedule I — Condensed Financial Information of Registrant, CMS Energy—Parent Company at December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020, and 2019 •Schedule II — Valuation and Qualifying Accounts and Reserves of CMS Energy for the years ended December 31, 2021, 2020, and 2019 •Schedule II — Valuation and Qualifying Accounts and Reserves of Consumers for the years ended December 31, 2021, 2020, and 2019, CMS Energy—Parent Company at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018, and 2017 |
| | • | Schedule II — Valuation and Qualifying Accounts and Reserves of CMS Energy for the years ended December 31, 2019, 2018, and 2017
|
| | • | Schedule II — Valuation and Qualifying Accounts and Reserves of Consumers for the years ended December 31, 2019, 2018, and 2017
|
187
Schedule I — Condensed Financial Information of Registrant CMS Energy—Parent Company Condensed Statements of Income | | In Millions | In Millions | | In Millions | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Years Ended December 31 | 2021 | 2020 | 2019 | | | | | | | | | | Operating Expenses | | | | | | | Operating Expenses | | Other operating expenses | | $ | (38 | ) | | $ | (7 | ) | | $ | (9 | ) | Other operating expenses | | $ | (7) | | | $ | (6) | | | $ | (38) | | Total operating expenses | | (38 | ) | | (7 | ) | | (9 | ) | Total operating expenses | | (7) | | | (6) | | | (38) | | | | | | | | | | Operating Loss | | (38 | ) | | (7 | ) | | (9 | ) | Operating Loss | | (7) | | | (6) | | | (38) | | | | | | | | | | Other Income (Expense) | | | | | | | Other Income (Expense) | | Equity earnings of subsidiaries | | 826 |
| | 780 |
| | 633 |
| Equity earnings of subsidiaries | | 1,482 | | | 909 | | | 826 | | Nonoperating retirement benefits, net | | (1 | ) | | (1 | ) | | (1 | ) | Nonoperating retirement benefits, net | | (1) | | | (1) | | | (1) | | Interest income | | 1 |
| | 2 |
| | 1 |
| Interest income | | 1 | | | 1 | | | 1 | | Other income | | 1 |
| | — |
| | 2 |
| Other income | | 1 | | | 1 | | | 1 | | Other expense | | — |
| | (17 | ) | | (31 | ) | Other expense | | — | | | (19) | | | — | | Total other income | | 827 |
| | 764 |
| | 604 |
| Total other income | | 1,483 | | | 891 | | | 827 | | | | | | | | | | Interest Charges | | | | | | | Interest Charges | | Interest on long-term debt | | 156 |
| | 135 |
| | 143 |
| Interest on long-term debt | | 183 | | | 178 | | | 156 | | Intercompany interest expense and other | | 10 |
| | 7 |
| | 3 |
| Intercompany interest expense and other | | 7 | | | 7 | | | 10 | | Total interest charges | | 166 |
| | 142 |
| | 146 |
| Total interest charges | | 190 | | | 185 | | | 166 | | | | | | | | | | Income Before Income Taxes | | 623 |
| | 615 |
| | 449 |
| Income Before Income Taxes | | 1,286 | | | 700 | | | 623 | | Income Tax Benefit | | (57 | ) | | (42 | ) | | (11 | ) | Income Tax Benefit | | (60) | | | (55) | | | (57) | | | | | | | | | | | Income From Continuing Operations | | Income From Continuing Operations | | 1,346 | | | 755 | | | 680 | | Income From Discontinued Operations, Net of Tax of $(5), $—, and $— | | Income From Discontinued Operations, Net of Tax of $(5), $—, and $— | | 7 | | | — | | | — | | | Net Income Attributable to CMS Energy | | Net Income Attributable to CMS Energy | | 1,353 | | | 755 | | | 680 | | Preferred Stock Dividends | | Preferred Stock Dividends | | 5 | | | — | | | — | | | Net Income Available to Common Stockholders | | $ | 680 |
| | $ | 657 |
| | $ | 460 |
| Net Income Available to Common Stockholders | | $ | 1,348 | | | $ | 755 | | | $ | 680 | |
The accompanying notes are an integral part of these statements.
