CMS ENERGY CORP, 10-Q filed on 10/28/2021
Quarterly Report
v3.21.2
Cover page - shares
9 Months Ended
Sep. 30, 2021
Oct. 11, 2021
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2021  
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 Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   289,697,389
Entity Central Index Key 0000811156  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
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 Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   84,108,789
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  
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  
CMS Energy Corporation Depositary Shares, each representing a 1/1,000th interest in a share of 4.200% Cumulative Redeemable Perpetual Preferred Stock, Series C    
Document Information [Line Items]    
Title of 12(b) Security CMS Energy Corporation Depositary Shares  
Trading Symbol CMS PRC  
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: $4.50 Series  
Trading Symbol CMS-PB  
Security Exchange Name NYSE  
v3.21.2
Consolidated Statements of Income (Unaudited) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Operating Revenue $ 1,725 $ 1,507 $ 5,296 $ 4,691
Operating Expenses        
Fuel for electric generation 184 108 438 274
Purchased power – related parties 21 13 56 45
Maintenance and other operating expenses 410 281 1,076 885
Depreciation and amortization 250 226 832 763
General taxes 81 74 290 262
Total operating expenses 1,465 1,167 4,354 3,768
Operating Income 260 340 942 923
Other Income (Expense)        
Interest income 0 1 2 3
Interest and dividend income – related parties 0 0 0 7
Allowance for equity funds used during construction 2 1 5 4
Income from equity method investees 4 0 8 1
Non-operating retirement benefits, net 40 29 121 90
Other income 1 1 7 3
Other expense (3) (4) (7) (9)
Total other income 44 28 136 99
Interest Charges        
Interest on long-term debt 120 124 359 361
Interest expense – related parties 3 3 9 9
Other interest expense 3 4 8 10
Allowance for borrowed funds used during construction (1) (1) (2) (2)
Total interest charges 125 130 374 378
Income Before Income Taxes 179 238 704 644
Income Tax Expense 26 40 90 88
Income From Continuing Operations 153 198 614 556
Income From Discontinued Operations, Net of Tax of $9, $4, $25, and $10 30 12 82 34
Net Income 183 210 696 590
Loss Attributable to Noncontrolling Interests (6) (8) (18) (7)
Net Income attributable to CMS Energy 189 218 714 597
Preferred Stock Dividends 3 0 3 0
Net Income Available to Common Stockholders $ 186 $ 218 $ 711 $ 597
Basic earnings per average common share, income from continuing operations per average common share available to common stockholders (in dollars per share) $ 0.54 $ 0.72 $ 2.18 $ 1.98
Basic earnings per average common share, income from discontinued operations per average common share available to common stockholders (in dollars per share) 0.10 0.04 0.28 0.12
Basic earnings per average common share (in dollars per share) 0.64 0.76 2.46 2.10
Diluted earnings per average common share, income from continuing operations per average common share available to common stockholders (in dollars per share) 0.54 0.72 2.18 1.97
Diluted earnings per average common share, income from discontinued operations per average common share available to common stockholders (in dollars per share) 0.10 0.04 0.28 0.12
Diluted earnings per average common share (in dollars per share) $ 0.64 $ 0.76 $ 2.46 $ 2.09
Consumers Energy Company        
Operating Revenue $ 1,644 $ 1,450 $ 5,074 $ 4,524
Operating Expenses        
Fuel for electric generation 147 85 340 207
Purchased and interchange power 450 420 1,200 1,121
Purchased power – related parties 21 13 56 45
Cost of gas sold 53 33 425 383
Maintenance and other operating expenses 390 266 1,021 846
Depreciation and amortization 241 223 804 753
General taxes 77 72 277 256
Total operating expenses 1,379 1,112 4,123 3,611
Operating Income 265 338 951 913
Other Income (Expense)        
Interest income 1 1 2 3
Interest and dividend income – related parties 1 2 4 4
Allowance for equity funds used during construction 2 1 5 4
Non-operating retirement benefits, net 37 28 113 85
Other income 1 1 7 3
Other expense (3) (4) (7) (9)
Total other income 39 29 124 90
Interest Charges        
Interest on long-term debt 74 76 220 227
Interest expense – related parties 3 3 9 9
Other interest expense 2 4 6 9
Allowance for borrowed funds used during construction (1) (1) (2) (2)
Total interest charges 78 82 233 243
Income Before Income Taxes 226 285 842 760
Income Tax Expense 40 55 130 135
Net Income 186 230 712 625
Net Income attributable to CMS Energy 186 230 712 625
Preferred Stock Dividends 0 0 1 1
Net Income Available to Common Stockholders 186 230 711 624
Purchased and interchange power        
Operating Expenses        
Cost of goods and services sold 462 430 1,230 1,149
Cost of gas sold        
Operating Expenses        
Cost of goods and services sold $ 57 $ 35 $ 432 $ 390
v3.21.2
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Net Income $ 183 $ 210 $ 696 $ 590
Retirement Benefits Liability        
Net loss arising during the period, net of tax 0 (5) 0 (5)
Settlement arising during the period, net of tax 0 1 0 1
Amortization of net actuarial loss, net of tax 1 1 5 3
