CMS ENERGY CORP, 10-Q filed on 10/24/2019
Quarterly Report
v3.19.3
Cover Page - shares
9 Months Ended
Sep. 30, 2019
Oct. 07, 2019
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2019  
Document Transition Report false  
Commission File Number 1-9513  
Entity Registrant Name CMS ENERGY CORPORATION  
IRS Employer Identification No. 38-2726431  
Entity Incorporation State MI  
Entity Address One Energy Plaza  
City Jackson  
State MI  
Postal Zip Code 49201  
City Area Code 517  
Local Phone Number 788‑0550  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Smaller reporting company false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   283,842,478
Entity Central Index Key 0000811156  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Consumers Energy Company    
Document Information [Line Items]    
Commission File Number 1-5611  
Entity Registrant Name CONSUMERS ENERGY COMPANY  
IRS Employer Identification No. 38-0442310  
Entity Incorporation State MI  
Entity Address One Energy Plaza  
City Jackson  
State MI  
Postal Zip Code 49201  
City Area Code 517  
Local Phone Number 788‑0550  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Smaller reporting company false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   84,108,789
Entity Central Index Key 0000201533  
Common Stock    
Document Information [Line Items]    
Title of each class CMS Energy Corporation Common Stock, $0.01 par value  
Trading Symbol CMS  
Security Exchange Name NYSE  
CMS Energy Corporation 5.625% Junior Subordinated Notes due 2078    
Document Information [Line Items]    
Title of each class CMS Energy Corporation 5.625% Junior Subordinated Notes due 2078  
Trading Symbol CMSA  
Security Exchange Name NYSE  
CMS Energy Corporation 5.875% Junior Subordinated Notes due 2078    
Document Information [Line Items]    
Title of each class CMS Energy Corporation 5.875% Junior Subordinated Notes due 2078  
Trading Symbol CMSC  
Security Exchange Name NYSE  
CMS Energy Corporation 5.875% Junior Subordinated Notes due 2079    
Document Information [Line Items]    
Title of each class CMS Energy Corporation 5.875% Junior Subordinated Notes due 2079  
Trading Symbol CMSD  
Security Exchange Name NYSE  
Consumers Energy Company Cumulative Preferred Stock, $100 par value: $4.50 Series    
Document Information [Line Items]    
Title of each class Consumers Energy Company Cumulative Preferred Stock, $100 par value: $4.50 Series  
Trading Symbol CMS-PB  
Security Exchange Name NYSE  
v3.19.3
Consolidated Statements of Income (Unaudited) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Operating Revenue $ 1,546 $ 1,599 $ 5,050 $ 5,044
Operating Expenses        
Fuel for electric generation 130 150 391 397
Purchased power – related parties 19 21 53 59
Maintenance and other operating expenses 313 366 1,010 1,002
Depreciation and amortization 215 206 729 689
General taxes 70 67 247 222
Total operating expenses 1,195 1,305 4,122 4,132
Operating Income 351 294 928 912
Other Income (Expense)        
Interest income 2 2 5 8
Allowance for equity funds used during construction 2 2 7 4
Income (loss) from equity method investees 5 (1) 6 6
Nonoperating retirement benefits, net 22 22 68 68
Other income 0 1 3 2
Other expense 0 (4) (8) (15)
Total other income 31 22 81 73
Interest Charges        
Interest on long-term debt 111 101 327 304
Interest expense – related parties 3 0 6 0
Other interest expense 20 14 55 35
Allowance for borrowed funds used during construction (1) (1) (3) (2)
Total interest charges 133 114 385 337
Income Before Income Taxes 249 202 624 648
Income Tax Expense 42 33 110 98
Net Income 207 169 514 550
Income Attributable to Noncontrolling Interests 0 0 1 1
Net Income Available to Common Stockholders $ 207 $ 169 $ 513 $ 549
Basic earnings per average common share (in dollars per share) $ 0.73 $ 0.60 $ 1.81 $ 1.95
Diluted earnings per average common share (in dollars per share) $ 0.73 $ 0.59 $ 1.81 $ 1.94
Consumers Energy Company        
Operating Revenue $ 1,429 $ 1,502 $ 4,706 $ 4,752
Operating Expenses        
Fuel for electric generation 101 122 295 310
Purchased and interchange power 408 440 1,132 1,206
Purchased power – related parties 19 22 53 61
Cost of gas sold 32 45 537 530
Maintenance and other operating expenses 272 334 911 914
Depreciation and amortization 210 203 716 681
General taxes 68 65 240 216
Total operating expenses 1,110 1,231 3,884 3,918
Operating Income 319 271 822 834
Other Income (Expense)        
Interest income 2 2 4 6
Interest and dividend income – related parties 1 1 3 1
Allowance for equity funds used during construction 2 2 7 4
Nonoperating retirement benefits, net 21 21 64 63
Other income 0 0 2 1
Other expense 0 (4) (8) (9)
Total other income 26 22 72 66
Interest Charges        
Interest on long-term debt 69 69 206 203
Interest expense – related parties 3 0 6 0
Other interest expense 4 5 11 14
Allowance for borrowed funds used during construction (1) (1) (3) (2)
Total interest charges 75 73 220 215
Income Before Income Taxes 270 220 674 685
Income Tax Expense 57 40 137 111
Net Income 213 180 537 574
Preferred Stock Dividends 0 0 1 1
Net Income Available to Common Stockholder 213 180 536 573
Purchased and interchange power        
Operating Expenses        
Cost of sales 413 447 1,147 1,222
Cost of gas sold        
Operating Expenses        
Cost of sales $ 35 $ 48 $ 545 $ 541
v3.19.3
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Net income $ 207 $ 169 $ 514 $ 550
Retirement Benefits Liability        
Amortization of net actuarial loss, net of tax of $- for all periods 0 1 2 3
Amortization of prior service credit 0 0 (1) (1)
Investments        
Unrealized loss on investments 0 0 0 (1)
Reclassification adjustments included in net income 0 1 0 1
Derivatives        
Unrealized loss on derivative instruments, net of tax of $-, $-, $(1), and $- 0   (3)  
Unrealized loss on derivative instruments, net of tax of $-, $-, $(1), and $-   0   0
Other Comprehensive Income (Loss) 0 2 (2) 2
Comprehensive Income 207 171 512 552
Comprehensive Income Attributable to Noncontrolling Interests 0 0 1 1
Comprehensive Income Attributable to CMS Energy 207 171 511 551