Schedule I — Condensed Financial Information of Registrant (Continued) CMS Energy—Parent Company Condensed Statements of Cash Flows | | In Millions | In Millions | | In Millions | Years Ended December 31 | 2019 | | 2018 | | 2017 | | Years Ended December 31 | 2021 | 2020 | 2019 | | | | | | | | | Cash Flows from Operating Activities | | | | | | | Cash Flows from Operating Activities | | Net cash provided by operating activities | | $ | 697 |
| | $ | 702 |
| | $ | 433 |
| Net cash provided by operating activities | | $ | 1,549 | | | $ | 507 | | | $ | 697 | | | | | | | | | | Cash Flows from Investing Activities | | | | | | | Cash Flows from Investing Activities | | Investment in subsidiaries | | (683 | ) | | (363 | ) | | (447 | ) | Investment in subsidiaries | | (581) | | | (657) | | | (683) | | Proceeds from DB SERP investments | | — |
| | 22 |
| | — |
| | Increase in notes receivable – intercompany | | Increase in notes receivable – intercompany | | (83) | | | (307) | | | — | | | Net cash used in investing activities | | (683 | ) | | (341 | ) | | (447 | ) | Net cash used in investing activities | | (664) | | | (964) | | | (683) | | | | | | | | | | Cash Flows from Financing Activities | | | | | | | Cash Flows from Financing Activities | | Proceeds from issuance of debt | | 1,158 |
| | 560 |
| | 799 |
| Proceeds from issuance of debt | | — | | | 1,225 | | | 1,158 | | Issuance of common stock | | 12 |
| | 41 |
| | 83 |
| Issuance of common stock | | 26 | | | 253 | | | 12 | | Issuance of preferred stock | | Issuance of preferred stock | | 224 | | | — | | | — | | Retirement of long-term debt | | (738 | ) | | (675 | ) | | (425 | ) | Retirement of long-term debt | | (200) | | | (425) | | | (738) | | Debt prepayment costs | | — |
| | (16 | ) | | (18 | ) | Debt prepayment costs | | — | | | (16) | | | — | | Payment of dividends on common stock | | (434 | ) | | (405 | ) | | (375 | ) | | Payment of dividends on common and preferred stock | | Payment of dividends on common and preferred stock | | (507) | | | (465) | | | (434) | | Debt issuance costs and financing fees | | (18 | ) | | (8 | ) | | (3 | ) | Debt issuance costs and financing fees | | (10) | | | (10) | | | (18) | | Change in notes payable – intercompany | | 6 |
| | 142 |
| | (47 | ) | Change in notes payable – intercompany | | (28) | | | (105) | | | 6 | | Net cash provided by (used in) financing activities | | (14 | ) | | (361 | ) | | 14 |
| Net cash provided by (used in) financing activities | | (495) | | | 457 | | | (14) | | | | | | | | | | Net Increase in Cash and Cash Equivalents, Including Restricted Amounts | | — |
| | — |
| | — |
| Net Increase in Cash and Cash Equivalents, Including Restricted Amounts | | 390 | | | — | | | — | | Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period | | — |
| | — |
| | — |
| Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period | | — | | | — | | | — | | | | | | | | | | | Cash and Cash Equivalents, Including Restricted Amounts, End of Period | | $ | — |
| | $ | — |
| | $ | — |
| Cash and Cash Equivalents, Including Restricted Amounts, End of Period | | $ | 390 | | | $ | — | | | $ | — | |
The accompanying notes are an integral part of these statements.
Schedule I — Condensed Financial Information of Registrant (Continued) CMS Energy—Parent Company Condensed Balance Sheets | | | | | | | | | | ASSETS | In Millions | | December 31 | 2019 | | 2018 | | | | | | | Current Assets | | | | | Notes and accrued interest receivable | | $ | 2 |
| | $ | 2 |
| Accounts receivable – intercompany and related parties | | 9 |
| | 7 |
| Federal income tax receivable | | 18 |
| | 44 |
| Accrued taxes | | — |
| | 26 |
| Prepayments and other current assets | | 1 |
| | 1 |
| Total current assets | | 30 |
| | 80 |
| | | | | | Other Non‑current Assets | | | | | Deferred income taxes | | 126 |
| | 180 |
| Investments in subsidiaries | | 8,526 |
| | 7,706 |
| Other investments | | 4 |
| | 3 |
| Other | | 16 |
| | 10 |
| Total other non‑current assets | | 8,672 |
| | 7,899 |
| | | | | | Total Assets | | $ | 8,702 |
| | $ | 7,979 |
|
