CMS ENERGY CORP, 10-K filed on 2/11/2021
Annual Report
v3.20.4
Cover page - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Jan. 15, 2021
Jun. 30, 2020
Document Information [Line Items]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2020    
Current Fiscal Year End Date --12-31    
Document Transition Report false    
Entity File Number 1-9513    
Entity Registrant Name CMS ENERGY CORPORATION    
Entity Tax Identification Number 38-2726431    
Entity Incorporation, State or Country Code MI    
Entity Address, Address Line One One Energy Plaza    
Entity Address, City or Town Jackson    
Entity Address, State or Province MI    
Entity Address, Postal Zip Code 49201    
City Area Code 517    
Local Phone Number 788‑0550    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filer No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Entity Shell Company false    
Entity Public Float     $ 16,647
Entity Common Stock, Shares Outstanding   288,943,354  
Documents Incorporated by Reference CMS Energy’s and Consumers’ proxy statement relating to their 2021 Annual Meetings of Shareholders to be held May 7, 2021.    
Entity Central Index Key 0000811156    
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
Amendment Flag false    
Consumers Energy Company      
Document Information [Line Items]      
Entity File Number 1-5611    
Entity Registrant Name CONSUMERS ENERGY COMPANY    
Entity Tax Identification Number 38-0442310    
Entity Incorporation, State or Country Code MI    
Entity Address, Address Line One One Energy Plaza    
Entity Address, City or Town Jackson    
Entity Address, State or Province MI    
Entity Address, Postal Zip Code 49201    
City Area Code 517    
Local Phone Number 788‑0550    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filer No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Non-accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Entity Shell Company false    
Entity Common Stock, Shares Outstanding   84,108,789  
Documents Incorporated by Reference CMS Energy’s and Consumers’ proxy statement relating to their 2021 Annual Meetings of Shareholders to be held May 7, 2021.    
Entity Central Index Key 0000201533    
CMS Energy Corporation Common Stock, $0.01 par value      
Document Information [Line Items]      
Title of 12(b) Security 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 12(b) Security 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 12(b) Security 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 12(b) Security 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 12(b) Security Consumers Energy Company Cumulative Preferred Stock, $100 par value: $4.50 Series    
Trading Symbol CMS-PB    
Security Exchange Name NYSE    
v3.20.4
Consolidated Statements Of Income - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Operating Revenue $ 6,680 $ 6,845 $ 6,873
Operating Expenses      
Fuel for electric generation 375 493 528
Purchased power – related parties 64 75 81
Maintenance and other operating expenses 1,403 1,448 1,417
Depreciation and amortization 1,048 992 933
General taxes 359 333 303
Total operating expenses 5,318 5,606 5,711
Operating Income 1,362 1,239 1,162
Other Income (Expense)      
Interest income 4 7 11
Interest and dividend income – related parties 7 0 0
Allowance for equity funds used during construction 6 10 6
Income from equity method investees 5 10 9
Nonoperating retirement benefits, net 118 91 90
Other income 6 4 2
Other expense (62) (13) (48)
Total other income 84 109 70
Interest Charges      
Interest on long-term debt 483 439 412
Interest expense – related parties 12 9 0
Other interest expense 68 75 49
Allowance for borrowed funds used during construction (2) (4) (3)
Total interest charges 561 519 458
Income Before Income Taxes 885 829 774
Income Tax Expense 133 147 115
Net Income 752 682 659
Income (Loss) Attributable to Noncontrolling Interests (3) 2 2
Net Income Available to Common Stockholders $ 755 $ 680 $ 657
Basic earnings per average common share (in dollars per share) $ 2.65 $ 2.40 $ 2.33
Diluted earnings per average common share (in dollars per share) $ 2.64 $ 2.39 $ 2.32
Consumers Energy Company      
Operating Revenue $ 6,189 $ 6,376 $ 6,464
Operating Expenses      
Fuel for electric generation 286 375 407
Purchased and interchange power 1,454 1,470 1,587
Purchased power – related parties 64 75 83
Cost of gas sold 568 754 819
Maintenance and other operating expenses 1,224 1,275 1,287
Depreciation and amortization 1,023 975 921
General taxes 349 322 295
Total operating expenses 4,968 5,246 5,399
Operating Income 1,221 1,130 1,065
Other Income (Expense)      
Interest income 3 5 8
Interest and dividend income – related parties 5 5 2
Allowance for equity funds used during construction 6 10 6
Nonoperating retirement benefits, net 112 85 83
Other income 5 3 2
Other expense (43) (13) (30)
Total other income 88 95 71
Interest Charges      
Interest on long-term debt 299 277 276
Interest expense – related parties 12 9 0
Other interest expense 11 15 16
Allowance for borrowed funds used during construction (2) (4) (3)
Total interest charges 320 297 289
Income Before Income Taxes 989 928 847
Income Tax Expense 173 185 142
Net Income 816 743 705
Preferred Stock Dividends 2 2 2
Net Income Available to Common Stockholders 814 741 703
Purchased and interchange power      
Operating Expenses      
Cost of goods and services sold 1,492 1,496 1,613
Cost of gas sold      
Operating Expenses      
Cost of goods and services sold $ 577 $ 769 $ 836
v3.20.4
Consolidated Statements Of Comprehensive Income - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Net Income $ 752 $ 682 $ 659
Retirement Benefits Liability      
Net loss arising during the period, net of tax (15) (7) (4)
Settlement arising during the period, net of tax 1 0 0
Prior service credit adjustment, net of tax (1) 0 (1)
Amortization of net actuarial loss, net of tax 5 3 4
Amortization of prior service credit, net of tax (1) (2) (1)
Derivatives      
Unrealized loss on derivative instruments, net of tax of $(2), $(1), and $— (4) (3) (2)
Reclassification adjustments included in net income, net of tax of $— for all periods 2 1 0
Other Comprehensive Loss (13) (8) (4)
Comprehensive Income 739 674 655
Comprehensive Income (Loss) Attributable to Noncontrolling Interests (3) 2 2
Comprehensive Income Attributable to CMS Energy 742 672 653
Consumers Energy Company      
Net Income 816 743 705
Retirement Benefits Liability      
Net loss arising during the period, net of tax (9) (8) 6
Amortization of net actuarial loss, net of tax 1 1 2
Investments      
Unrealized gain on investments, net of tax 0 0 (1)
Reclassification adjustments included in net income, net of tax 0 0 1
Derivatives      
Other Comprehensive Loss (8) (7) 8
Comprehensive Income $ 808 $ 736 $ 713
v3.20.4
Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Net loss arising during the period, TAX $ (4) $ (3) $ (1)
Settlement arising during the period, TAX 0 0 0
Prior service credit adjustment, TAX 0 0 0
Amortization of net actuarial loss, TAX 1 1 1
Amortization of prior service credit, TAX 0 0 (1)
Unrealized loss on derivative instruments, TAX (2) (1) 0
Reclassification adjustments included in net income , TAX 0 0 0
Consumers Energy Company      
Net loss arising during the period, TAX (3) (3) 2
Amortization of net actuarial loss, TAX 1 0 0
Unrealized loss on investments, TAX 0 0 0
Reclassification adjustments included in net income , TAX $ 0 $ 0 $ 0
v3.20.4
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Cash Flows from Operating Activities      
Net Income $ 752 $ 682 $ 659
Adjustments to reconcile net income to net cash provided by operating activities      
Depreciation and amortization 1,048 992 933
Deferred income taxes and investment tax credits 170 150 182
Bad debt expense 90 67 54
Other non‑cash operating activities and reconciling adjustments (22) (58) 22
Postretirement benefits contributions (712) (10) (252)
Cash provided by (used in) changes in assets and liabilities      
Accounts and notes receivable and accrued revenue (12) 45 15
Inventories 28 44 14
Accounts payable and accrued rate refunds 54 (69) 22
Other current and non‑current assets and liabilities (120) (53) 54
Net cash provided by operating activities 1,276 1,790 1,703
Cash Flows from Investing Activities      
Capital expenditures (excludes assets placed under finance lease) (2,317) (2,104) (2,074)
Increase in EnerBank notes receivable (657) (401) (307)
Purchase of notes receivable by EnerBank (17) (343) (225)
Proceeds from DB SERP investments 0 0 146
Proceeds from sale of EnerBank notes receivable 197 67 0
Proceeds from sale of transmission equipment 58 97 0
Cost to retire property and other investing activities (131) (132) (146)
Net cash used in investing activities (2,867) (2,816) (2,606)
Cash Flows from Financing Activities      
Proceeds from issuance of debt 3,179 2,151 2,767