Consumers Energy Company        
Net income 213 180 537 574
Retirement Benefits Liability        
Amortization of net actuarial loss, net of tax of $- for all periods 0 1 1 2
Investments        
Unrealized loss on investments 0 0 0 (1)
Reclassification adjustments included in net income 0 1 0 1
Derivatives        
Other Comprehensive Income (Loss) 0 2 1 2
Comprehensive Income $ 213 $ 182 $ 538 $ 576
v3.19.3
Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Amortization of net actuarial loss TAX $ 0 $ 0 $ 0 $ 0
Amortization of prior service credit (TAX BENEFIT) 0 0 0 0
Unrealized loss on investments (TAX BENEFIT) 0 0 0 0
Reclassification adjustments included in net income TAX (TAX BENEFIT) 0 0 0 0
Unrealized loss on derivative instruments (TAX BENEFIT) 0   (1)  
Unrealized loss on derivative instruments (TAX BENEFIT)   0   0
Consumers Energy Company        
Amortization of net actuarial loss TAX 0 0 0 0
Unrealized loss on investments (TAX BENEFIT) 0 0 0 0
Reclassification adjustments included in net income TAX (TAX BENEFIT) $ 0 $ 0 $ 0 $ 0
v3.19.3
Consolidated Statements Of Cash Flows (Unaudited) - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Cash Flows from Operating Activities    
Net income $ 514 $ 550
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 729 689
Deferred income taxes and investment tax credits 89 90
Other non-cash operating activities and reconciling adjustments (11) 47
Cash provided by (used in) changes in assets and liabilities    
Accounts and notes receivable and accrued revenue 297 299
Inventories (49) (76)
Accounts payable and accrued rate refunds (82) (46)
Other current and non-current assets and liabilities (92) 12
Net cash provided by operating activities 1,395 1,565
Cash Flows from Investing Activities    
Capital expenditures (excludes assets placed under finance lease) (1,570) (1,572)
Increase in EnerBank notes receivable (328) (200)
Purchase of notes receivable by EnerBank (307) (87)
Proceeds from DB SERP investments 0 146
Proceeds from sale of transmission equipment 96 0
Cost to retire property and other investing activities (103) (102)
Net cash used in investing activities (2,212) (1,815)
Cash Flows from Financing Activities    
Proceeds from issuance of debt 2,076 1,044
Retirement of debt (1,170) (705)
Increase in EnerBank certificates of deposit 622 288
Increase (decrease) in notes payable (97)  
Increase (decrease) in notes payable   110
Issuance of common stock 9 39
Payment of dividends on common and preferred stock (326) (305)
Other financing costs (39) (59)
Net cash provided by financing activities 1,075 412
Net Increase in Cash and Cash Equivalents, Including Restricted Amounts 258 162
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period 175 204
Cash and Cash Equivalents, Including Restricted Amounts, End of Period 433 366
Non-cash transactions    
Capital expenditures not paid 135 159
Consumers Energy Company    
Cash Flows from Operating Activities    
Net income 537 574
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 716 681
Deferred income taxes and investment tax credits 37 40
Other non-cash operating activities and reconciling adjustments (24) 33
Cash provided by (used in) changes in assets and liabilities    
Accounts and notes receivable and accrued revenue 230 178
Inventories (52) (75)
Accounts payable and accrued rate refunds (76) (48)
Other current and non-current assets and liabilities (117) (128)
Net cash provided by operating activities 1,251 1,255
Cash Flows from Investing Activities    
Capital expenditures (excludes assets placed under finance lease) (1,559) (1,339)
Proceeds from DB SERP investments 0 106
DB SERP investment in note receivable – related party 0 (106)
Proceeds from sale of transmission equipment 76 0
Cost to retire property and other investing activities (100) (96)
Net cash used in investing activities (1,583) (1,435)
Cash Flows from Financing Activities    
Proceeds from issuance of debt 918 544
Retirement of debt (528) (330)
Increase (decrease) in notes payable (97)  
Increase (decrease) in notes payable   110
Stockholder contribution 675 250
Payment of dividends on common and preferred stock (397) (393)
Other financing costs (11) (28)
Net cash provided by financing activities 560 153
Net Increase in Cash and Cash Equivalents, Including Restricted Amounts 228 (27)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period 56 65
Cash and Cash Equivalents, Including Restricted Amounts, End of Period 284 38
Non-cash transactions    
Capital expenditures not paid $ 123 $ 128
v3.19.3
Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Current Assets    
Cash and cash equivalents $ 403 $ 153
Restricted cash and cash equivalents 29 21
Accounts receivable and accrued revenue, less allowance of $21 in 2019 and $20 in 2018 641 964
Notes receivable, less allowance of $33 in 2019 and $24 in 2018 234 233
Accounts receivable – related parties 16 14
Accrued gas revenue 6 16
Inventories at average cost    
Gas in underground storage 505 450
Materials and supplies 142 143
Generating plant fuel stock 52 57
Deferred property taxes 184 279
Regulatory assets 7 37
Prepayments and other current assets 86 101
Total current assets 2,305 2,468
Plant, Property, and Equipment    
Plant, property, and equipment, gross 24,645 24,400
Less accumulated depreciation and amortization 7,264 7,037
Plant, property, and equipment, net 17,381 17,363
Construction work in progress 1,143 763
Total plant, property, and equipment 18,524 18,126
Other Non-current Assets    
Regulatory assets 2,367 1,743
Accounts and notes receivable 2,253 1,645
Investments 68 69
Other 492 478
Total other non-current assets 5,180 3,935
Total Assets 26,009 24,529
Current Liabilities    
Current portion of long-term debt, finance leases, and other financing 1,074 996
Notes payable 0 97
Accounts payable 598 723
Accounts payable – related parties 9 10
Accrued rate refunds 18 4
Accrued interest 99 94
Accrued taxes 125 398
Regulatory liabilities 72 155
Other current liabilities 170 147
Total current liabilities 2,165 2,624
Non-current Liabilities    
Long-term debt 12,040 10,615
Non-current portion of finance leases and other financing 81 69