Amortization of prior service credit 0 0 (1) (1)
Derivatives        
Unrealized gain (loss) on derivative instruments, net of tax of $—, $—, $—, and $(1) 0 (1) 1 (5)
Reclassification adjustments included in net income, net of tax of $—, $—, $1, and $— 0 1 0 1
Other Comprehensive Income (Loss) 1 (3) 5 (6)
Comprehensive Income 184 207 701 584
Comprehensive Loss Attributable to Noncontrolling Interests (6) (8) (18) (7)
Comprehensive Income Attributable to CMS Energy 190 215 719 591
Consumers Energy Company        
Net Income 186 230 712 625
Retirement Benefits Liability        
Amortization of net actuarial loss, net of tax 1 1 2 1
Derivatives        
Other Comprehensive Income (Loss) 1 1 2 1
Comprehensive Income $ 187 $ 231 $ 714 $ 626
v3.21.2
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Net gain arising during the period, TAX $ 0 $ (2) $ 0 $ (2)
Settlement arising during the period, TAX 0 0 0 0
Amortization of net actuarial loss, TAX 0 0 1 1
Amortization of prior service credit, TAX 0 0 0 0
Unrealized loss on derivative instruments, TAX 0 0 0 (1)
Reclassification adjustments included in net income , TAX 0 0 1 0
Consumers Energy Company        
Amortization of net actuarial loss, TAX $ 0 $ 0 $ 0 $ 1
v3.21.2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Cash Flows from Operating Activities    
Net Income $ 696 $ 590
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 832 763
Deferred income taxes and investment tax credits 110 140
Other non‑cash operating activities and reconciling adjustments (71) (22)
Pension contributions 0 (531)
Net cash provided by (used in) discontinued operations (111) 35
Changes in assets and liabilities    
Accounts receivable and accrued revenue 129 221
Inventories (185) (34)
Accounts payable and accrued rate refunds 84 30
Other current assets and liabilities (30) (91)
Other non‑current assets and liabilities 29 43
Net cash provided by operating activities 1,483 1,144
Cash Flows from Investing Activities    
Capital expenditures (excludes assets placed under finance lease) (1,442) (1,693)
Net cash provided by (used in) discontinued operations 78 (505)
Cost to retire property and other investing activities (96) (100)
Net cash used in investing activities (1,460) (2,298)
Cash Flows from Financing Activities    
Proceeds from issuance of debt 300 2,353
Retirement of debt (18) (1,294)
Decrease in notes payable 0 (90)
Issuance of common stock, net of issuance costs 23 107
Issuance of preferred stock, net of issuance costs 224 0
Payment of dividends on common and preferred stock (380) (351)
Proceeds from the sale of membership interest in VIE to tax equity investor 0 417
Contribution from noncontrolling interest 1 31
Net cash provided by (used in) discontinued operations (84) 456
Other financing costs (38) (74)
Net cash provided by financing activities 28 1,555
Net Increase in Cash and Cash Equivalents, Including Restricted Amounts 51 401
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period 185 157
Cash and Cash Equivalents, Including Restricted Amounts, End of Period 236 558
Non‑cash transactions    
Capital expenditures not paid 172 140
Consumers Energy Company    
Cash Flows from Operating Activities    
Net Income 712 625
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 804 753
Deferred income taxes and investment tax credits 129 136
Other non‑cash operating activities and reconciling adjustments (65) (21)
Pension contributions 0 (518)
Changes in assets and liabilities    
Accounts receivable and accrued revenue 137 190
Inventories (186) (34)
Accounts payable and accrued rate refunds 60 29
Other current assets and liabilities (24) (103)
Other non‑current assets and liabilities 16 28
Net cash provided by operating activities 1,583 1,085
Cash Flows from Investing Activities    
Capital expenditures (excludes assets placed under finance lease) (1,433) (1,595)
Cost to retire property and other investing activities (86) (105)
Net cash used in investing activities (1,519) (1,700)
Cash Flows from Financing Activities    
Proceeds from issuance of debt 300 1,528
Retirement of debt (13) (773)
Decrease in notes payable 0 (90)
Decrease in notes payable – related parties (307) 0
Stockholder contribution 575 650
Payment of dividends on common and preferred stock (571) (450)
Other financing costs (28) (55)
Net cash provided by financing activities (44) 810
Net Increase in Cash and Cash Equivalents, Including Restricted Amounts 20 195
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period 35 28
Cash and Cash Equivalents, Including Restricted Amounts, End of Period 55 223
Non‑cash transactions    
Capital expenditures not paid $ 168 $ 156
v3.21.2
Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Current Assets    
Cash and cash equivalents $ 102 $ 32
Restricted cash and cash equivalents 30 17
Accounts receivable and accrued revenue 713 853
Accounts receivable – related parties 17 19
Accrued gas revenue 5 0
Inventories at average cost    
Gas in underground storage 556 353
Materials and supplies 173 155
Generating plant fuel stock 31 68
Deferred property taxes 215 332
Regulatory assets 11 42
Assets held for sale 494 429
Prepayments and other current assets 130 104
Total current assets 2,477 2,404
Plant, Property, and Equipment    
Plant, property, and equipment, gross 29,450 27,870
Less accumulated depreciation and amortization 8,489 7,938