Retirement of debt (2,010) (1,285) (1,870)
Increase in EnerBank certificates of deposit 416 631 513
Decrease in notes payable (90) (7) (73)
Issuance of common stock, net of issuance costs 253 12 41
Payment of dividends on common and preferred stock (467) (436) (407)
Debt prepayment costs (59) (8) (36)
Proceeds from the sale of membership interest in VIE to tax equity investor 417 0 0
Contribution from noncontrolling interest 31 0 0
Other financing costs (51) (50) (61)
Net cash provided by financing activities 1,619 1,008 874
Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts 28 (18) (29)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period 157 175 204
Cash and Cash Equivalents, Including Restricted Amounts, End of Period 185 157 175
Cash transactions      
Interest paid (net of amounts capitalized) 549 498 458
Income taxes paid (refunds received), net (58) (58) (123)
Non‑cash transactions      
Capital expenditures not paid 141 170 158
Consumers Energy Company      
Cash Flows from Operating Activities      
Net Income 816 743 705
Adjustments to reconcile net income to net cash provided by operating activities      
Depreciation and amortization 1,023 975 921
Deferred income taxes and investment tax credits 177 37 123
Bad debt expense     29
Other non‑cash operating activities and reconciling adjustments (30) (32) 13
Postretirement benefits contributions (690) (7) (242)
Cash provided by (used in) changes in assets and liabilities      
Accounts and notes receivable and accrued revenue (46) 8 (26)
Inventories 26 40 15
Accounts payable and accrued rate refunds 45 (63) 12
Other current and non‑current assets and liabilities (136) (129) (101)
Net cash provided by operating activities 1,218 1,601 1,449
Cash Flows from Investing Activities      
Capital expenditures (excludes assets placed under finance lease) (2,170) (2,085) (1,822)
Proceeds from DB SERP investments 0 0 106
DB SERP investment in note receivable – related party (5) 0 (106)
Proceeds from sale of transmission equipment 58 77 0
Cost to retire property and other investing activities (129) (129) (149)
Net cash used in investing activities (2,246) (2,137) (1,971)
Cash Flows from Financing Activities      
Proceeds from issuance of debt 1,954 993 2,106
Retirement of debt (1,086) (541) (1,193)
Decrease in notes payable (90) (7) (73)
Increase in notes payable – related parties 307 0 0
Stockholder contribution 650 675 250
Payment of dividends on common and preferred stock (639) (594) (533)
Debt prepayment costs (43) (8) (20)
Other financing costs (18) (10) (24)
Net cash provided by financing activities 1,035 508 513
Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts 7 (28) (9)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period 28 56 65
Cash and Cash Equivalents, Including Restricted Amounts, End of Period 35 28 56
Cash transactions      
Interest paid (net of amounts capitalized) 305 279 287
Income taxes paid (refunds received), net 51 132 156
Non‑cash transactions      
Capital expenditures not paid $ 130 $ 160 $ 143
v3.20.4
Consolidated Balance Sheets - USD ($)
$ in Millions
Dec. 31, 2020
Dec. 31, 2019
Current Assets    
Cash and cash equivalents $ 168 $ 140
Restricted cash and cash equivalents 17 17
Accounts receivable and accrued revenue, less allowance of $29 in 2020 and $20 in 2019 863 886
Notes receivable, less allowance of $32 in 2020 and $33 in 2019 275 242
Accounts receivable – related parties 19 17
Inventories at average cost    
Gas in underground storage 353 399
Materials and supplies 155 140
Generating plant fuel stock 68 66
Deferred property taxes 332 305
Regulatory assets 42 33
Prepayments and other current assets 112 86
Total current assets 2,404 2,331
Plant, Property, and Equipment    
Plant, property, and equipment, gross 27,907 25,390
Less accumulated depreciation and amortization 7,953 7,360
Plant, property, and equipment, net 19,954 18,030
Construction work in progress 1,085 896
Total plant, property, and equipment 21,039 18,926
Other Non‑current Assets    
Regulatory assets 2,653 2,489
Accounts and notes receivable, less allowance of $91 in 2020 and $— in 2019 2,631 2,281
Investments 70 71
Other 869 739
Total other non‑current assets 6,223 5,580
Total Assets 29,666 26,837
Current Liabilities    
Current portion of long-term debt, finance leases, and other financing 1,506 1,130
Notes payable 0 90
Accounts payable 671 622
Accounts payable – related parties 7 13
Accrued rate refunds 20 35
Accrued interest 106 104
Accrued taxes 457 437
Regulatory liabilities 151 87
Other current liabilities 156 186
Total current liabilities 3,074 2,704
Non‑current Liabilities    
Long-term debt 13,634 11,951
Non-current portion of finance leases and other financing 56 76
Regulatory liabilities 3,744 3,742
Postretirement benefits 152 674
Asset retirement obligations 553 477
Deferred investment tax credit 115 120
Deferred income taxes 1,863 1,655
Other non‑current liabilities 398 383
Total non‑current liabilities 20,515 19,078
Commitments and Contingencies
Common stockholders’ equity    
Common stock 3 3
Other paid-in capital 5,365 5,113
Accumulated other comprehensive loss (86) (73)
Retained earnings (accumulated deficit) 214 (25)
Total common stockholders’ equity 5,496 5,018
Noncontrolling interests 581 37
Total equity 6,077 5,055
Total Liabilities and Equity 29,666 26,837
Consumers Energy Company    
Current Assets    
Cash and cash equivalents 20 11
Restricted cash and cash equivalents 15 17
Accounts receivable and accrued revenue, less allowance of $29 in 2020 and $20 in 2019 828 827
Accounts receivable – related parties 18 9
Inventories at average cost    
Gas in underground storage 353 399
Materials and supplies 149 135
Generating plant fuel stock 67 63
Deferred property taxes 332 305
Regulatory assets 42 33
Prepayments and other current assets 68 73
Total current assets 1,892 1,872
Plant, Property, and Equipment    
Plant, property, and equipment, gross 26,757 24,963
Less accumulated depreciation and amortization 7,844 7,272
Plant, property, and equipment, net 18,913 17,691
Construction work in progress 1,058 879
Total plant, property, and equipment 19,971 18,570
Other Non‑current Assets    
Regulatory assets 2,653 2,489
Accounts and notes receivable, less allowance of $91 in 2020 and $— in 2019 25 29
Accounts and notes receivable – related parties 105 102
Other 753 637
Total other non‑current assets 3,536 3,257
Total Assets 25,399 23,699
Current Liabilities    
Current portion of long-term debt, finance leases, and other financing 384 221
Notes payable 0 90
Notes payable – related parties 307 0
Accounts payable 636 593
Accounts payable – related parties 7 20
Accrued rate refunds 20 35
Accrued interest 72 67
Accrued taxes 458 481
Regulatory liabilities 151 87
Other current liabilities 104 118
Total current liabilities 2,139 1,712
Non‑current Liabilities    
Long-term debt 7,742 7,048
Non-current portion of finance leases and other financing 56 76
Regulatory liabilities 3,744 3,742
Postretirement benefits 112 622
Asset retirement obligations 530 474
Deferred investment tax credit 115 120
Deferred income taxes 2,094 1,864
Other non‑current liabilities 311 304
Total non‑current liabilities 14,704 14,250
Commitments and Contingencies
Common stockholders’ equity    
Common stock 841 841
Other paid-in capital 6,024 5,374
Accumulated other comprehensive loss (36) (28)
Retained earnings (accumulated deficit) 1,690 1,513
Total common stockholders’ equity 8,519 7,700
Cumulative preferred stock, $4.50 series 37 37
Total equity 8,556 7,737
Total Liabilities and Equity $ 25,399 $ 23,699
v3.20.4
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Dec. 31, 2020
Dec. 31, 2019
Accounts receivable and accrued revenue, ALLOWANCE $ 29 $ 20
Notes receivable, ALLOWANCE 32 33
Accounts and notes receivable, ALLOWANCE $ 91 $ 0
Common stock authorized (in shares) 350,000,000.0 350,000,000.0
Common stock outstanding (in shares) 288,900,000 283,900,000
Consumers Energy Company    
Accounts receivable and accrued revenue, ALLOWANCE $ 29 $ 20
Common stock authorized (in shares) 125,000,000.0 125,000,000.0
Common stock outstanding (in shares) 84,100,000 84,100,000
v3.20.4
Consolidated Statements Of Changes In Equity - USD ($)
$ in Millions
Total
Common Stock
Other Paid-in Capital
Accumulated Other Comprehensive Loss
Retirement benefits liability
Retirement benefits liability
Cumulative Effect, Period of Adoption, Adjustment
Derivative instruments
Retained Earnings (Accumulated Deficit)
Retained Earnings (Accumulated Deficit)
Cumulative Effect, Period of Adoption, Adjustment
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
Retirement benefits liability
Cumulative Effect, Period of Adoption, Adjustment
Consumers Energy Company
Investments
Consumers Energy Company
Investments
Cumulative Effect, Period of Adoption, Adjustment
Consumers Energy Company
Retained Earnings (Accumulated Deficit)
Consumers Energy Company