Regulatory liabilities 3,754 3,681
Postretirement benefits 447 436
Asset retirement obligations 451 432
Deferred investment tax credit 116 99
Deferred income taxes 1,588 1,487
Other non-current liabilities 373 294
Total non-current liabilities 18,850 17,113
Commitments and contingencies
Common stockholders’ equity    
Common stock, authorized 350.0 shares; outstanding 283.8 shares in 2019 and 283.4 shares in 2018 3 3
Other paid-in capital 5,104 5,088
Accumulated other comprehensive loss (67) (65)
Accumulated deficit (83) (271)
Total common stockholders’ equity 4,957 4,755
Noncontrolling interests 37 37
Total equity 4,994 4,792
Total Liabilities and Equity 26,009 24,529
Consumers Energy Company    
Current Assets    
Cash and cash equivalents 259 39
Restricted cash and cash equivalents 25 17
Accounts receivable and accrued revenue, less allowance of $21 in 2019 and $20 in 2018 611 855
Accounts receivable – related parties 8 15
Accrued gas revenue 6 16
Inventories at average cost    
Gas in underground storage 505 450
Materials and supplies 137 137
Generating plant fuel stock 49 52
Deferred property taxes 184 279
Regulatory assets 7 37
Prepayments and other current assets 74 83
Total current assets 1,865 1,980
Plant, Property, and Equipment    
Plant, property, and equipment, gross 24,214 23,963
Less accumulated depreciation and amortization 7,175 6,958
Plant, property, and equipment, net 17,039 17,005
Construction work in progress 1,129 756
Total plant, property, and equipment 18,168 17,761
Other Non-current Assets    
Regulatory assets 2,367 1,743
Accounts and notes receivable 29 27
Accounts and notes receivable – related parties 102 104
Other 407 410
Total other non-current assets 2,905 2,284
Total Assets 22,938 22,025
Current Liabilities    
Current portion of long-term debt, finance leases, and other financing 122 48
Notes payable 0 97
Accounts payable 569 685
Accounts payable – related parties 14 14
Accrued rate refunds 18 4
Accrued interest 76 59
Accrued taxes 158 436
Regulatory liabilities 72 155
Other current liabilities 127 120
Total current liabilities 1,156 1,618
Non-current Liabilities    
Long-term debt 7,087 6,779
Non-current portion of finance leases and other financing 81 69
Regulatory liabilities 3,754 3,681
Postretirement benefits 404 392
Asset retirement obligations 448 428
Deferred investment tax credit 116 99
Deferred income taxes 1,858 1,809
Other non-current liabilities 298 230
Total non-current liabilities 14,046 13,487
Commitments and contingencies
Common stockholders’ equity    
Common stock, authorized 350.0 shares; outstanding 283.8 shares in 2019 and 283.4 shares in 2018 841 841
Other paid-in capital 5,374 4,699
Accumulated other comprehensive loss (20) (21)
Accumulated deficit 1,504 1,364
Total common stockholders’ equity 7,699 6,883
Cumulative preferred stock, $4.50 series 37 37
Total equity 7,736 6,920
Total Liabilities and Equity $ 22,938 $ 22,025
v3.19.3
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Accounts receivable and accrued revenue ALLOWANCE $ 21 $ 20
Accounts and notes receivable ALLOWANCE $ 33 $ 24
Common stock, authorized (in shares) 350,000,000.0 350,000,000.0
Common stock, outstanding (in shares) 283,800,000 283,400,000
Preferred stock, par value (in dollars per share) $ 4.50 $ 4.50
Consumers Energy Company    
Accounts receivable and accrued revenue ALLOWANCE $ 21 $ 20
Common stock, authorized (in shares) 125,000,000.0 125,000,000
Common stock, outstanding (in shares) 84,100,000 84,100,000
v3.19.3
Consolidated Statements of Changes In Equity (Unaudited) - USD ($)
$ in Millions
Total
Common Stock
Other Paid-in Capital
Accumulated Other Comprehensive Loss
Retirement benefits liability
Investments
Derivative instruments
Derivative instruments
Accumulated Deficit
Noncontrolling Interests
Consumers Energy Company
Consumers Energy Company
Common Stock
Consumers Energy Company
Other Paid-in Capital
Consumers Energy Company
Accumulated Other Comprehensive Loss
Consumers Energy Company
Retirement benefits liability
Consumers Energy Company
Investments
Consumers Energy Company
Accumulated Deficit
Consumers Energy Company
Preferred Stock
Total Equity at Beginning of Period at Dec. 31, 2017 $ 4,478 $ 3 $ 5,019 $ (50) $ (50) $ 0   $ 0 $ (531) $ 37 $ 6,488 $ 841 $ 4,449 $ (12) $ (24) $ 12 $ 1,173 $ 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                    
Common stock issued     54                              
Common stock repurchased     (10)                              
Common stock reissued     20                              
Stockholder contribution                         250          
Amortization of net actuarial loss 3       3           2       2      
Amortization of prior service credit (1)       (1)                          
Unrealized loss on investments (1)         (1)         (1)         (1)    
Reclassification adjustments included in net income 1         1         1         1    
Unrealized loss on derivative instruments, net of tax of $-, $-, $(1), and $- 0                                  
Net income 550               549 1 574           574  
Dividends declared on common stock                 (304)               (392)  
Dividends declared on preferred stock                                 (1)  
Distributions and other changes in noncontrolling interests                   (1)                
Total Equity at End of Period at Sep. 30, 2018 $ 4,786 3 5,083 (59) (59) 0   0 (278) 37 6,923 841 4,699 (27) (27) 0 1,373 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                    
Dividends declared per common share (in dollars per share) $ 1.0725                                  
Total Equity at Beginning of Period at Dec. 31, 2017 $ 4,478 3 5,019 (50) (50) 0   0 (531) 37 6,488 841 4,449 (12) (24) 12 1,173 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                    
Unrealized loss on derivative instruments, net of tax of $-, $-, $(1), and $-               0                    
Total Equity at End of Period at Dec. 31, 2018 4,792 3 5,088 (65) (63) 0 $ (2)   (271) 37 6,920 841 4,699 (21) (21) 0 1,364 37