| | | | | | | | | | | | | | | ASSETS | In Millions | December 31 | 2021 | 2020 | Current Assets | | | | | Cash and cash equivalents | | $ | 390 | | | $ | — | | Notes and accrued interest receivable – intercompany | | 463 | | | 358 | | Accounts receivable – intercompany and related parties | | 5 | | | 3 | | | | | | | Accrued taxes | | — | | | 48 | | Prepayments and other current assets | | 1 | | | 1 | | Total current assets | | 859 | | | 410 | | | | | | | Other Non‑current Assets | | | | | | | | | | Deferred income taxes | | 147 | | | 91 | | Investments in subsidiaries | | 9,870 | | | 9,372 | | Other investments | | 6 | | | 5 | | Other | | 8 | | | 5 | | Total other non‑current assets | | 10,031 | | | 9,473 | | | | | | | Total Assets | | $ | 10,890 | | | $ | 9,883 | |
| | LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | In Millions | In Millions | | In Millions | December 31 | 2019 | | 2018 | | December 31 | 2021 | 2020 | | | | | | | Current Liabilities | | | | | Current Liabilities | | Current portion of long-term debt | | $ | — |
| | $ | 180 |
| Current portion of long-term debt | | $ | — | | | $ | 200 | | Accounts and notes payable – intercompany | | 123 |
| | 113 |
| Accounts and notes payable – intercompany | | 61 | | | 69 | | Accrued interest, including intercompany | | 34 |
| | 32 |
| Accrued interest, including intercompany | | 33 | | | 33 | | Accrued taxes | | 5 |
| | — |
| Accrued taxes | | 83 | | | — | | Other current liabilities | | 38 |
| | 7 |
| Other current liabilities | | 8 | | | 9 | | Total current liabilities | | 200 |
| | 332 |
| Total current liabilities | | 185 | | | 311 | | | | | | | | Non‑current Liabilities | | | | | | Non‑current Liabilities | | Non‑current Liabilities | | Long-term debt | | 3,334 |
| | 2,750 |
| Long-term debt | | 3,928 | | | 3,926 | | Notes payable – intercompany | | 112 |
| | 116 |
| Notes payable – intercompany | | 112 | | | 116 | | Postretirement benefits | | 21 |
| | 17 |
| Postretirement benefits | | 19 | | | 21 | | Other non‑current liabilities | | 17 |
| | 9 |
| | Total non‑current liabilities | | 3,484 |
| | 2,892 |
| | Other non‑current liabilities | | Other non‑current liabilities | | 15 | | | 13 | | Total non‑current liabilities | | Total non‑current liabilities | | 4,074 | | | 4,076 | | | | | | | | Equity | | | | | Equity | | Common stockholders’ equity | | 5,018 |
| | 4,755 |
| Common stockholders’ equity | | 6,407 | | | 5,496 | | Preferred stock | | Preferred stock | | 224 | | | — | | Total equity | | Total equity | | 6,631 | | | 5,496 | | | | | | | | Total Liabilities and Equity | | $ | 8,702 |
| | $ | 7,979 |
| Total Liabilities and Equity | | $ | 10,890 | | | $ | 9,883 | |
The accompanying notes are an integral part of these statements.
Schedule I — Condensed Financial Information of Registrant (Continued) CMS Energy—Parent Company Notes to the Condensed Financial Statements 1: Basis of Presentation CMS Energy’s condensed financial statements have been prepared on a parent-only basis. In accordance with Rule 12-04 of Regulation S-X, these parent-only financial statements do not include all of the information and notes required by GAAP for annual financial statements, and therefore these parent-only financial statements and other information included should be read in conjunction with CMS Energy’s audited consolidated financial statements contained within Item 8. Financial Statements and Supplementary Data. Gas Index Price Reporting Litigation: CMS Energy, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company, were named as defendants in 4 class action lawsuits and 1 individual lawsuit arising as a result of alleged inaccurate natural gas price reporting to publications that report trade information. Allegations include price-fixing conspiracies, restraint of trade, and artificial inflation of natural gas retail prices in Kansas, Missouri, and Wisconsin. In 2016, CMS Energy entities reached a settlement with the plaintiffs in the Kansas and Missouri class action cases for an amount that was not material to CMS Energy. In 2017, the federal district court approved the settlement.