Plant, property, and equipment, net 20,961 19,932
Construction work in progress 973 1,085
Total plant, property, and equipment 21,934 21,017
Other Non‑current Assets    
Regulatory assets 2,588 2,653
Accounts receivable 18 19
Investments 73 70
Assets held for sale 2,606 2,680
Other 817 823
Total other non‑current assets 6,102 6,245
Total Assets 30,513 29,666
Current Liabilities    
Current portion of long-term debt, finance leases, and other financing 585 591
Accounts payable 787 661
Accounts payable – related parties 8 7
Accrued rate refunds 9 20
Accrued interest 112 104
Accrued taxes 146 454
Regulatory liabilities 191 151
Liabilities held for sale 1,233 953
Other current liabilities 183 133
Total current liabilities 3,254 3,074
Non‑current Liabilities    
Long-term debt 12,027 11,744
Non-current portion of finance leases and other financing 48 56
Regulatory liabilities 3,758 3,744
Postretirement benefits 147 152
Asset retirement obligations 599 553
Deferred investment tax credit 113 115
Deferred income taxes 2,014 1,863
Liabilities held for sale 1,523 1,894
Other non‑current liabilities 377 394
Total non‑current liabilities 20,606 20,515
Commitments and Contingencies
Common stockholders’ equity    
Common stock 3 3
Other paid-in capital 5,397 5,365
Accumulated other comprehensive loss (81) (86)
Retained earnings 547 214
Total common stockholders’ equity 5,866 5,496
Cumulative preferred stock 224 0
Total stockholders’ equity 6,090 5,496
Noncontrolling interests 563 581
Total equity 6,653 6,077
Total Liabilities and Equity 30,513 29,666
Consumers Energy Company    
Current Assets    
Cash and cash equivalents 29 20
Restricted cash and cash equivalents 26 15
Accounts receivable and accrued revenue 683 828
Accounts receivable – related parties 8 18
Accrued gas revenue 5 0
Inventories at average cost    
Gas in underground storage 556 353
Materials and supplies 168 149
Generating plant fuel stock 31 67
Deferred property taxes 215 332
Regulatory assets 11 42
Prepayments and other current assets 112 68
Total current assets 1,844 1,892
Plant, Property, and Equipment    
Plant, property, and equipment, gross 28,331 26,757
Less accumulated depreciation and amortization 8,367 7,844
Plant, property, and equipment, net 19,964 18,913
Construction work in progress 930 1,058
Total plant, property, and equipment 20,894 19,971
Other Non‑current Assets    
Regulatory assets 2,588 2,653
Accounts receivable 24 25
Accounts and notes receivable – related parties 103 105
Other 736 753
Total other non‑current assets 3,451 3,536
Total Assets 26,189 25,399
Current Liabilities    
Current portion of long-term debt, finance leases, and other financing 377 384
Notes payable – related parties 0 307
Accounts payable 745 636
Accounts payable – related parties 13 7
Accrued rate refunds 9 20
Accrued interest 80 72
Accrued taxes 158 458
Regulatory liabilities 191 151
Other current liabilities 128 104
Total current liabilities 1,701 2,139
Non‑current Liabilities    
Long-term debt 8,028 7,742
Non-current portion of finance leases and other financing 48 56
Regulatory liabilities 3,758 3,744
Postretirement benefits 108 112
Asset retirement obligations 576 530
Deferred investment tax credit 113 115
Deferred income taxes 2,265 2,094
Other non‑current liabilities 318 311
Total non‑current liabilities 15,214 14,704
Commitments and Contingencies
Common stockholders’ equity    
Common stock 841 841
Other paid-in capital 6,599 6,024
Accumulated other comprehensive loss (34) (36)
Retained earnings 1,831 1,690
Total common stockholders’ equity 9,237 8,519
Cumulative preferred stock 37 37
Total stockholders’ equity 9,274 8,556
Total equity 9,274 8,556
Total Liabilities and Equity $ 26,189 $ 25,399
v3.21.2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Accounts receivable and accrued revenue, ALLOWANCE $ 24 $ 29
Common stock authorized (in shares) 350,000,000.0 350,000,000.0
Common stock outstanding (in shares) 289,700,000 288,900,000
Preferred stock authorized (in shares) 9,200,000  
Preferred stock outstanding (in shares) 9,200,000  
Consumers Energy Company    
Accounts receivable and accrued revenue, ALLOWANCE $ 24 $ 29
Common stock authorized (in shares) 125,000,000.0 125,000,000.0
Common stock outstanding (in shares) 84,100,000 84,100,000
Preferred stock authorized (in shares) 7,500,000 7,500,000
Preferred stock outstanding (in shares) 400,000 400,000
v3.21.2
Consolidated Statements of Changes In Equity (Unaudited) - USD ($)
$ in Millions
Total
Common Stock
Other Paid-in Capital
Accumulated Other Comprehensive Loss
Retirement benefits liability
Derivative instruments
Retained Earnings (Accumulated Deficit)
Retained Earnings (Accumulated Deficit)
Cumulative Effect, Period of Adoption, Adjustment
Cumulative Preferred Stock
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
Retained Earnings (Accumulated Deficit)
Consumers Energy Company
Cumulative Preferred Stock
Total Equity at Beginning of Period at Dec. 31, 2019 $ 5,055 $ 3 $ 5,113 $ (73) $ (69) $ (4) $ (25) $ (51) $ 0 $ 37 $ 7,737 $ 841 $ 5,374 $ (28) $ (28) $ 1,513 $ 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Stock issued     125           0                
Common stock repurchased     (13)                            
Stockholder contribution                         650        