Total Equity at Beginning of Period at Jun. 30, 2018 4,709 3 5,076 (61) (60) (1)   0 (346) 37 6,888 841 4,699 (29) (28) (1) 1,340 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                    
Common stock issued     7                              
Common stock repurchased     0                              
Common stock reissued     0                              
Stockholder contribution                         0          
Amortization of net actuarial loss 1       1           1       1      
Amortization of prior service credit 0       0                          
Unrealized loss on investments 0         0         0         0    
Reclassification adjustments included in net income 1         1         1         1    
Unrealized loss on derivative instruments, net of tax of $-, $-, $(1), and $- 0             0                    
Net income 169               169 0 180           180  
Dividends declared on common stock                 (101)               (147)  
Dividends declared on preferred stock                                 0  
Distributions and other changes in noncontrolling interests                   0                
Total Equity at End of Period at Sep. 30, 2018 $ 4,786 3 5,083 (59) (59) 0   $ 0 (278) 37 6,923 841 4,699 (27) (27) 0 1,373 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                    
Dividends declared per common share (in dollars per share) $ 0.3575                                  
Total Equity at Beginning of Period at Dec. 31, 2018 $ 4,792 3 5,088 (65) (63) 0 (2)   (271) 37 6,920 841 4,699 (21) (21) 0 1,364 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                    
Common stock issued     25                              
Common stock repurchased     (9)                              
Common stock reissued     0                              
Stockholder contribution                         675          
Amortization of net actuarial loss 2       2           1       1      
Amortization of prior service credit (1)       (1)                          
Unrealized loss on investments 0         0         0         0    
Reclassification adjustments included in net income 0         0         0         0    
Unrealized loss on derivative instruments (3)           (3)                      
Net income 514               513 1 537           537  
Dividends declared on common stock                 (325)               (396)  
Dividends declared on preferred stock                                 (1)  
Distributions and other changes in noncontrolling interests                   (1)                
Total Equity at End of Period at Sep. 30, 2019 $ 4,994 3 5,104 (67) (62) 0 (5)   (83) 37 7,736 841 5,374 (20) (20) 0 1,504 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                    
Dividends declared per common share (in dollars per share) $ 1.1475                                  
Total Equity at Beginning of Period at Jun. 30, 2019 $ 4,888 3 5,097 (67) (62) 0 (5)   (182) 37 7,647 841 5,374 (20) (20) 0 1,415 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                    
Common stock issued     8                              
Common stock repurchased     (1)                              
Common stock reissued     0                              
Stockholder contribution                         0          
Amortization of net actuarial loss 0       0           0       0      
Amortization of prior service credit 0       0                          
Unrealized loss on investments 0         0         0         0    
Reclassification adjustments included in net income 0         0         0         0    
Unrealized loss on derivative instruments 0           0                      
Net income 207               207 0 213           213  
Dividends declared on common stock                 (108)               (124)  
Dividends declared on preferred stock                                 0  
Distributions and other changes in noncontrolling interests                   0                
Total Equity at End of Period at Sep. 30, 2019 $ 4,994 $ 3 $ 5,104 $ (67) $ (62) $ 0 $ (5)   $ (83) $ 37 $ 7,736 $ 841 $ 5,374 $ (20) $ (20) $ 0 $ 1,504 $ 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                    
Dividends declared per common share (in dollars per share) $ 0.3825                                  
v3.19.3
New Accounting Standards
9 Months Ended
Sep. 30, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
New Accounting Standards 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 recognize 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 8, Leases. 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, which will be 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. 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. The allowance presently reflects 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 will record the initial increase to the allowance on January 1, 2020, with the offsetting adjustment recorded to retained earnings. 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 in this area. CMS Energy and Consumers are continuing to evaluate the standard.
Consumers Energy Company  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
New Accounting Standards 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 recognize 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 8, Leases. 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, which will be 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. 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. The allowance presently reflects 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 will record the initial increase to the allowance on January 1, 2020, with the offsetting adjustment recorded to retained earnings. 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 in this area. CMS Energy and Consumers are continuing to evaluate the standard.
v3.19.3
Regulatory Matters
9 Months Ended
Sep. 30, 2019
Public Utilities, General Disclosures [Line Items]  
Regulatory Matters Regulatory Matters
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, and other matters. Consumers is unable to predict the outcome of these appeals.