Retained Earnings (Accumulated Deficit)
Cumulative Effect, Period of Adoption, Adjustment
Consumers Energy Company
Cumulative Preferred Stock
Total Equity at Beginning of Period at Dec. 31, 2017 $ 4,478 $ 3 $ 5,019 $ (50) $ (50) $ (11) $ 0 $ (531) $ 8 $ 37 $ 6,488 $ 841 $ 4,449 $ (12) $ (24) $ (5) $ 12 $ (12) $ 1,173 $ 19 $ 37
Beginning of period (in shares) at Dec. 31, 2017   281,647,000                                      
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                          
Common stock issued (in shares)   1,554,000                                      
Common stock issued     59                                    
Common stock repurchased (in shares)   (224,000)                                      
Common stock repurchased     (10)                                    
Common stock reissued (in shares)   423,000                                      
Common stock reissued     20                                    
Common stock reacquired (in shares)   (26,000)                                      
Common stock reacquired     0                                    
Stockholder contribution                         250                
Net loss arising during the period (4)       (4)           6       6            
Settlement arising during the period 0       0                                
Prior service credit adjustment (1)       (1)                                
Amortization of net actuarial loss 4       4           2       2            
Amortization of prior service credit (1)       (1)                                
Unrealized gain (loss) on investments                     (1)           (1)        
Reclassification adjustments included in net income                     1           1        
Unrealized loss on derivative instruments (2)           (2)                            
Reclassification adjustments included in net income 0           0                            
Net Income 659             657   2 705               705    
Dividends declared on common stock               (405)                     (531)    
Dividends declared on preferred stock                                     (2)    
Impact of purchase and consolidation of VIE                   0                      
Sale of membership interest in VIE to tax equity investor                   0                      
Contribution from noncontrolling interest                   0                      
Distributions and other changes in noncontrolling interests                   (2)                      
End of period (in shares) at Dec. 31, 2018   283,374,000                                      
Total Equity at End of Period at Dec. 31, 2018 $ 4,792 $ 3 5,088 (65) (63) 0 (2) (271) 0 37 6,920 841 4,699 (21) (21) 0 0 0 1,364 0 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                          
Dividends declared per common share (in dollars per share) $ 1.43                                        
Common stock issued (in shares)   710,000                                      
Common stock issued     35                                    
Common stock repurchased (in shares)   (181,000)                                      
Common stock repurchased     (10)                                    
Common stock reissued (in shares)   8,000                                      
Common stock reissued     0                                    
Common stock reacquired (in shares)   (47,000)                                      
Common stock reacquired     0                                    
Stockholder contribution                         675                
Net loss arising during the period $ (7)       (7)           (8)       (8)            
Settlement arising during the period 0       0                                
Prior service credit adjustment 0       0                                
Amortization of net actuarial loss 3       3           1       1            
Amortization of prior service credit (2)       (2)                                
Unrealized gain (loss) on investments                     0           0        
Reclassification adjustments included in net income                     0           0        
Unrealized loss on derivative instruments (3)           (3)                            
Reclassification adjustments included in net income 1           1                            
Net Income $ 682             680   2 $ 743               743    
Dividends declared on common stock               (434)                     (592)    
Dividends declared on preferred stock                                     (2)    
Impact of purchase and consolidation of VIE                   0                      
Sale of membership interest in VIE to tax equity investor                   0                      
Contribution from noncontrolling interest                   0                      
Distributions and other changes in noncontrolling interests                   (2)                      
End of period (in shares) at Dec. 31, 2019 283,900,000 283,864,000                 84,100,000                    
Total Equity at End of Period at Dec. 31, 2019 $ 5,055 $ 3 5,113 (73) (69) $ 0 (4) (25) $ (51) 37 $ 7,737 841 5,374 (28) (28) $ 0 0 $ 0 1,513 $ 0 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                          
Dividends declared per common share (in dollars per share) $ 1.53                                        
Common stock issued (in shares)   5,609,000                                      
Common stock issued     265                                    
Common stock repurchased (in shares)   (216,000)                                      
Common stock repurchased     (13)                                    
Common stock reissued (in shares)   12,000                                      
Common stock reissued     1                                    
Common stock reacquired (in shares)   (329,000)                                      
Common stock reacquired     (1)                                    
Stockholder contribution                         650                
Net loss arising during the period $ (15)       (15)           (9)       (9)            
Settlement arising during the period 1       1                                
Prior service credit adjustment (1)       (1)                                
Amortization of net actuarial loss 5       5           1       1            
Amortization of prior service credit (1)       (1)                                
Unrealized gain (loss) on investments                     0           0        
Reclassification adjustments included in net income                     0           0        
Unrealized loss on derivative instruments (4)           (4)                            
Reclassification adjustments included in net income 2           2                            
Net Income $ 752             755   (3) $ 816               816    
Dividends declared on common stock               (465)                     (637)    
Dividends declared on preferred stock                                     (2)    
Impact of purchase and consolidation of VIE                   101                      
Sale of membership interest in VIE to tax equity investor                   417                      
Contribution from noncontrolling interest                   31                      
Distributions and other changes in noncontrolling interests                   (2)                      
End of period (in shares) at Dec. 31, 2020 288,900,000 288,940,000                 84,100,000                    
Total Equity at End of Period at Dec. 31, 2020 $ 6,077 $ 3 $ 5,365 $ (86) $ (80)   $ (6) $ 214   $ 581 $ 8,556 $ 841 $ 6,024 $ (36) $ (36)   $ 0   $ 1,690   $ 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                          
Dividends declared per common share (in dollars per share) $ 1.63                                        
v3.20.4
Significant Accounting Policies
12 Months Ended
Dec. 31, 2020
Significant Accounting Policies [Line Items]  
Significant Accounting Policies Significant Accounting Policies
Principles of Consolidation: CMS Energy and Consumers prepare their consolidated financial statements in conformity with GAAP. CMS Energy’s consolidated financial statements comprise CMS Energy, Consumers, CMS Enterprises, EnerBank, and all other entities in which CMS Energy has a controlling financial interest or is the primary beneficiary. Consumers’ consolidated financial statements comprise Consumers and all other entities in which it has a controlling financial interest or is the primary beneficiary. CMS Energy uses the equity method of accounting for investments in companies and partnerships that are not consolidated, where they have significant influence over operations and financial policies but are not the primary beneficiary. CMS Energy and Consumers eliminate intercompany transactions and balances.