Net loss arising during the period, net of tax (5)       (5)                        
Settlement arising during the period, net of tax 1       1                        
Amortization of net actuarial loss 3       3           1       1    
Amortization of prior service credit (1)       (1)                        
Unrealized gain (loss) on derivative instruments (5)         (5)                      
Reclassification adjustments included in net income 1         1                      
Net Income 590           597     (7) 625         625  
Dividends declared on common stock             (350)                 (449)  
Dividends declared on preferred stock             0                 (1)  
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                   (1)              
Total Equity at End of Period at Sep. 30, 2020 $ 5,898 3 5,225 (79) (71) (8) 171   0 578 8,563 841 6,024 (27) (27) 1,688 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Dividends declared per common share (in dollars per share) $ 1.2225                                
Dividends declared per preferred stock Series C depositary share (in dollars per share) $ 0                                
Total Equity at Beginning of Period at Jun. 30, 2020 $ 5,251 3 5,217 (76) (68) (8) 70 0 0 37 8,505 841 6,024 (28) (28) 1,631 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Stock issued     8           0                
Common stock repurchased     0                            
Stockholder contribution                         0        
Net loss arising during the period, net of tax (5)       (5)                        
Settlement arising during the period, net of tax 1       1                        
Amortization of net actuarial loss 1       1           1       1    
Amortization of prior service credit 0       0                        
Unrealized gain (loss) on derivative instruments (1)         (1)                      
Reclassification adjustments included in net income 1         1                      
Net Income 210           218     (8) 230         230  
Dividends declared on common stock             (117)                 (173)  
Dividends declared on preferred stock             0                 0  
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                   0              
Total Equity at End of Period at Sep. 30, 2020 $ 5,898 3 5,225 (79) (71) (8) 171   0 578 8,563 841 6,024 (27) (27) 1,688 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Dividends declared per common share (in dollars per share) $ 0.4075                                
Dividends declared per preferred stock Series C depositary share (in dollars per share) $ 0                                
Total Equity at Beginning of Period at Dec. 31, 2020 $ 6,077 3 5,365 (86) (80) (6) 214 0 0 581 8,556 841 6,024 (36) (36) 1,690 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Stock issued     41           224                
Common stock repurchased     (9)                            
Stockholder contribution                         575        
Net loss arising during the period, net of tax 0       0                        
Settlement arising during the period, net of tax 0       0                        
Amortization of net actuarial loss 5       5           2       2    
Amortization of prior service credit (1)       (1)                        
Unrealized gain (loss) on derivative instruments 1         1                      
Reclassification adjustments included in net income 0         0                      
Net Income 696           714     (18) 712         712  
Dividends declared on common stock             (378)                 (570)  
Dividends declared on preferred stock             (3)                 (1)  
Impact of purchase and consolidation of VIE                   0              
Sale of membership interest in VIE to tax equity investor                   0              
Contribution from noncontrolling interest                   1              
Distributions and other changes in noncontrolling interests                   (1)              
Total Equity at End of Period at Sep. 30, 2021 $ 6,653 3 5,397 (81) (76) (5) 547   224 563 9,274 841 6,599 (34) (34) 1,831 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Dividends declared per common share (in dollars per share) $ 1.3050                                
Dividends declared per preferred stock Series C depositary share (in dollars per share) $ 0.3063                                
Total Equity at Beginning of Period at Jun. 30, 2021 $ 6,366 3 5,389 (82) (77) (5) 487 $ 0 0 569 8,977 841 6,299 (35) (35) 1,835 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Stock issued     8           224                
Common stock repurchased     0                            
Stockholder contribution                         300        
Net loss arising during the period, net of tax 0       0                        
Settlement arising during the period, net of tax 0       0                        
Amortization of net actuarial loss 1       1           1       1    
Amortization of prior service credit 0       0                        
Unrealized gain (loss) on derivative instruments 0         0                      
Reclassification adjustments included in net income 0         0                      
Net Income 183           189     (6) 186         186  