2017 Electric Rate Case: In June 2018, the MPSC issued an order authorizing an annual rate increase of $72 million, based on a 10.0 percent authorized return on equity. In July 2018, Consumers filed a reconciliation of total revenues collected from rates it self‑implemented in October 2017 to those that would have been collected under final rates. In August 2019, the MPSC approved a $34 million refund to customers, which was refunded in September 2019. Consumers had recorded this amount as a reserve for customer refunds at December 31, 2018.
2018 Electric Rate Case: In May 2018, Consumers filed an application with the MPSC seeking an annual rate increase of $58 million, based on a 10.75 percent authorized return on equity. The filing requested authority to recover new investment in system reliability, environmental compliance, and technology enhancements. In October 2018, Consumers reduced its requested annual rate increase to $44 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.
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, the MPSC approved an annual rate increase of $144 million, based on a 9.90 percent authorized return on equity. This increase includes a $13 million adjustment to begin returning net regulatory tax liabilities associated
with 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 approved by the MPSC.
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 10, Income Taxes.
Costs of Coal-fueled Electric Generating Units to be Retired: In June 2019, the MPSC approved the settlement agreement reached in Consumers’ 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 qualified costs of $657 million, representing the remaining book value in 2023 of the two coal-fueled electric generating units upon their retirement. In June 2019, Consumers removed this amount from plant, property, and equipment 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.
Energy Waste Reduction Plan Incentive: Consumers filed its 2018 waste reduction reconciliation in May 2019, requesting the MPSC’s approval to collect from customers the maximum performance incentive of $34 million for exceeding its statutory savings targets in 2018. Consumers recognized incentive revenue under this program of $34 million in 2018.
Consumers Energy Company  
Public Utilities, General Disclosures [Line Items]  
Regulatory Matters Regulatory Matters
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, and other matters. Consumers is unable to predict the outcome of these appeals.
2017 Electric Rate Case: In June 2018, the MPSC issued an order authorizing an annual rate increase of $72 million, based on a 10.0 percent authorized return on equity. In July 2018, Consumers filed a reconciliation of total revenues collected from rates it self‑implemented in October 2017 to those that would have been collected under final rates. In August 2019, the MPSC approved a $34 million refund to customers, which was refunded in September 2019. Consumers had recorded this amount as a reserve for customer refunds at December 31, 2018.
2018 Electric Rate Case: In May 2018, Consumers filed an application with the MPSC seeking an annual rate increase of $58 million, based on a 10.75 percent authorized return on equity. The filing requested authority to recover new investment in system reliability, environmental compliance, and technology enhancements. In October 2018, Consumers reduced its requested annual rate increase to $44 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.
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, the MPSC approved an annual rate increase of $144 million, based on a 9.90 percent authorized return on equity. This increase includes a $13 million adjustment to begin returning net regulatory tax liabilities associated
with 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 approved by the MPSC.
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 10, Income Taxes.
Costs of Coal-fueled Electric Generating Units to be Retired: In June 2019, the MPSC approved the settlement agreement reached in Consumers’ 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 qualified costs of $657 million, representing the remaining book value in 2023 of the two coal-fueled electric generating units upon their retirement. In June 2019, Consumers removed this amount from plant, property, and equipment 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.
Energy Waste Reduction Plan Incentive: Consumers filed its 2018 waste reduction reconciliation in May 2019, requesting the MPSC’s approval to collect from customers the maximum performance incentive of $34 million for exceeding its statutory savings targets in 2018. Consumers recognized incentive revenue under this program of $34 million in 2018.
v3.19.3
Contingencies and Commitments
9 Months Ended
Sep. 30, 2019
Site Contingency [Line Items]  
Contingencies and Commitments 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 four class action lawsuits and one 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. Plaintiffs are making claims for the following: treble damages, full consideration damages, exemplary damages, costs, interest, and/or 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.
These cases involve complex facts, a large number of similarly situated defendants with different factual positions, and multiple jurisdictions. Presently, any estimate of liability would be highly speculative; the amount of CMS Energy’s reasonably possible loss would be based on widely varying models previously untested in this context. If the outcome after appeals is unfavorable, 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, a liquid consisting of water and other substances, 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 and renewed in 2016. The renewed NPDES permit is valid through September 2020.
At September 30, 2019, CMS Energy had a recorded liability of $44 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 one percent on annual operating and maintenance costs. The undiscounted amount of the remaining obligation is $56 million. CMS Energy expects to pay the following amounts for long‑term liquid disposal and operating and maintenance costs during the remainder of 2019 and in each of the next five years:
In Millions
 