Use of Estimates: CMS Energy and Consumers are required to make estimates using assumptions that may affect reported amounts and disclosures. Actual results could differ from those estimates.
Contingencies: CMS Energy and Consumers record estimated liabilities for contingencies on their consolidated financial statements when it is probable that a liability has been incurred and when the amount of loss can be reasonably estimated. For environmental remediation projects in which the timing of estimated expenditures is considered reliably determinable, CMS Energy and Consumers record the liability at its net present value, using a discount rate equal to the interest rate on monetary assets that are essentially risk-free and have maturities comparable to that of the environmental liability. CMS Energy and Consumers expense legal fees as incurred; fees incurred but not yet billed are accrued based on estimates of work performed.
Debt Issuance Costs, Discounts, Premiums, and Refinancing Costs: Upon the issuance of long-term debt, CMS Energy and Consumers defer issuance costs, discounts, and premiums and amortize those amounts over the terms of the associated debt. Debt issuance costs are presented as a direct deduction from the carrying amount of long-term debt on the balance sheet. Upon the refinancing of long-term debt, Consumers, as a regulated entity, defers any remaining unamortized issuance costs, discounts, and premiums associated with the refinanced debt and amortizes those amounts over the term of the newly issued debt. For the non‑regulated portions of CMS Energy’s business, any remaining unamortized issuance costs, discounts, and premiums associated with extinguished debt are charged to earnings.
Derivative Instruments: In order to support ongoing operations, CMS Energy and Consumers enter into contracts for the future purchase and sale of various commodities, such as electricity, natural gas, and coal. These forward contracts are generally long-term in nature and result in physical delivery of the commodity at a contracted price. Most of these contracts are not subject to derivative accounting for one or more of the following reasons:
they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas)
they qualify for the normal purchases and sales exception
they cannot be net settled due in part to the absence of an active market for the commodity
Consumers also uses FTRs to manage price risk related to electricity transmission congestion. An FTR is a financial instrument that entitles its holder to receive compensation or requires its holder to remit payment for congestion-related transmission charges. Consumers accounts for FTRs as derivatives.
Additionally, CMS Energy uses interest rate swaps to manage its interest rate risk on certain long-term debt and notes receivable transactions.
CMS Energy and Consumers record derivative contracts that do not qualify for the normal purchases and sales exception at fair value on their consolidated balance sheets. At CMS Energy, if the derivative is accounted for as a cash flow hedge, unrealized gains and losses from changes in the fair value of the derivative are recognized in AOCI and subsequently recognized in earnings when the hedged transactions impact earnings. If the derivative is accounted for as a fair value hedge, changes in the fair value of the derivative and changes in the fair value of the hedged item due to the hedged risk are recognized in earnings. For the FTRs at Consumers, changes in fair value are deferred as regulatory assets or liabilities. For details regarding CMS Energy’s and Consumers’ derivative instruments recorded at fair value, see Note 6, Fair Value Measurements.
EPS: CMS Energy calculates basic and diluted EPS using the weighted-average number of shares of common stock and dilutive potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted EPS, includes the effects of nonvested stock awards and forward equity sales. CMS Energy computes the effect on potential common stock using the treasury stock method. Diluted EPS excludes the impact of antidilutive securities, which are those securities resulting in an increase in EPS or a decrease in loss per share. For EPS computations, see Note 15, Earnings Per Share—CMS Energy.
Impairment of Long-Lived Assets and Equity Method Investments: CMS Energy and Consumers perform tests of impairment if certain triggering events occur or if there has been a decline in value that may be other than temporary.
CMS Energy and Consumers evaluate long-lived assets held in use for impairment by calculating the undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. If the undiscounted future cash flows are less than the carrying amount, CMS Energy and Consumers recognize an impairment loss equal to the amount by which the carrying amount exceeds the fair value. CMS Energy and Consumers estimate the fair value of the asset using quoted market prices, market prices of similar assets, or discounted future cash flow analyses.
CMS Energy also assesses equity method investments for impairment whenever there has been a decline in value that is other than temporary. This assessment requires CMS Energy to determine the fair value of the equity method investment. CMS Energy determines fair value using valuation methodologies, including discounted cash flows, and assesses the ability of the investee to sustain an earnings capacity that justifies the carrying amount of the investment. CMS Energy records an impairment if the fair value is less than the carrying amount and the decline in value is considered to be other than temporary.
Investment Tax Credits: Consumers amortizes its investment tax credits over the life of the related property in accordance with regulatory treatment. CMS Energy’s non‑regulated businesses use the deferral method of accounting for investment tax credits. Under the deferral method, the book basis of the associated assets is reduced by the amount of the credit, resulting in lower depreciation expense over the life of the assets. Furthermore, the tax basis of the assets is reduced by 50 percent of the related credit, resulting in a net deferred tax asset. CMS Energy recognizes the tax benefit of this basis difference as a reduction to income tax expense in the year in which the plant reaches commercial operation.
Inventory: CMS Energy and Consumers use the weighted-average cost method for valuing working gas, recoverable base gas in underground storage facilities, and materials and supplies inventory. CMS Energy and Consumers also use this method for valuing coal inventory, and they classify these amounts as generating plant fuel stock on their consolidated balance sheets.
CMS Energy and Consumers account for RECs and emission allowances as inventory and use the weighted-average cost method to remove amounts from inventory. RECs and emission allowances are used to satisfy compliance obligations related to the generation of power. CMS Energy and Consumers classify these amounts within other assets on their consolidated balance sheets.
CMS Energy and Consumers evaluate inventory for impairment as required to ensure that its carrying value does not exceed the lower of cost or net realizable value.
MISO Transactions: MISO requires the submission of hourly day-ahead and real-time bids and offers for energy at locations across the MISO region. CMS Energy and Consumers account for MISO transactions on a net hourly basis in each of the real-time and day-ahead markets, netted across all MISO energy market locations. CMS Energy and Consumers record net hourly purchases in purchased and interchange power and net hourly sales in operating revenue on their consolidated statements of income. They record net billing adjustments upon receipt of settlement statements, record accruals for future net purchases and sales adjustments based on historical experience, and reconcile accruals to actual expenses and sales upon receipt of settlement statements.