CMS Energy and the plaintiffs in each of the Kansas and the Wisconsin actions engaged in settlement discussions and CMS Energy has recorded a $30 million liability at December 31, 2019 as a probable estimate to settle these two cases. CMS Energy can give no assurances that it can reach a final settlement with the plaintiffs in these two cases, of the actual amount CMS Energy would have to pay in any settlement, or, in the Wisconsin case, that the Wisconsin court would approve any such settlement. If settlement does not occur and the outcome after appeals is unfavorable to CMS Energy, these cases could negatively affect CMS Energy’s liquidity, financial condition, and results of operations.2: Guarantees
CMS Energy has issued guarantees with a maximum potential obligation of $430$633 million on behalf of some of its wholly owned subsidiaries and related parties. CMS Energy’s maximum potential obligation consists primarily of potential payments: •to third parties under certain commodity purchase and swap agreements entered into with CMS ERM | | • | to third parties under certain agreements entered into with Grand River Wind, LLC, a wholly owned subsidiary of CMS Enterprises
|
to third parties in supportunder certain agreements entered into with Grand River Wind, LLC, a wholly owned subsidiary of non‑recourse revenue bonds issued by GeneseeCMS Enterprises •to EGLE on behalf of CMS Land and CMS Capital, for environmental remediation obligations at Bay Harbor •to the U.S. Department of Energy on behalf of Consumers, in connection with Consumers’ 2011 settlement agreement with the U.S. Department of Energy regarding damages resulting from the department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by Consumers •to a tax equity investor under certain agreements in connection with the purchase of a VIE •to Regions Bank related to the sale of EnerBank The expiry dates of these guarantees vary, depending upon contractual provisions or upon the statute of limitations under the relevant governing law. | | 4: | 3: Note Payable—Intercompany Note Payable—Intercompany
|
In July 2018, CMS Energy issuedhas a demand note payable to the DB SERP rabbi trust, of which $124 million was attributable to CMS Energy’s subsidiaries.trust. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028. This note payable is not recorded at fair value; however, its carrying value approximates fair value at December 31, 2019.2021. This fair value measurement is classified in Level 3 within the fair value hierarchy.
4: Preferred Stock
In 2021, CMS Energy issued 9.2 million depositary shares, each representing a 1/1,000th interest in a share of its cumulative Series C preferred stock, traded on the New York Stock Exchange under the symbol CMS PRC, at a price of $25.00 per depositary share. The transaction resulted in net proceeds of $224 million, which was used for general corporate purposes. Dividends on the preferred stock accumulate at an annual rate of 4.200 percent and are payable quarterly. The Series C preferred stock has no maturity or mandatory redemption date and is not redeemable at the option of the holders. CMS Energy may, at its option, redeem the Series C preferred stock, in whole or in part, at a price equal to $25,000 per share (equivalent to $25.00 per depositary share), plus accumulated and unpaid dividends, at any time on or after July 15, 2026. The Series C preferred stock ranks senior to CMS Energy’s common stock with respect to dividend rights and distribution rights upon liquidation.
Schedule II — Valuation and Qualifying Accounts and Reserves CMS Energy Corporation Years Ended December 31, 2019, 2018,2021, 2020, and 20172019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | Description | Balance at Beginning of Period | Charged to Expense | Charged to Other Accounts | Deductions | Balance at End of Period | Allowance for uncollectible accounts1 | | | | | | | | | | | 2021 | | $ | 29 | | | $ | 22 | | | $ | — | | | $ | 31 | | | $ | 20 | | 2020 | | 20 | | | 33 | | | — | | | 24 | | | 29 | | 2019 | | 20 | | | 29 | | | — | | | 29 | | | 20 | | Deferred tax valuation allowance | | | | | | | | | | | 2021 | | $ | 1 | | | $ | 1 | | | $ | — | | | $ | — | | | $ | 2 | | 2020 | | 2 | | | — | | | — | | | 1 | | | 1 | | 2019 | | 8 | | | — | | | — | | | 6 | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | In Millions | | Description | Balance at Beginning of Period | | Charged to Expense | | Charged to Other Accounts | | Deductions | | Balance at End of Period | | Allowance for uncollectible accounts1 | | | | | | | | | | | 2019 | | $ | 20 |
| | $ | 29 |
| | $ | — |
| | $ | 29 |
| | $ | 20 |
| 2018 | | 20 |
| | 29 |
| | — |
| | 29 |
| | 20 |
| 2017 | | 24 |
| | 29 |
| | — |
| | 33 |
| | 20 |
| Deferred tax valuation allowance | | | | | | | | | | | 2019 | | $ | 8 |
| | $ | — |
| | $ | — |
| | $ | 6 |
| | $ | 2 |
| 2018 | | 15 |
| | 2 |
| | — |
| | 9 |
| | 8 |
| 2017 | | 5 |
| | 10 |
| | — |
| | — |
| | 15 |
| Allowance for notes receivable1 | | | | | | | | | | | 2019 | | $ | 24 |
| | $ | 38 |
| | $ | — |
| | $ | 29 |
| | $ | 33 |
| 2018 | | 20 |
| | 25 |
| | — |
| | 21 |
| | 24 |
| 2017 | | 16 |
| | 20 |
| | — |
| | 16 |
| | 20 |
|
| | 11Deductions represent write-offs of uncollectible accounts, net of recoveries.