Dividends declared on common stock             (126)                 (190)  
Dividends declared on preferred stock             (3)                 0  
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                   0              
Total Equity at End of Period at Sep. 30, 2021 $ 6,653 $ 3 $ 5,397 $ (81) $ (76) $ (5) $ 547   $ 224 $ 563 $ 9,274 $ 841 $ 6,599 $ (34) $ (34) $ 1,831 $ 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Dividends declared per common share (in dollars per share) $ 0.4350                                
Dividends declared per preferred stock Series C depositary share (in dollars per share) $ 0.3063                                
v3.21.2
Consolidated Statements of Income (Unaudited) (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Income Statement [Abstract]        
Tax effect of discontinued operation $ 9 $ 4 $ 25 $ 10
v3.21.2
Regulatory Matters
9 Months Ended
Sep. 30, 2021
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 MPSC’s authority to approve voluntary revenue refunds, and other matters. Consumers is unable to predict the outcome of these appeals.
Electric Rate Case: In June 2021, the MPSC Staff filed testimony in the general electric rate case that Consumers filed in March 2021. In its testimony, the MPSC Staff recommended the disallowance of cost recovery for certain categories of recently completed capital expenditures incurred by Consumers. In October 2021, the administrative law judge issued a proposal for decision supporting the MPSC Staff’s recommended disallowance. At September 30, 2021, Consumers had incurred $39 million of such expenditures. A material disallowance of incurred capital costs could negatively affect CMS Energy’s and
Consumers’ results of operations. Consumers cannot predict the outcome of this proceeding. The MPSC is expected to issue a final order in December 2021.
Reserve for Customer Refunds: In December 2020, the MPSC issued an order authorizing Consumers to refund $28 million voluntarily to utility customers. In May 2021, the MPSC approved a filing submitted by Consumers that proposed the refund take the form of incremental spending in 2021 above amounts included in rates on various programs, including electric service restoration and gas and electric technology expenses. If Consumers does not achieve the incremental spending, the remaining balance will be provided to electric or gas utility customers through a bill credit. Consumers had recorded a current regulatory liability of $8 million at September 30, 2021 and $28 million at December 31, 2020 related to this voluntary 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 through incremental service restoration spending in 2021; this application was approved by the MPSC in February 2021. As a result, the $14 million gain was recorded on Consumers’ consolidated balance sheets as a current regulatory liability at December 31, 2020 and was shared with customers in 2021.
Energy Waste Reduction Plan Incentive: Consumers filed its 2020 energy waste reduction reconciliation in May 2021, requesting the MPSC’s approval to collect from customers the maximum performance incentive of $42 million for exceeding statutory savings targets in 2020. Consumers recognized incentive revenue under this program of $42 million in 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 MPSC’s authority to approve voluntary revenue refunds, and other matters. Consumers is unable to predict the outcome of these appeals.
Electric Rate Case: In June 2021, the MPSC Staff filed testimony in the general electric rate case that Consumers filed in March 2021. In its testimony, the MPSC Staff recommended the disallowance of cost recovery for certain categories of recently completed capital expenditures incurred by Consumers. In October 2021, the administrative law judge issued a proposal for decision supporting the MPSC Staff’s recommended disallowance. At September 30, 2021, Consumers had incurred $39 million of such expenditures. A material disallowance of incurred capital costs could negatively affect CMS Energy’s and
Consumers’ results of operations. Consumers cannot predict the outcome of this proceeding. The MPSC is expected to issue a final order in December 2021.
Reserve for Customer Refunds: In December 2020, the MPSC issued an order authorizing Consumers to refund $28 million voluntarily to utility customers. In May 2021, the MPSC approved a filing submitted by Consumers that proposed the refund take the form of incremental spending in 2021 above amounts included in rates on various programs, including electric service restoration and gas and electric technology expenses. If Consumers does not achieve the incremental spending, the remaining balance will be provided to electric or gas utility customers through a bill credit. Consumers had recorded a current regulatory liability of $8 million at September 30, 2021 and $28 million at December 31, 2020 related to this voluntary 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 through incremental service restoration spending in 2021; this application was approved by the MPSC in February 2021. As a result, the $14 million gain was recorded on Consumers’ consolidated balance sheets as a current regulatory liability at December 31, 2020 and was shared with customers in 2021.