Property Taxes: Property taxes are based on the taxable value of Consumers’ real and personal property assessed by local taxing authorities. Consumers records property tax expense over the fiscal year of the taxing authority for which the taxes are levied. The deferred property tax balance represents the amount of Consumers’ accrued property tax that will be recognized over future governmental fiscal periods.
Renewable Energy Grant: In 2013, Consumers received a renewable energy cash grant for Lake Winds® Energy Park under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009. Upon receipt of the grant, Consumers recorded a regulatory liability, which Consumers is amortizing over the life of Lake Winds® Energy Park. Consumers presents the amortization as a reduction to maintenance and other operating expenses on its consolidated statements of income. Consumers recorded the deferred income taxes related to the grant as a reduction of the book basis of Lake Winds® Energy Park.
Other: For additional accounting policies, see:
Note 8, Notes Receivable
Note 9, Plant, Property, and Equipment
Note 11, Asset Retirement Obligations
Note 12, Retirement Benefits
Note 14, Income Taxes
Note 15, Earnings Per Share—CMS Energy
Note 16, Revenue
Note 18, Cash and Cash Equivalents
Note 21, Variable Interest Entities
Consumers Energy Company  
Significant Accounting Policies [Line Items]  
Significant Accounting Policies Significant Accounting Policies
Principles of Consolidation: CMS Energy and Consumers prepare their consolidated financial statements in conformity with GAAP. CMS Energy’s consolidated financial statements comprise CMS Energy, Consumers, CMS Enterprises, EnerBank, and all other entities in which CMS Energy has a controlling financial interest or is the primary beneficiary. Consumers’ consolidated financial statements comprise Consumers and all other entities in which it has a controlling financial interest or is the primary beneficiary. CMS Energy uses the equity method of accounting for investments in companies and partnerships that are not consolidated, where they have significant influence over operations and financial policies but are not the primary beneficiary. CMS Energy and Consumers eliminate intercompany transactions and balances.
Use of Estimates: CMS Energy and Consumers are required to make estimates using assumptions that may affect reported amounts and disclosures. Actual results could differ from those estimates.
Contingencies: CMS Energy and Consumers record estimated liabilities for contingencies on their consolidated financial statements when it is probable that a liability has been incurred and when the amount of loss can be reasonably estimated. For environmental remediation projects in which the timing of estimated expenditures is considered reliably determinable, CMS Energy and Consumers record the liability at its net present value, using a discount rate equal to the interest rate on monetary assets that are essentially risk-free and have maturities comparable to that of the environmental liability. CMS Energy and Consumers expense legal fees as incurred; fees incurred but not yet billed are accrued based on estimates of work performed.
Debt Issuance Costs, Discounts, Premiums, and Refinancing Costs: Upon the issuance of long-term debt, CMS Energy and Consumers defer issuance costs, discounts, and premiums and amortize those amounts over the terms of the associated debt. Debt issuance costs are presented as a direct deduction from the carrying amount of long-term debt on the balance sheet. Upon the refinancing of long-term debt, Consumers, as a regulated entity, defers any remaining unamortized issuance costs, discounts, and premiums associated with the refinanced debt and amortizes those amounts over the term of the newly issued debt. For the non‑regulated portions of CMS Energy’s business, any remaining unamortized issuance costs, discounts, and premiums associated with extinguished debt are charged to earnings.
Derivative Instruments: In order to support ongoing operations, CMS Energy and Consumers enter into contracts for the future purchase and sale of various commodities, such as electricity, natural gas, and coal. These forward contracts are generally long-term in nature and result in physical delivery of the commodity at a contracted price. Most of these contracts are not subject to derivative accounting for one or more of the following reasons:
they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas)
they qualify for the normal purchases and sales exception
they cannot be net settled due in part to the absence of an active market for the commodity
Consumers also uses FTRs to manage price risk related to electricity transmission congestion. An FTR is a financial instrument that entitles its holder to receive compensation or requires its holder to remit payment for congestion-related transmission charges. Consumers accounts for FTRs as derivatives.
Additionally, CMS Energy uses interest rate swaps to manage its interest rate risk on certain long-term debt and notes receivable transactions.
CMS Energy and Consumers record derivative contracts that do not qualify for the normal purchases and sales exception at fair value on their consolidated balance sheets. At CMS Energy, if the derivative is accounted for as a cash flow hedge, unrealized gains and losses from changes in the fair value of the derivative are recognized in AOCI and subsequently recognized in earnings when the hedged transactions impact earnings. If the derivative is accounted for as a fair value hedge, changes in the fair value of the derivative and changes in the fair value of the hedged item due to the hedged risk are recognized in earnings. For the FTRs at Consumers, changes in fair value are deferred as regulatory assets or liabilities. For details regarding CMS Energy’s and Consumers’ derivative instruments recorded at fair value, see Note 6, Fair Value Measurements.
EPS: CMS Energy calculates basic and diluted EPS using the weighted-average number of shares of common stock and dilutive potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted EPS, includes the effects of nonvested stock awards and forward equity sales. CMS Energy computes the effect on potential common stock using the treasury stock method. Diluted EPS excludes the impact of antidilutive securities, which are those securities resulting in an increase in EPS or a decrease in loss per share. For EPS computations, see Note 15, Earnings Per Share—CMS Energy.
Impairment of Long-Lived Assets and Equity Method Investments: CMS Energy and Consumers perform tests of impairment if certain triggering events occur or if there has been a decline in value that may be other than temporary.
CMS Energy and Consumers evaluate long-lived assets held in use for impairment by calculating the undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. If the undiscounted future cash flows are less than the carrying amount, CMS Energy and Consumers recognize an impairment loss equal to the amount by which the carrying amount exceeds the fair value. CMS Energy and Consumers estimate the fair value of the asset using quoted market prices, market prices of similar assets, or discounted future cash flow analyses.
CMS Energy also assesses equity method investments for impairment whenever there has been a decline in value that is other than temporary. This assessment requires CMS Energy to determine the fair value of the equity method investment. CMS Energy determines fair value using valuation methodologies, including discounted cash flows, and assesses the ability of the investee to sustain an earnings capacity that justifies the carrying amount of the investment. CMS Energy records an impairment if the fair value is less than the carrying amount and the decline in value is considered to be other than temporary.
Investment Tax Credits: Consumers amortizes its investment tax credits over the life of the related property in accordance with regulatory treatment. CMS Energy’s non‑regulated businesses use the deferral method of accounting for investment tax credits. Under the deferral method, the book basis of the associated assets is reduced by the amount of the credit, resulting in lower depreciation expense over the life of the assets. Furthermore, the tax basis of the assets is reduced by 50 percent of the related credit, resulting in a net deferred tax asset. CMS Energy recognizes the tax benefit of this basis difference as a reduction to income tax expense in the year in which the plant reaches commercial operation.
Inventory: CMS Energy and Consumers use the weighted-average cost method for valuing working gas, recoverable base gas in underground storage facilities, and materials and supplies inventory. CMS Energy and Consumers also use this method for valuing coal inventory, and they classify these amounts as generating plant fuel stock on their consolidated balance sheets.
CMS Energy and Consumers account for RECs and emission allowances as inventory and use the weighted-average cost method to remove amounts from inventory. RECs and emission allowances are used to satisfy compliance obligations related to the generation of power. CMS Energy and Consumers classify these amounts within other assets on their consolidated balance sheets.