| Deductions represent write-offs of uncollectible accounts, net of recoveries. |
Consumers Energy Company Years Ended December 31, 2019, 2018,2021, 2020, and 20172019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In Millions | Description | Balance at Beginning of Period | Charged to Expense | Charged to Other Accounts | Deductions | Balance at End of Period | Allowance for uncollectible accounts1 | | | | | | | | | | | 2021 | | $ | 29 | | | $ | 22 | | | $ | — | | | $ | 31 | | | $ | 20 | | 2020 | | 20 | | | 33 | | | — | | | 24 | | | 29 | | 2019 | | 20 | | | 29 | | | — | | | 29 | | | 20 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1Deductions represent write-offs of uncollectible accounts, net of recoveries. | | | | | | | | | | | | | | | | | | | | | | In Millions | | Description | Balance at Beginning of Period | | Charged to Expense | | Charged to Other Accounts | | Deductions | | Balance at End of Period | | Allowance for uncollectible accounts1 | | | | | | | | | | | 2019 | | $ | 20 |
| | $ | 29 |
| | $ | — |
| | $ | 29 |
| | $ | 20 |
| 2018 | | 20 |
| | 29 |
| | — |
| | 29 |
| | 20 |
| 2017 | | 24 |
| | 29 |
| | — |
| | 33 |
| | 20 |
|
| | 1
| Deductions represent write-offs of uncollectible accounts, net of recoveries. |
Exhibit Index The agreements included as exhibits to this Form 10-K filing are included solely to provide information regarding the terms of the agreements and are not intended to provide any other factual or disclosure information about CMS Energy, Consumers, or other parties to the agreements. The agreements may contain representations and warranties made by each of the parties to each of the agreements that were made exclusively for the benefit of the parties involved in each of the agreements and should not be treated as statements of fact. The representations and warranties were made as a way to allocate risk if one or more of those statements prove to be incorrect. The statements were qualified by disclosures of the parties to each of the agreements that may not be reflected in each of the agreements. The agreements may apply standards of materiality that are different than standards applied to other investors. Additionally, the statements were made as of the date of the agreements or as specified in the agreements and have not been updated. The representations and warranties may not describe the actual state of affairs of the parties to each agreement. Additional information about CMS Energy and Consumers may be found in this filing, at www.cmsenergy.com, at www.consumersenergy.com, and through the SEC’s website at www.sec.gov. | | | | | | | Previously Filed | | | Exhibits | With File Number | As Exhibit Number | | Description | 3.11 | 1-9513 | (3)(a) | — | | 3.21 | 1-9513 | 3.2 | — | | 3.3 | 1-5611 | 3(c) | — | | 3.4 | 1-5611 | 3.2 | — | | 4.1 | 2-65973 | (b)(1)–4 | — | Indenture dated as of September 1, 1945 between Consumers and Chemical Bank (successor to Manufacturers Hanover Trust Company), as Trustee, including therein indentures supplemental thereto through the Forty-third Supplemental Indenture dated as of May 1, 1979 (Form S-16 filed November 13, 1979) | | | | | Indentures Supplemental thereto: | 4.1.a | 1-5611 | 4.2 | — | | 4.1.b | 1-5611 | 4.1 | — | | 4.1.c | 1-5611 | 4.1 | — | | 4.1.d | 1-5611 | 4.1 | — | | 4.1.e | 1-5611 | 4.1 | — | | 4.1.f | 1-5611 | 4.1 | — | | 4.1.g | 1-5611 | 4.1 | — | | 4.1.h | 1-5611 | 4.1 | — | |