 
2019
 
2020
 
2021
 
2022
 
2023
 
2024
 
CMS Energy
 
 
 
 
 
 
 
 
 
 
 
 
Long‑term liquid disposal and operating and maintenance costs
 
$
2

 
$
5

 
$
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. CMS Energy has concluded that the government’s tax claim is without merit and will continue to contest the claim, 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 million and $4 million. At September 30, 2019, Consumers had a recorded liability of $3 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 September 30, 2019, 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 December 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 its claim against Consumers related to the Clean Air Act; the majority of the MCV Partnership’s claim, which estimated damages and interest in excess of $270 million, was related to this dismissed claim. Consumers believes that the MCV Partnership’s remaining claims are without merit, but cannot predict 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‑energized 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. Consumers is collaborating with the State of Michigan, local Native American tribes, and other stakeholders to evaluate the status of the cables and to determine if any additional action is advisable. Consumers cannot predict the outcome of this matter, but if Consumers is required to remove all the cables, it could incur additional 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.
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 September 30, 2019, Consumers had a recorded liability of $70 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 $72 million. Consumers expects to pay the following amounts for remediation and other response activity costs during the remainder of 2019 and in each of the next five years:
In Millions
 
 
2019
 
2020
 
2021
 
2022
 
2023
 
2024
 
Consumers
 
 
 
 
 
 
 
 
 
 
 
 
Remediation and other response activity costs
 
$
3

 
$
13

 
$
12

 
$
20

 
$
11

 
$
2


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 September 30, 2019, Consumers had a regulatory asset of $132 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 September 30, 2019, 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.
As a result of the fire and the resulting curtailment, Consumers could be subject to various claims from impacted customers or claims for damages. Consumers may also be subject to regulatory penalties and disallowances of gas purchased, gas lost, and costs associated with the repairs to the Ray Compressor Station. At this time, Consumers cannot predict the outcome of these matters or other gas-related incidents and a reasonable estimate of any loss cannot be made, but they could have a material adverse effect on 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. An order by the MPSC in this proceeding is not expected until mid-2020. Consumers has resolved the backlog of staking requests. Consumers cannot predict the outcome of this matter, but it could be subject to regulatory penalties that have a material adverse effect on Consumers’ results of operations, financial condition, or liquidity, and Consumers could be subject to increased regulatory scrutiny.
Guarantees
Presented in the following table are CMS Energy’s and Consumers’ guarantees at September 30, 2019:
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

 
$

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. CMS Energy believes the likelihood of material loss to be remote for the indemnity obligations not recorded as liabilities.
2 
At Consumers, this obligation comprises a guarantee provided 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.
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. The carrying value of these indemnity obligations is $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 and Note 2, Regulatory Matters, 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.
Consumers Energy Company  
Site Contingency [Line Items]  
Contingencies and Commitments 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 four class action lawsuits and one 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. Plaintiffs are making claims for the following: treble damages, full consideration damages, exemplary damages, costs, interest, and/or 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.
These cases involve complex facts, a large number of similarly situated defendants with different factual positions, and multiple jurisdictions. Presently, any estimate of liability would be highly speculative; the amount of CMS Energy’s reasonably possible loss would be based on widely varying models previously untested in this context. If the outcome after appeals is unfavorable, 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, a liquid consisting of water and other substances, 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 and renewed in 2016. The renewed NPDES permit is valid through September 2020.
At September 30, 2019, CMS Energy had a recorded liability of $44 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 one percent on annual operating and maintenance costs. The undiscounted amount of the remaining obligation is $56 million. CMS Energy expects to pay the following amounts for long‑term liquid disposal and operating and maintenance costs during the remainder of 2019 and in each of the next five years:
In Millions
 