CMS Energy and Consumers evaluate inventory for impairment as required to ensure that its carrying value does not exceed the lower of cost or net realizable value.
MISO Transactions: MISO requires the submission of hourly day-ahead and real-time bids and offers for energy at locations across the MISO region. CMS Energy and Consumers account for MISO transactions on a net hourly basis in each of the real-time and day-ahead markets, netted across all MISO energy market locations. CMS Energy and Consumers record net hourly purchases in purchased and interchange power and net hourly sales in operating revenue on their consolidated statements of income. They record net billing adjustments upon receipt of settlement statements, record accruals for future net purchases and sales adjustments based on historical experience, and reconcile accruals to actual expenses and sales upon receipt of settlement statements.
Property Taxes: Property taxes are based on the taxable value of Consumers’ real and personal property assessed by local taxing authorities. Consumers records property tax expense over the fiscal year of the taxing authority for which the taxes are levied. The deferred property tax balance represents the amount of Consumers’ accrued property tax that will be recognized over future governmental fiscal periods.
Renewable Energy Grant: In 2013, Consumers received a renewable energy cash grant for Lake Winds® Energy Park under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009. Upon receipt of the grant, Consumers recorded a regulatory liability, which Consumers is amortizing over the life of Lake Winds® Energy Park. Consumers presents the amortization as a reduction to maintenance and other operating expenses on its consolidated statements of income. Consumers recorded the deferred income taxes related to the grant as a reduction of the book basis of Lake Winds® Energy Park.
Other: For additional accounting policies, see:
Note 8, Notes Receivable
Note 9, Plant, Property, and Equipment
Note 11, Asset Retirement Obligations
Note 12, Retirement Benefits
Note 14, Income Taxes
Note 15, Earnings Per Share—CMS Energy
Note 16, Revenue
Note 18, Cash and Cash Equivalents
Note 21, Variable Interest Entities
v3.20.4
New Accounting Standards
12 Months Ended
Dec. 31, 2020
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
New Accounting Standards New Accounting Standards
Implementation of New Accounting Standards
ASU 2016‑13, Measurement of Credit Losses on Financial Instruments: This standard, which was effective on January 1, 2020 for CMS Energy and Consumers, provides new guidance for measuring and recognizing credit losses on financial instruments. The standard applies to financial assets that are not measured at fair value through net income as well as to certain off‑balance-sheet credit exposures. CMS Energy and Consumers were required to apply the standard using a modified retrospective approach, under which the initial impacts of the standard are recorded through a cumulative-effect adjustment to beginning retained earnings on the effective date.
The standard required an increase to the allowance for loan losses at EnerBank. Prior to the standard, the allowance reflected expected credit losses over a 12‑month period, but the new guidance requires the allowance to reflect expected credit losses over the entire life of the loans. As a result, CMS Energy recorded a $65 million increase to its expected credit loss reserves on January 1, 2020, with the offsetting adjustment recorded to retained earnings, net of taxes of $14 million. The standard also requires an increase in the initial provision for loan losses recognized in net income for new loans originated in 2020 and beyond. The adoption of this standard resulted in a $21 million reduction to CMS Energy’s income before income taxes for the year ended December 31, 2020. For further information on EnerBank’s loans and the related allowance for loan losses see Note 8, Notes Receivable. At Consumers, the standard applies to the allowance for uncollectible accounts, but did not result in any significant changes to the allowance methodology and did not have a material impact on Consumers’ consolidated financial statements.
ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting: This standard, which was effective as of March 12, 2020 for CMS Energy and Consumers, provides optional guidance intended to ease the potential burden in accounting for the expected discontinuation of LIBOR as a reference rate in the financial markets. The guidance can be applied to modifications made to certain contracts to replace LIBOR with a new reference rate. The guidance, if elected, will permit entities to treat such modifications as the continuation of the original contract, without any required accounting reassessments or remeasurements. The guidance will also facilitate the continuation of hedge accounting for derivatives that may have to be modified to incorporate a new rate. The guidance is effective through December 31, 2022. CMS Energy and Consumers presently have various contracts that reference LIBOR and they are assessing how this standard may be applied to specific contract modifications.
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 2016‑13, Measurement of Credit Losses on Financial Instruments: This standard, which was effective on January 1, 2020 for CMS Energy and Consumers, provides new guidance for measuring and recognizing credit losses on financial instruments. The standard applies to financial assets that are not measured at fair value through net income as well as to certain off‑balance-sheet credit exposures. CMS Energy and Consumers were required to apply the standard using a modified retrospective approach, under which the initial impacts of the standard are recorded through a cumulative-effect adjustment to beginning retained earnings on the effective date.
The standard required an increase to the allowance for loan losses at EnerBank. Prior to the standard, the allowance reflected expected credit losses over a 12‑month period, but the new guidance requires the allowance to reflect expected credit losses over the entire life of the loans. As a result, CMS Energy recorded a $65 million increase to its expected credit loss reserves on January 1, 2020, with the offsetting adjustment recorded to retained earnings, net of taxes of $14 million. The standard also requires an increase in the initial provision for loan losses recognized in net income for new loans originated in 2020 and beyond. The adoption of this standard resulted in a $21 million reduction to CMS Energy’s income before income taxes for the year ended December 31, 2020. For further information on EnerBank’s loans and the related allowance for loan losses see Note 8, Notes Receivable. At Consumers, the standard applies to the allowance for uncollectible accounts, but did not result in any significant changes to the allowance methodology and did not have a material impact on Consumers’ consolidated financial statements.
ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting: This standard, which was effective as of March 12, 2020 for CMS Energy and Consumers, provides optional guidance intended to ease the potential burden in accounting for the expected discontinuation of LIBOR as a reference rate in the financial markets. The guidance can be applied to modifications made to certain contracts to replace LIBOR with a new reference rate. The guidance, if elected, will permit entities to treat such modifications as the continuation of the original contract, without any required accounting reassessments or remeasurements. The guidance will also facilitate the continuation of hedge accounting for derivatives that may have to be modified to incorporate a new rate. The guidance is effective through December 31, 2022. CMS Energy and Consumers presently have various contracts that reference LIBOR and they are assessing how this standard may be applied to specific contract modifications.
v3.20.4
Regulatory Matters
12 Months Ended
Dec. 31, 2020
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.
Regulatory Assets and Liabilities
Consumers is subject to the actions of the MPSC and FERC and therefore prepares its consolidated financial statements in accordance with the provisions of regulatory accounting. A utility must apply regulatory accounting when its rates are designed to recover specific costs of providing regulated services. Under regulatory accounting, Consumers records regulatory assets or liabilities for certain transactions that would have been treated as expense or revenue by non‑regulated businesses.