| | | | | | | | | | | | | | | | Previously Filed | | | Exhibits | With File Number | As Exhibit Number | | Description | 3.11 | 1-9513 | 3.1 | — | | 3.21 | 1-9513 | 3.2 | — | | | | | | | 3.3 | 1-5611 | 3(c) | — | | 3.4 | 1-5611 | 3.2 | — | | 4.1 | 2-65973 | (b)(1)–4 | — | Indenture dated as of September 1, 1945 between Consumers and Chemical Bank (successor to Manufacturers Hanover Trust Company), as Trustee, including therein indentures supplemental thereto through the Forty-third Supplemental Indenture dated as of May 1, 1979 (Form S-16 filed November 13, 1979) | | | | | Indentures Supplemental thereto: | 4.1.a | 1-5611 | 4.2 | — | | 4.1.b | 1-5611 | 4.1 | — | | 4.1.c | 1-5611 | 4.1 | — | | 4.1.d | 1-5611 | 4.1 | — | | 4.1.e | 1-5611 | 4.1 | — | | 4.1.f | 1-5611 | 4.1 | — | | 4.1.g | 1-5611 | 4.1 | — | |
| | | | | | | | | | | | | | | | Previously Filed | | | Exhibits | With File Number | As Exhibit Number | | Description | 4.1.i4.1.h | 1-5611 | 4.1 | — | | 4.1.j | 1-5611 | 4.1 | — | | 4.1.k4.1.i | 1-5611 | 4.1 | — | | 4.1.l4.1.j | 1-5611 | 4.1 | — | | 4.1.m4.1.k | 1-5611 | 4.1 | — | | 4.1.n4.1.l | 1-5611 | 4.1 | — | | 4.1.o4.1.m | 1-5611 | 4.1 | — | | 4.1.p4.1.n | 1-5611 | 4.1 | — | | 4.1.q4.1.o | 1-5611 | 4.1 | — | | 4.1.r4.1.p | 1-5611 | 4.1 | — | | 4.1.s4.1.q | 1-5611 | 4.1 | — | | 4.1.t4.1.r | 1-5611 | 4.1 | — | | 4.1.u4.1.s | 1-5611 | 4.1 | — | | 4.1.v4.1.t | 1-5611 | 4.1 | — | | 4.1.w4.1.u | 1-5611 | 4.1 | — | | 4.1.x4.1.v | 1-5611 | 4.1 | — | | 4.1.y4.1.w | 1-5611 | 4.1 | — | | 4.1.z4.1.x | 1-5611 | 4.3 | — | | 4.24.1.y | 1-5611 | (4)(b)4.1 | — | | 4.1.z | 1-5611 | 4.1 | — | | 4.1.aa | 1-5611 | 4.1 | — | | 4.1.bb | 1-5611 | 4.1 | — | | 4.1.cc | 1-5611 | 4.1 | — | | 4.1.dd | 1-5611 | 4.1 | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4.2 | 1-5611 | (4)(b) | — | | 4.3 | 1-5611 | (4)(c) | — | | 4.41 | 33-47629 | (4)(a) | — | Indenture dated as of September 15, 1992 between CMS Energy and NBD Bank, as Trustee (Form S-3 filed May 1, 1992) | | | | | Indentures Supplemental thereto: | 4.4.a1 | 1-9513 | 4.1 | — | | 4.4.b1
| 1-9513 | 4.1 | — | | 4.4.c4.4.b1
| 1-9513 | 4.1 | — | | 4.4.d4.4.c1
| 1-9513 | 4.2 | — | | 4.4.e4.4.d1
| 1-9513 | 4.1 | — | | 4.4.f4.4.e1
| 1-9513 | 4.1 | — | | 4.4.g4.4.f1
| 1-9513 | 4.1 | — | | 4.4.h1
| 1-9513 | 4.1 | — | |
| | | | | | | | | | | | | | | | Previously Filed | | | Exhibits | With File Number | As Exhibit Number | | Description | 4.4.g1 | 1-9513 | 4.1 | — | | | | | | | | | | | | | | | | | | | | | | | | | | | 4.51 | 1-9513 | (4a) | — | | | | | | Indentures Supplemental thereto: | 4.5.a1 | 1-9513 | 4.5.a | — | | 4.5.b1 | 1-9513 | 4.1 | — | | 4.5.c1 | 1-9513 | 4.1 | — | | 4.5.d1 | 1-9513 | 4.1 | — | | 4.5.e1 | 1-9513 | 4.1 | — | | 4.5.f1 | 1-9513 | 4.1 | — | | | | | | | | | | | | | | | | | | | | | | | | | | | 4.61 | | | — | | 4.7 | 1-5611 | 4.7 | — | | 4.81 | 1-9513 | 4.2 | — | | | | | | | 10.12 | 1-9513 | 10.1 | — | | 10.22 | 1-9513 | 10.3 | — | | 10.32 | 1-9513 | 10.5 | — | | 10.42 | 1-9513 | 10.6 | — | | 10.52 | 1-9513 | 10.7 | — | | 10.62 | 1-9513 | 10.6 | — | | 10.71 | 1-9513 | (10)(y) | — | Environmental Agreement dated as of June 1, 1990 made by CMS Energy to The Connecticut National Bank and Others (Form 10-K for the fiscal year ended December 31, 1990) | 10.81,2 | 1-9513 | (10)(a) | — | |