 
2019
 
2020
 
2021
 
2022
 
2023
 
2024
 
CMS Energy
 
 
 
 
 
 
 
 
 
 
 
 
Long‑term liquid disposal and operating and maintenance costs
 
$
2

 
$
5

 
$
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. CMS Energy has concluded that the government’s tax claim is without merit and will continue to contest the claim, 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 million and $4 million. At September 30, 2019, Consumers had a recorded liability of $3 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 September 30, 2019, 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 December 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 its claim against Consumers related to the Clean Air Act; the majority of the MCV Partnership’s claim, which estimated damages and interest in excess of $270 million, was related to this dismissed claim. Consumers believes that the MCV Partnership’s remaining claims are without merit, but cannot predict 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‑energized 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. Consumers is collaborating with the State of Michigan, local Native American tribes, and other stakeholders to evaluate the status of the cables and to determine if any additional action is advisable. Consumers cannot predict the outcome of this matter, but if Consumers is required to remove all the cables, it could incur additional 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.
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 September 30, 2019, Consumers had a recorded liability of $70 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 $72 million. Consumers expects to pay the following amounts for remediation and other response activity costs during the remainder of 2019 and in each of the next five years:
In Millions
 
 
2019
 
2020
 
2021
 
2022
 
2023
 
2024
 
Consumers
 
 
 
 
 
 
 
 
 
 
 
 
Remediation and other response activity costs
 
$
3

 
$
13

 
$
12

 
$
20

 
$
11

 
$
2


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 September 30, 2019, Consumers had a regulatory asset of $132 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 September 30, 2019, 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.
As a result of the fire and the resulting curtailment, Consumers could be subject to various claims from impacted customers or claims for damages. Consumers may also be subject to regulatory penalties and disallowances of gas purchased, gas lost, and costs associated with the repairs to the Ray Compressor Station. At this time, Consumers cannot predict the outcome of these matters or other gas-related incidents and a reasonable estimate of any loss cannot be made, but they could have a material adverse effect on 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. An order by the MPSC in this proceeding is not expected until mid-2020. Consumers has resolved the backlog of staking requests. Consumers cannot predict the outcome of this matter, but it could be subject to regulatory penalties that have a material adverse effect on Consumers’ results of operations, financial condition, or liquidity, and Consumers could be subject to increased regulatory scrutiny.
Guarantees
Presented in the following table are CMS Energy’s and Consumers’ guarantees at September 30, 2019:
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

 
$

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. CMS Energy believes the likelihood of material loss to be remote for the indemnity obligations not recorded as liabilities.
2 
At Consumers, this obligation comprises a guarantee provided 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.
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. The carrying value of these indemnity obligations is $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 and Note 2, Regulatory Matters, 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.
v3.19.3
Financings and Capitalization
9 Months Ended
Sep. 30, 2019
Debt Instrument [Line Items]  
Financings and Capitalization Financings and Capitalization
Financings: Presented in the following table is a summary of major long‑term debt transactions during the nine months ended September 30, 2019:
 
Principal
 (In Millions)
 
Interest Rate

Issue/Retirement
Date
Maturity Date
Debt issuances
 
 
 
 
 
CMS Energy, parent only
 
 
 
 
 
Term loan facility
 
$
300

variable

January 2019
December 2019
Junior subordinated notes1

630

5.875
%
February 2019
March 2079
Term loan facility2
 
165

variable

June 2019
June 2020
Total CMS Energy, parent only
 
$
1,095

 
 
 
Consumers
 
 
 
 
 
First mortgage bonds
 
$
300

3.750
%
May 2019
February 2050
First mortgage bonds
 
550

3.100
%
September 2019
August 2050
First mortgage bonds3
 
76

variable

September 2019
September 2069
Total Consumers
 
$
926

 
 
 
Total CMS Energy
 
$
2,021

 
 
 
Debt retirements
 
 
 
 
 
CMS Energy, parent only
 
 
 
 
 
Term loan facility
 
$
300

variable

February 2019
December 2019
Term loan facility
 
180

variable

February 2019
April 2019
Term loan facility2
 
65

variable

August 2019
June 2020
Total CMS Energy, parent only
 
$
545

 
 
 
Consumers
 
 
 
 
 
First mortgage bonds 
 
$
300

5.650
%
May 2019
April 2020
Total Consumers
 
$
300

 
 
 
Total CMS Energy
 
$
845

 
 
 
1 
These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness.
2 
At September 30, 2019, the weighted-average interest rate on the remaining balance of this term loan facility was 2.552 percent, based on a $95 million tranche bearing interest at a rate of one-month LIBOR plus 0.500 percent and a $5 million tranche bearing interest at a rate of one-week LIBOR plus 0.500 percent. In October 2019, CMS Energy repaid the $5 million tranche.
3 
These floating rate first mortgage bonds bear interest quarterly at a rate of three-month LIBOR minus 0.300 percent (1.864 percent at September 30, 2019).
Tax-exempt Variable Rate Limited Obligation Revenue Bonds: In October 2019, Consumers entered into a $75 million loan agreement with the MSF that matures in October 2049. Concurrently, the MSF issued $75 million in tax-exempt variable rate limited obligation revenue bonds and loaned Consumers the proceeds. The proceeds from the bonds, which are collateralized by Consumers’ first mortgage bonds, will reimburse or pay for the cost of construction, improvement, and installation of solid waste disposal facilities at certain generating units.
Revolving Credit Facilities: The following revolving credit facilities with banks were available at September 30, 2019:
In Millions
 