Energy Waste Reduction Plan Incentive: Consumers filed its 2020 energy waste reduction reconciliation in May 2021, requesting the MPSC’s approval to collect from customers the maximum performance incentive of $42 million for exceeding statutory savings targets in 2020. Consumers recognized incentive revenue under this program of $42 million in 2020.
v3.21.2
Contingencies and Commitments
9 Months Ended
Sep. 30, 2021
Other Commitments [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
Bay Harbor: CMS Land retained environmental remediation obligations for the collection and treatment of leachate at Bay Harbor after selling its interests in the development in 2002. Leachate is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site. In 2012, CMS Land and EGLE finalized an agreement that established the final remedies and the future water quality criteria at the site. CMS Land completed all construction necessary to implement the remedies required by the agreement and will continue to maintain and operate a system to discharge treated leachate into Little Traverse Bay under an NPDES permit, which was valid through September 2020. CMS Land submitted a renewal request for the permit in April 2020. CMS Land is allowed to continue operating under the previous NPDES permit until a response is received from EGLE.
At September 30, 2021, 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 $54 million. CMS Energy
expects to pay the following amounts for long-term leachate disposal and operating and maintenance costs during the remainder of 2021 and in each of the next five years:
In Millions
202120222023202420252026
CMS Energy
Long-term leachate disposal and operating and maintenance costs$$$$$$
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 believes the likelihood of material loss to be remote, but cannot predict the financial impact or outcome of the matter. An unfavorable outcome could have a material adverse effect on CMS Energy’s liquidity, financial condition, and results of operations.
Consumers Electric Utility Contingencies
Electric Environmental Matters: Consumers’ operations are subject to environmental laws and regulations. Historically, Consumers has generally been able to recover, in customer rates, the costs to operate its facilities in compliance with these laws and regulations.
Cleanup and Solid Waste: Consumers expects to incur remediation and other response activity costs at a number of sites under 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 $2 million and $4 million. At September 30, 2021, Consumers had a recorded liability of $2 million, the minimum amount in the range of its estimated probable NREPA liability, as no amount in the range was considered a better estimate than any other amount.
Consumers is a potentially responsible party at a number of contaminated sites administered under CERCLA. CERCLA liability is joint and several. In 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party for cleanup of PCBs at the Kalamazoo River CERCLA site. The notification claimed that the EPA has reason to believe that Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site. In 2011, Consumers received a follow-up letter from the EPA requesting that Consumers agree to participate in a removal action plan along with several other companies for an area of lower Portage Creek, which is connected to the Kalamazoo River. All parties, including Consumers, that were asked to participate in the removal action plan declined to accept liability. Until further information is received from the EPA, Consumers is unable to estimate a range of potential liability for cleanup of the river.
Based on its experience, Consumers estimates that its share of the total liability for known CERCLA sites will be between $3 million and $8 million. Various factors, including the number and creditworthiness of
potentially responsible parties involved with each site, affect Consumers’ share of the total liability. At September 30, 2021, Consumers had a recorded liability of $3 million for its share of the total liability at these sites, the minimum amount in the range of its estimated probable CERCLA liability, as no amount in the range was considered a better estimate than any other amount.
The timing of payments related to Consumers’ remediation and other response activities at its CERCLA and NREPA sites is uncertain. Consumers periodically reviews these cost estimates. A change in the underlying assumptions, such as an increase in the number of sites, different remediation techniques, the nature and extent of contamination, and legal and regulatory requirements, could affect its estimates of NREPA and CERCLA liability.
Ludington PCB: In 1998, during routine maintenance activities, Consumers identified PCB as a component in certain paint, grout, and sealant materials at Ludington. Consumers removed part of the PCB material and replaced it with non‑PCB material. Consumers has had several communications with the EPA regarding this matter, but cannot predict the financial impact or outcome.
MCV PPA: In 2017, the MCV Partnership initiated arbitration against Consumers, asserting a breach of contract associated with the MCV PPA. In 2019, an arbitration panel issued an order concluding that the MCV Partnership is not entitled to any damages associated with a claim against Consumers that was related to the Clean Air Act. In November 2020, the MCV Partnership and Consumers signed a settlement agreement resolving all remaining disputes between the parties, and filed the settlement and associated agreements with the MPSC for approval. In March 2021, the MPSC approved the settlement and associated agreements.