Presented in the following table are the regulatory assets and liabilities on Consumers’ consolidated balance sheets:
In Millions
December 31End of Recovery or Refund Period20202019
Regulatory assets
Current
Energy waste reduction plan incentive1
2021$34 $33 
Deferred capital spending2
2021— 
Other2021— 
Total current regulatory assets$42 $33 
Non-current
Postretirement benefits3
various$1,231 $1,130 
Costs of coal-fueled electric generating units to be retired2
various678 667 
Securitized costs2
2029221 247 
ARO4
various216 191 
MGP sites4
various120 130 
Unamortized loss on reacquired debt4
various108 70 
Energy waste reduction plan incentive1
202242 34 
Energy waste reduction plan4
various16 10 
Demand response program4
various10 
COVID-19 costs accounting deferral4
various— 
Othervarious
Total non-current regulatory assets$2,653 $2,489 
Total regulatory assets$2,695 $2,522 
Regulatory liabilities
Current
Income taxes, net2021$105 $65 
Reserve for customer refunds202128 
Voluntary transmission asset sale gain share202114 17 
Other2021
Total current regulatory liabilities$151 $87 
Non-current
Cost of removalvarious$2,245 $2,126 
Income taxes, netvarious1,419 1,510 
Renewable energy grant204349 52 
AROvarious11 26 
Renewable energy plan202817 
Othervarious11 11 
Total non-current regulatory liabilities$3,744 $3,742 
Total regulatory liabilities$3,895 $3,829 
1These regulatory assets have arisen from an alternative revenue program and are not associated with incurred costs or capital investments. Therefore, the MPSC has provided for recovery without a return.
2The MPSC has historically authorized and Consumers expects the MPSC to authorize a specific return on these regulatory assets.
3This regulatory asset is included in rate base, thereby providing a return.
4These regulatory assets represent incurred costs for which the MPSC has provided, or Consumers expects, recovery without a return on investment.
Regulatory Assets
Energy Waste Reduction Plan Incentive: The energy waste reduction incentive mechanism provides a financial incentive if the energy savings of Consumers’ customers exceed annual targets established by the MPSC. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizing revenue related to the incentive as soon as energy savings exceed the annual targets established by the MPSC.
In November 2020, the MPSC approved a settlement agreement authorizing Consumers to collect $34 million during 2021 as an incentive for exceeding its statutory savings targets in 2019. Consumers recognized incentive revenue under this program of $34 million in 2019.
Consumers also exceeded its statutory savings targets in 2020, achieved certain other goals, and will request the MPSC’s approval to collect $42 million, the maximum performance incentive, in the energy waste reduction reconciliation to be filed in 2021. Consumers recognized incentive revenue under this program of $42 million in 2020.
Deferred Capital Spending: In January 2019, the MPSC approved a settlement agreement in Consumers’ 2018 electric rate case, which provided deferred accounting treatment for distribution-related capital investments exceeding certain threshold amounts. Thus, for actual capital spending above the threshold amounts detailed in the settlement agreement, Consumers has deferred as a regulatory asset the associated depreciation and property tax expense as well as the debt component of the overall rate of return on such spending.
Postretirement Benefits: As part of the ratemaking process, the MPSC allows Consumers to recover the costs of postretirement benefits. Accordingly, Consumers defers the net impact of actuarial losses and gains, prior service costs and credits, and settlements associated with postretirement benefits as a regulatory asset or liability. The asset or liability will decrease as the deferred items are amortized and recognized as components of net periodic benefit cost. For details about settlements and the amortization periods, see Note 12, Retirement Benefits.
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. In 2019, Consumers removed from total plant, property, and equipment an amount representing the projected remaining book value of the two coal-fueled electric generating units upon their retirement, and recorded it as a regulatory asset. Until securitization, the book value of the generating units will remain in rate base and receive full regulatory returns in general rate cases.
In December 2020, the MPSC issued a securitization financing order authorizing Consumers to issue securitization bonds in order to finance the recovery of the remaining book value of the two coal-fueled electric generating units upon their retirement. An intervenor has appealed the order, contending that it should not have to pay the securitization surcharge.
Securitized Costs: In 2013, the MPSC issued a securitization financing order authorizing Consumers to issue securitization bonds in order to finance the recovery of the remaining book value of seven smaller
coal-fueled electric generating units that Consumers retired in 2016 and three smaller natural gas-fueled electric generating units that Consumers retired in 2015. Upon receipt of the MPSC’s order, Consumers removed the book value of the ten units from plant, property, and equipment and recorded this amount as a regulatory asset. Consumers is amortizing the regulatory asset over the life of the related securitization bonds, which it issued through a subsidiary in 2014. For additional details regarding the securitization bonds, see Note 5, Financings and Capitalization.
ARO: The recovery of the underlying asset investments and related removal and monitoring costs of recorded AROs is approved by the MPSC in depreciation rate cases. Consumers records a regulatory asset and a regulatory liability for timing differences between the recognition of AROs for financial reporting purposes and the recovery of these costs from customers. The recovery period approximates the useful life of the assets to be removed.
MGP Sites: Consumers is incurring environmental remediation and other response activity costs at 23 former MGP facilities. The MPSC allows Consumers to recover from its natural gas customers over a ten-year period the costs incurred to remediate the MGP sites.
Unamortized Loss on Reacquired Debt: Under regulatory accounting, any unamortized discount, premium, or expense related to debt redeemed with the proceeds of new debt is capitalized and amortized over the life of the new debt.
Energy Waste Reduction Plan: The MPSC allows Consumers to collect surcharges from customers to fund its energy waste reduction plan. The amount of spending incurred in excess of surcharges collected is recorded as a regulatory asset and amortized as surcharges are collected from customers over the plan period. The amount of surcharges collected in excess of spending incurred is recorded as a regulatory liability and amortized as costs are incurred.
Demand Response Program: In the IRP and in general electric rate cases, the MPSC has approved the recovery of demand response costs. Consumers annually files a reconciliation with the MPSC to review actual demand response costs against amounts approved. The method of recovery of demand response costs will be determined in a future rate case.
COVID‑19 Costs Accounting Deferral: In April 2020, the MPSC issued an order authorizing Consumers to defer uncollectible accounts expense incurred beginning March 24, 2020 that are in excess of the amount used to set existing rates.
Regulatory Liabilities
Income Taxes, Net: Consumers records regulatory assets and liabilities to reflect the difference between deferred income taxes recognized for financial reporting purposes and amounts previously reflected in Consumers’ rates. This net balance will decrease over the remaining life of the related temporary differences and flow through income tax expense. The majority of the net regulatory liability recorded related to income taxes is associated with plant assets that are subject to normalization, which is governed by the Internal Revenue Code, and will be returned to customers over the remaining book life of the related plant assets, the average of which is 44 years for gas plant assets and 27 years for electric plant assets. For additional details on deferred income taxes, see Note 14, Income Taxes.
Reserve for Customer Refunds: In December 2020, the MPSC issued an order authorizing Consumers to refund $28 million voluntarily to utility customers. Consumers is required to submit another filing by the end of February 2021 proposing an appropriate method for making this refund.
Voluntary Transmission Asset Sale Gain Share: In October 2020, Consumers completed a sale of the electric utility’s remaining transmission equipment to METC. In December 2020, Consumers filed an application with the MPSC requesting approval to share voluntarily half of the gain from the sale with electric utility customers; this application was approved by the MPSC in February 2021. Consumers will share the gain through an offset to additional spending in 2021 or through a bill credit to electric utility customers in 2022. As a result, Consumers deferred $14 million of the gain in December 2020.
In September 2019, Consumers completed a sale of a portion of its electric utility’s substation transmission equipment to METC. In December 2019, Consumers filed an application with the MPSC requesting approval to share voluntarily half of the gain from the sale with customers; this application was approved by the MPSC in April 2020. As a result, Consumers deferred $17 million of the gain in December 2019 and shared that gain with customers in 2020.
Cost of Removal: The MPSC allows Consumers to collect amounts from customers to fund future asset removal activities. This regulatory liability is reduced as costs of removal are incurred. The refund period of this regulatory liability approximates the useful life of the assets to be removed.