| | | | | | | | | | | | | | | | Previously Filed | | | Exhibits | With File Number | As Exhibit Number | | Description | 10.92 | 1-5611 | (10)(b) | — | | 10.102 | | | — | | 10.112 | 1-9513 | 10.1 | — | | 10.122 | | | — | | 10.131,2 | | | — | | 10.141 | 1-9513 | 10.1 | — | | 10.14.a1 | 1-9513 | 10.2 | — | | 10.14.b1 | 1-9513 | 10.1 | — | | 10.15 | 1-5611 | 10.2 | — | | 10.15.a | 1-5611 | 10.2 | — | | 10.16 | 1-5611 | 10.1 | — | | 10.16.a | 1-5611 | 10.1 | — | | 10.16.b | 1-5611 | 10.1 | — | | 10.16.c | 1-5611 | 10.1 | — | |
| | | | | | | | | | | | | | | | Previously Filed | | | Exhibits | With File Number | As Exhibit Number | | Description | 10.172 | 1-9513 | 10.1 | — | | 10.18 | 1-5611 | 10.1 | — | | 10.191 | 1-9513 | 10.1 | — | | 10.19.a1 | 1-9513 | 10.1 | — | | 10.20 | 1-5611 | 10.1 | — | | 10.21 | 1-5611 | 10.2 | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21.1 | | | — | | 23.1 | | | — | | 23.2 | | | — | | 31.1 | | | — | | 31.2 | | | — | | 31.3 | | | — | | 31.4 | | | — | | 32.1 | | | — | | 32.2 | | | — | | 99.11 | 333-249643 | 99.1 | — | |
| | | | | | | | | | | | | | | | Previously Filed | | | Exhibits | With File Number | As Exhibit Number | | Description | 4.5101.INS1
| 1-9513 | (4a) | — | | | | | | Indentures Supplemental thereto: | 4.5.a1
| 1-9513 | 4.5.a | — | | 4.5.b1
| 1-9513 | 4.1 | — | | 4.5.c1
| 1-9513 | 4.1 | — | | 4.5.d1
| 1-9513 | 4.1 | — | | 4.61
| | | — | | 4.7 | | | — | | 10.12
| 1-9513 | 10.1 | — | | 10.22
| 1-9513 | 10.3 | — | | 10.32
| 1-9513 | 10.5 | — | | 10.42
| 1-9513 | 10.6 | — | | 10.52
| 1-9513 | 10.7 | — | | 10.62
| | | — | | 10.71
| 1-9513 | (10)(y) | — | Environmental Agreement dated as of June 1, 1990 made by CMS Energy to The Connecticut National Bank and Others (Form 10-K for the fiscal year ended December 31, 1990) | 10.81,2
| 1-9513 | (10)(a) | — | | 10.92
| 1-5611 | (10)(b) | — | | 10.102
| | | — | | 10.112
| 1-9513 | 10.1 | — | | 10.122
| | | — | |
| | | | | | | Previously Filed | | | Exhibits | With File Number | As Exhibit Number | | Description | 10.132 | | | — | | 10.141 | 1-9513 | 10.1 | — | | 10.15 | 1-5611 | 10.2 | — | | 10.16 | 1-5611 | 10.1 | — | | 10.16.a | 1-5611 | 10.1 | — | | 10.172 | 1-9513 | 10.1 | — | | 10.18 | 1-5611 | 10.1 | — | | 21.1 | | | — | | 23.1 | | | — | | 23.2 | | | — | | 31.1 | | | — | | 31.2 | | | — | | 31.3 | | | — | | 31.4 | | | — | | 32.1 | | | — | | 32.2 | | | — | | 99.11 | 333-221134 | 99.1 | — | |
| | | | — | | | Previously Filed | | | Exhibits | With File
Number
| As
Exhibit
Number
| | Description | 101.INS | | | — | Inline XBRL Instance Document | 101.SCH | | | — | Inline XBRL Taxonomy Extension Schema | 101.CAL | | | — | Inline XBRL Taxonomy Extension Calculation Linkbase | 101.DEF | | | — | Inline XBRL Taxonomy Extension Definition Linkbase | 101.LAB | | | — | Inline XBRL Taxonomy Extension Labels Linkbase | 101.PRE | | | — | Inline XBRL Taxonomy Extension Presentation Linkbase | 104 | | | — | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document) |
| | 11Obligations of CMS Energy or its subsidiaries, but not of Consumers. 2Management contract or compensatory plan or arrangement. | Obligations of CMS Energy or its subsidiaries, but not of Consumers. |
| | 2
| Management contract or compensatory plan or arrangement. |
Exhibits that have been previously filed with the SEC, designated above, are incorporated herein by reference and made a part hereof. Item 16. Form 10-K Summary None.
Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, CMS Energy Corporation has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. | | | | | | | | | | | | /s/ Patricia K. PoppeGarrick J. Rochow | | | Name: | Patricia K. PoppeGarrick J. Rochow | | | Title: | President andChief Executive Officer | | | Date: | February 6, 202010, 2022 | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of CMS Energy Corporation and in the capacities indicated and on February 6, 2020. | | | | | | | | | /s/ Garrick J. Rochow | | /s/ William D. Harvey | Garrick J. Rochow | | William D. Harvey, Director | President, Chief Executive Officer, and Director | | | (Principal Executive Officer) | | | | | /s/ John G. Russell | | | John G. Russell, Director | /s/ Rejji P. Hayes | | | Rejji P. Hayes | | | Executive Vice President and Chief Financial Officer | | /s/ Suzanne F. Shank | | Suzanne F. Shank, Director | (Principal Financial Officer) | | | | | | /s/ Patricia K. Poppe | | /s/ Kurt L. Darrow | Patricia K. Poppe | | Kurt L. Darrow, Director | President and Chief Executive Officer, and Director | | | | /s/ Stephen E. Ewing | (Principal Executive Officer) | | Stephen E. Ewing, Director | | | | | | /s/ William D. Harvey | /s/ Rejji P. Hayes | | William D. Harvey, Director | Rejji P. Hayes | | | Executive Vice President and Chief Financial Officer | | /s/ John G. Russell | | John G. Russell, Director | (Principal Financial Officer) | | | | | /s/ Suzanne F. Shank | | | Suzanne F. Shank, Director | /s/ Glenn P. Barba | | | Glenn P. Barba | | /s/ Myrna M. Soto | /s/ Scott B. McIntosh | | Myrna M. Soto, Director | Scott B. McIntosh | | | Vice President, Controller, and Chief Accounting Officer | | Myrna M. Soto, Director | | | (Controller) | | /s/ John G. Sznewajs | (Controller) | | John G. Sznewajs, Director | | | | | | | /s/ Jon E. Barfield | | /s/ Ronald J. Tanski | Jon E. Barfield, Director | | Ronald J. Tanski, Director | | | | | | | /s/ Deborah H. Butler | | /s/ Laura H. Wright | Deborah H. Butler, Director | | Laura H. Wright, Director | | | | | | | /s/ Kurt L. Darrow | | | Kurt L. Darrow, Director | | |
Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Consumers Energy Company has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. | | | | | | | | | | | | /s/ Patricia K. PoppeGarrick J. Rochow | | | Name: | Patricia K. PoppeGarrick J. Rochow | | | Title: | President andChief Executive Officer | | | Date: | February 6, 202010, 2022 | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of Consumers Energy Company and in the capacities indicated and on February 6, 2020. | | | | | | | | | /s/ Garrick J. Rochow | | /s/ William D. Harvey | Garrick J. Rochow | | William D. Harvey, Director | President, Chief Executive Officer, and Director | | | (Principal Executive Officer) | | | | | /s/ John G. Russell | | | John G. Russell, Director | /s/ Rejji P. Hayes | | | Rejji P. Hayes | | | Executive Vice President and Chief Financial Officer | | /s/ Suzanne F. Shank | | Suzanne F. Shank, Director | (Principal Financial Officer) | | | | | | /s/ Patricia K. Poppe | | /s/ Kurt L. Darrow | Patricia K. Poppe | | Kurt L. Darrow, Director | President and Chief Executive Officer, and Director | | | | /s/ Stephen E. Ewing | (Principal Executive Officer) | | Stephen E. Ewing, Director | | | | | | /s/ William D. Harvey | /s/ Rejji P. Hayes | | William D. Harvey, Director | Rejji P. Hayes | | | Executive Vice President and Chief Financial Officer | | /s/ John G. Russell | | John G. Russell, Director | (Principal Financial Officer) | | | | | /s/ Suzanne F. Shank | | | Suzanne F. Shank, Director | /s/ Glenn P. Barba | | | Glenn P. Barba | | /s/ Myrna M. Soto | /s/ Scott B. McIntosh | | Myrna M. Soto, Director | Scott B. McIntosh | | | Vice President, Controller, and Chief Accounting Officer | | Myrna M. Soto, Director | | | (Controller) | | /s/ John G. Sznewajs | (Controller) | | John G. Sznewajs, Director | | | | | | | /s/ Jon E. Barfield | | /s/ Ronald J. Tanski | Jon E. Barfield, Director | | Ronald J. Tanski, Director | | | | | | | /s/ Deborah H. Butler | | /s/ Laura H. Wright | Deborah H. Butler, Director | | Laura H. Wright, Director | | | | | | | /s/ Kurt L. Darrow | | | Kurt L. Darrow, Director | | |
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