Plant Purchase Commitment: In conjunction with its 2021 IRP, Consumers executed agreements to purchase:
the New Covert Generating Facility, a natural gas-fueled generating unit with 1,176 MW of nameplate capacity in Van Buren County, Michigan, for $810 million, subject to certain adjustments, in 2023
the enterprises segment’s three natural gas-fueled generating units, totaling 1,001 MW of nameplate capacity, for $515 million, subject to certain adjustments, in 2025
These agreements are subject to the approval of the MPSC and FERC and the New Covert Generating Facility agreement is subject to the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Consumers Gas Utility Contingencies
Gas Environmental Matters: Consumers expects to incur remediation and other response activity costs at a number of sites under 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, 2021, Consumers had a recorded liability of $57 million for its remaining obligations for these sites. This amount represents the present value of long-term projected costs, using a discount rate of 2.57 percent and an inflation rate of 2.5 percent. The undiscounted amount of the remaining
obligation is $62 million. Consumers expects to pay the following amounts for remediation and other response activity costs during the remainder of 2021 and in each of the next five years:
In Millions
202120222023202420252026
Consumers
Remediation and other response activity costs$$$$24 $11 $
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, 2021, Consumers had a regulatory asset of $114 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, 2021, Consumers had a recorded liability of $1 million, the minimum amount in the range of its estimated probable liability, as no amount in the range was considered a better estimate than any other amount.
Ray Compressor Station: On January 30, 2019, Consumers experienced a fire at the Ray Compressor Station, which resulted in the Ray Storage Field being off‑line or operating at significantly reduced capacity, which negatively affected Consumers’ natural gas supply and delivery capacity. This incident, which occurred during the extreme polar vortex weather condition, required Consumers to request voluntary reductions in customer load, to implement contingency gas supply purchases, and to implement a curtailment of natural gas deliveries for industrial and large commercial customers pursuant to Consumers’ MPSC curtailment tariff. The curtailment and request for voluntary reductions of customer loads were canceled as of midnight, February 1, 2019. Consumers investigated the cause of the incident, and filed a report on the incident with the MPSC in April 2019. In response, the MPSC issued an order in July 2019, directing Consumers to file additional reports regarding the incident and to include detail of the resulting costs in a future rate proceeding. The compressor station is presently operating at full capacity.
In May 2020, the MPSC approved an administrative settlement agreement between Consumers and the MPSC Staff, which resulted in a $10,000 civil penalty in connection with the fire. Consumers may also be subject to various claims from impacted customers and claims for damages.
In September 2020, the MPSC disallowed the recovery of $7 million in incremental gas purchases related to the fire. In January 2021, the MPSC denied Consumers’ petition for a rehearing challenging this disallowance. In February 2021, Consumers filed an appeal of the MPSC’s denial with the Michigan Court of Appeals. Consumers could also be subject to disallowances of costs associated with the repair and modification of the Ray Compressor Station. At September 30, 2021, Consumers had incurred capital expenditures of $17 million to restore and modify the compressor station.
As of September 30, 2021, Consumers had recorded an insurance recovery of $10 million related to the compressor station. Consumers recognized $4 million of the insurance recovery as a reduction to plant, property, and equipment, $3 million as a reduction of maintenance and other operating expenses, and $3 million as operating revenue, which represented recovery of incremental gas purchases related to the fire.
At this time, Consumers cannot predict the outcome of these matters or other gas-related incidents and a reasonable estimate of a total loss cannot be made, but they could have a material adverse effect on CMS Energy’s and Consumers’ results of operations, financial condition, or liquidity, and could subject Consumers’ gas utility to increased regulatory scrutiny.
Guarantees
Presented in the following table are CMS Energy’s and Consumers’ guarantees at September 30, 2021:
In Millions
Guarantee DescriptionIssue DateExpiration DateMaximum ObligationCarrying Amount
CMS Energy, including Consumers
Indemnity obligations from purchase of VIE1
September 2020indefinite$320 $— 
Indemnity obligations from stock and asset sale agreements2
variousindefinite153 
Guarantee3
July 2011indefinite30 — 
Consumers
Guarantee3
July 2011indefinite$30 $— 
1In conjunction with the purchase of its interest in Aviator Wind Equity Holdings, CMS Enterprises assumed certain indemnity obligations that protect the associated tax equity investor against losses incurred as a result of breaches of representations and warranties provided by Aviator Wind Equity Holdings and its subsidiaries. These obligations are generally capped at an amount equal to the tax equity investor’s capital contributions plus a specified return, less any distributions and tax benefits it receives, in connection with its membership interest in Aviator Wind. CMS Enterprises would recover 49 percent of any amounts paid to the tax equity investor from the other owner of Aviator Wind Equity Holdings. Additionally, Aviator Wind holds insurance coverage that would partially protect against losses incurred as a result of certain failures to qualify for production tax credits. For further details on CMS Enterprises’ ownership interest in Aviator Wind Equity Holdings, see Note 12, Variable Interest Entities.
2These obligations arose from stock and asset sale agreements under which CMS Energy or a subsidiary of CMS Energy indemnified the purchaser for losses resulting from various matters, primarily claims related to taxes. The maximum obligation amount is mostly related to the Equatorial Guinea tax claim discussed in the CMS Energy Contingencies section of this Note. CMS Energy believes the likelihood of material loss to be remote for the indemnity obligations not recorded as liabilities.