Renewable Energy Grant: In 2013, Consumers received a $69 million renewable energy grant for Lake Winds® Energy Park, which began operations in 2012. This grant reduces Consumers’ cost of complying with Michigan’s renewable portfolio standard and, accordingly, reduces the overall renewable energy surcharge to be collected from customers. The regulatory liability recorded for the grant will be amortized over the life of Lake Winds® Energy Park.
Renewable Energy Plan: Consumers has collected surcharges to fund its renewable energy plan. Amounts not yet spent under the plan are recorded as a regulatory liability, which is amortized as incremental costs are incurred to operate and depreciate Consumers’ renewable generation facilities and to purchase RECs under renewable energy purchase agreements. Incremental costs represent costs incurred in excess of amounts recovered through the PSCR process.
Consumers Electric Utility
2020 Electric Rate Case: In February 2020, Consumers filed an application with the MPSC seeking an annual rate increase of $244 million, based on a 10.5 percent authorized return on equity and a projected twelve-month period ending December 31, 2021. In July 2020, Consumers reduced its requested annual rate increase to $230 million. In December 2020, the MPSC approved an annual rate increase of $90 million, based on a 9.9 percent authorized return on equity. This increase reflects a $36 million refund to customers of regulatory tax liabilities associated with the remeasurement of Consumers’ deferred income taxes as a result of the TCJA; excluding the impacts of this refund, the order resulted in a $126 million increase in annual rates.
The order also approved the recovery of $13 million associated with Consumers’ deferral of depreciation and property tax expense and the overall rate of return on distribution-related capital investments exceeding certain threshold amounts.
Additionally, the order approved the method of recovering amounts earned under the financial compensation mechanism approved by the MPSC in Consumers’ IRP. This mechanism allows Consumers to earn a return equal to Consumer’s weighted-average cost of capital on payments made under PPAs approved by the MPSC after January 1, 2019. The order authorizes Consumers to recover $3 million, beginning in January 2021, for incentives earned and to be earned on PPA payments during 2019 through 2021. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizing revenue related to the mechanism as payments are made on MPSC-approved PPAs. Consumers recognized revenue under this mechanism of $1 million in 2020.
Consumers is also authorized in the order to replace the current net metering tariff with a new distributed generation tariff, pursuant to the 2016 Energy Law. The new distributed generation tariff is consistent with other distributed generation tariffs already approved by the MPSC and will reduce the subsidies paid by non-distributed generation customers under the current net metering program.
Consumers Gas Utility
2019 Gas Rate Case: In December 2019, Consumers filed an application with the MPSC seeking an annual rate increase of $245 million, based on a 10.5 percent authorized return on equity and a projected twelve-month period ending September 30, 2021. In May 2020, Consumers reduced its requested annual rate increase to $229 million. In September 2020, the MPSC approved a settlement agreement authorizing an annual rate increase of $144 million, based on a 9.9 percent authorized return on equity, effective October 1, 2020. As part of that agreement, Consumers agreed not to file a new gas rate case prior to December 2021. 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. This reconciliation would start in October 2021 and continue until the MPSC resets rates in a subsequent rate case.
Additionally, the MPSC authorized Consumers to accelerate:
the refund of a regulatory liability associated with the unprotected, non‑property-related excess deferred income taxes resulting from the TCJA; Consumers was previously authorized to refund this through 2029
the flow-through of certain income tax benefits associated primarily with the cost of removal of gas plant assets placed in service before 1993; Consumers was previously authorized to refund this through 2025
Under the settlement agreement approved by the MPSC, these benefits, which total $84 million, will now be passed through to customers by September 2022. For additional details, see Note 14, Income Taxes.
Power Supply Cost Recovery and Gas Cost Recovery
The PSCR and GCR ratemaking processes are designed to allow Consumers to recover all of its power supply and purchased natural gas costs if incurred under reasonable and prudent policies and practices. The MPSC reviews these costs, policies, and practices in annual plan and reconciliation proceedings. Consumers adjusts its PSCR and GCR billing charges monthly in order to minimize the underrecovery or overrecovery amount in the annual reconciliations. Underrecoveries represent probable future revenues that will be recovered from customers; overrecoveries represent previously collected revenues that will be refunded to customers.
Presented in the following table are the liabilities for PSCR and GCR overrecoveries reflected on Consumers’ consolidated balance sheets:
In Millions
December 3120202019
Liabilities
PSCR overrecoveries$$33 
GCR overrecoveries15 
Accrued rate refunds$20 $35 
PSCR Plans and Reconciliations: In October 2020, the MPSC issued an order in Consumers’ 2018 PSCR reconciliation, authorizing recovery of $2.0 billion of power costs and authorizing Consumers to reflect in its 2019 PSCR reconciliation the underrecovery of $28 million.
In April 2020, the MPSC issued an order in Consumers’ 2019 PSCR plan authorizing the 2019 PSCR charge that Consumers self-implemented beginning in January 2019. In March 2020, Consumers filed its 2019 PSCR reconciliation, requesting full recovery of $1.9 billion of power costs and authorization to reflect in its 2020 PSCR reconciliation the overrecovery of $21 million.
Consumers submitted its 2020 PSCR plan to the MPSC in September 2019 and, in accordance with its proposed plan, self-implemented the 2020 PSCR charge beginning in January 2020.
GCR Plans and Reconciliations: In September 2020, the MPSC issued an order in Consumers’ 2018-2019 GCR reconciliation, authorizing recovery of $0.6 billion of gas costs and authorizing Consumers to reflect in its 2019-2020 GCR reconciliation the underrecovery of $11 million. The MPSC disallowed the recovery of $7 million in incremental gas purchases related to the Ray Compressor Station fire. For additional details, see Note 4, Contingencies and Commitments—Consumers Gas Utility Contingencies.
In June 2020, Consumers filed its 2019-2020 GCR reconciliation, requesting full recovery of $0.5 billion of gas costs and authorization to reflect in its 2020-2021 GCR reconciliation the underrecovery of $1 million.
In September 2020, the MPSC approved a settlement agreement in Consumers’ 2020-2021 GCR plan authorizing the 2020-2021 GCR charge that Consumers self-implemented beginning in April 2020.
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.
Regulatory Assets and Liabilities
Consumers is subject to the actions of the MPSC and FERC and therefore prepares its consolidated financial statements in accordance with the provisions of regulatory accounting. A utility must apply regulatory accounting when its rates are designed to recover specific costs of providing regulated services. Under regulatory accounting, Consumers records regulatory assets or liabilities for certain transactions that would have been treated as expense or revenue by non‑regulated businesses.
Presented in the following table are the regulatory assets and liabilities on Consumers’ consolidated balance sheets:
In Millions
December 31End of Recovery or Refund Period20202019
Regulatory assets
Current
Energy waste reduction plan incentive1
2021$34 $33 
Deferred capital spending2
2021— 
Other2021— 
Total current regulatory assets$42 $33 
Non-current
Postretirement benefits3
various$1,231 $1,130 
Costs of coal-fueled electric generating units to be retired2
various678 667 
Securitized costs2
2029221 247 
ARO4
various216 191 
MGP sites4
various120 130 
Unamortized loss on reacquired debt4
various108 70 
Energy waste reduction plan incentive1
202242 34 
Energy waste reduction plan4
various16 10 
Demand response program4
various10 
COVID-19 costs accounting deferral4
various— 
Othervarious
Total non-current regulatory assets$2,653 $2,489 
Total regulatory assets$2,695 $2,522 
Regulatory liabilities
Current
Income taxes, net2021$105 $65 
Reserve for customer refunds202128 
Voluntary transmission asset sale gain share202114 17 
Other2021
Total current regulatory liabilities