Expiration Date
Amount of Facility
 
Amount Borrowed
 
Letters of Credit Outstanding
 
Amount Available
 
CMS Energy, parent only
 
 
 
 
 
 
 
 
June 5, 2023
 
$
550

 
$

 
$
3

 
$
547

CMS Enterprises, including subsidiaries
 
 
 
 
 
 
 
 
September 30, 20251
 
$
18

 
$

 
$
8

 
$
10

Consumers2
 
 
 
 
 
 
 
 
June 5, 2023
 
$
850

 
$

 
$
7

 
$
843

November 23, 2020
 
250

 

 
25

 
225

April 18, 2022
 
30

 

 
30

 


1 
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.
2 
Obligations under these facilities are secured by first mortgage bonds of Consumers.
Short‑term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, commercial paper notes with maturities of up to 365 days and that bear interest at fixed or floating 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 September 30, 2019, there were no commercial paper notes outstanding under this program.
Dividend Restrictions: At September 30, 2019, payment of dividends by CMS Energy on its common stock was limited to $5.0 billion under provisions of the Michigan Business Corporation Act of 1972.
Under the provisions of its articles of incorporation, at September 30, 2019, Consumers had $1.4 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.
For the nine months ended September 30, 2019, Consumers paid $396 million in dividends on its common stock to CMS Energy.
Issuance of Common Stock: In 2018, 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. Under this 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 contracts having an aggregate sales price of $250 million. Presented in the following table are details of these contracts:
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


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 be 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 September 30, 2019, CMS Energy would have been required to deliver 1,039,414 shares.
Consumers Energy Company  
Debt Instrument [Line Items]  
Financings and Capitalization Financings and Capitalization
Financings: Presented in the following table is a summary of major long‑term debt transactions during the nine months ended September 30, 2019:
 
Principal
 (In Millions)
 
Interest Rate

Issue/Retirement
Date
Maturity Date
Debt issuances
 
 
 
 
 
CMS Energy, parent only
 
 
 
 
 
Term loan facility
 
$
300

variable

January 2019
December 2019
Junior subordinated notes1

630

5.875
%
February 2019
March 2079
Term loan facility2
 
165

variable

June 2019
June 2020
Total CMS Energy, parent only
 
$
1,095

 
 
 
Consumers
 
 
 
 
 
First mortgage bonds
 
$
300

3.750
%
May 2019
February 2050
First mortgage bonds
 
550

3.100
%
September 2019
August 2050
First mortgage bonds3
 
76

variable

September 2019
September 2069
Total Consumers
 
$
926

 
 
 
Total CMS Energy
 
$
2,021

 
 
 
Debt retirements
 
 
 
 
 
CMS Energy, parent only
 
 
 
 
 
Term loan facility
 
$
300

variable

February 2019
December 2019
Term loan facility
 
180

variable

February 2019
April 2019
Term loan facility2
 
65

variable

August 2019
June 2020
Total CMS Energy, parent only
 
$
545

 
 
 
Consumers
 
 
 
 
 
First mortgage bonds 
 
$
300

5.650
%
May 2019
April 2020
Total Consumers
 
$
300

 
 
 
Total CMS Energy
 
$
845

 
 
 
1 
These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness.
2 
At September 30, 2019, the weighted-average interest rate on the remaining balance of this term loan facility was 2.552 percent, based on a $95 million tranche bearing interest at a rate of one-month LIBOR plus 0.500 percent and a $5 million tranche bearing interest at a rate of one-week LIBOR plus 0.500 percent. In October 2019, CMS Energy repaid the $5 million tranche.
3 
These floating rate first mortgage bonds bear interest quarterly at a rate of three-month LIBOR minus 0.300 percent (1.864 percent at September 30, 2019).
Tax-exempt Variable Rate Limited Obligation Revenue Bonds: In October 2019, Consumers entered into a $75 million loan agreement with the MSF that matures in October 2049. Concurrently, the MSF issued $75 million in tax-exempt variable rate limited obligation revenue bonds and loaned Consumers the proceeds. The proceeds from the bonds, which are collateralized by Consumers’ first mortgage bonds, will reimburse or pay for the cost of construction, improvement, and installation of solid waste disposal facilities at certain generating units.
Revolving Credit Facilities: The following revolving credit facilities with banks were available at September 30, 2019:
In Millions
 
Expiration Date
Amount of Facility
 
Amount Borrowed
 
Letters of Credit Outstanding
 
Amount Available
 
CMS Energy, parent only
 
 
 
 
 
 
 
 
June 5, 2023
 
$
550

 
$

 
$
3

 
$
547

CMS Enterprises, including subsidiaries
 
 
 
 
 
 
 
 
September 30, 20251
 
$
18

 
$