3This obligation comprises a guarantee provided by Consumers to the U.S. Department of Energy in connection with a settlement agreement regarding damages resulting from the department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by Consumers.
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. At September 30, 2021, the carrying value of these indemnity obligations was $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 1, 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  
Other Commitments [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
Bay Harbor: CMS Land retained environmental remediation obligations for the collection and treatment of leachate at Bay Harbor after selling its interests in the development in 2002. Leachate is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site. In 2012, CMS Land and EGLE finalized an agreement that established the final remedies and the future water quality criteria at the site. CMS Land completed all construction necessary to implement the remedies required by the agreement and will continue to maintain and operate a system to discharge treated leachate into Little Traverse Bay under an NPDES permit, which was valid through September 2020. CMS Land submitted a renewal request for the permit in April 2020. CMS Land is allowed to continue operating under the previous NPDES permit until a response is received from EGLE.
At September 30, 2021, 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 $54 million. CMS Energy
expects to pay the following amounts for long-term leachate disposal and operating and maintenance costs during the remainder of 2021 and in each of the next five years:
In Millions
202120222023202420252026
CMS Energy
Long-term leachate disposal and operating and maintenance costs$$$$$$
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 believes the likelihood of material loss to be remote, but cannot predict the financial impact or outcome of the matter. An unfavorable outcome could have a material adverse effect on CMS Energy’s liquidity, financial condition, and results of operations.
Consumers Electric Utility Contingencies
Electric Environmental Matters: Consumers’ operations are subject to environmental laws and regulations. Historically, Consumers has generally been able to recover, in customer rates, the costs to operate its facilities in compliance with these laws and regulations.
Cleanup and Solid Waste: Consumers expects to incur remediation and other response activity costs at a number of sites under 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 $2 million and $4 million. At September 30, 2021, Consumers had a recorded liability of $2 million, the minimum amount in the range of its estimated probable NREPA liability, as no amount in the range was considered a better estimate than any other amount.
Consumers is a potentially responsible party at a number of contaminated sites administered under CERCLA. CERCLA liability is joint and several. In 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party for cleanup of PCBs at the Kalamazoo River CERCLA site. The notification claimed that the EPA has reason to believe that Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site. In 2011, Consumers received a follow-up letter from the EPA requesting that Consumers agree to participate in a removal action plan along with several other companies for an area of lower Portage Creek, which is connected to the Kalamazoo River. All parties, including Consumers, that were asked to participate in the removal action plan declined to accept liability. Until further information is received from the EPA, Consumers is unable to estimate a range of potential liability for cleanup of the river.
Based on its experience, Consumers estimates that its share of the total liability for known CERCLA sites will be between $3 million and $8 million. Various factors, including the number and creditworthiness of
potentially responsible parties involved with each site, affect Consumers’ share of the total liability. At September 30, 2021, Consumers had a recorded liability of $3 million for its share of the total liability at these sites, the minimum amount in the range of its estimated probable CERCLA liability, as no amount in the range was considered a better estimate than any other amount.
The timing of payments related to Consumers’ remediation and other response activities at its CERCLA and NREPA sites is uncertain. Consumers periodically reviews these cost estimates. A change in the underlying assumptions, such as an increase in the number of sites, different remediation techniques, the nature and extent of contamination, and legal and regulatory requirements, could affect its estimates of NREPA and CERCLA liability.
Ludington PCB: In 1998, during routine maintenance activities, Consumers identified PCB as a component in certain paint, grout, and sealant materials at Ludington. Consumers removed part of the PCB material and replaced it with non‑PCB material. Consumers has had several communications with the EPA regarding this matter, but cannot predict the financial impact or outcome.
MCV PPA: In 2017, the MCV Partnership initiated arbitration against Consumers, asserting a breach of contract associated with the MCV PPA. In 2019, an arbitration panel issued an order concluding that the MCV Partnership is not entitled to any damages associated with a claim against Consumers that was related to the Clean Air Act. In November 2020, the MCV Partnership and Consumers signed a settlement agreement resolving all remaining disputes between the parties, and filed the settlement and associated agreements with the MPSC for approval. In March 2021, the MPSC approved the settlement and associated agreements.
Plant Purchase Commitment: In conjunction with its 2021 IRP, Consumers executed agreements to purchase:
the New Covert Generating Facility, a natural gas-fueled generating unit with 1,176 MW of nameplate capacity in Van Buren County, Michigan, for $810 million, subject to certain adjustments, in 2023
the enterprises segment’s three natural gas-fueled generating units, totaling 1,001 MW of nameplate capacity, for $515 million, subject to certain adjustments, in 2025
These agreements are subject to the approval of the MPSC and FERC and the New Covert Generating Facility agreement is subject to the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Consumers Gas Utility Contingencies
Gas Environmental Matters: Consumers expects to incur remediation and other response activity costs at a number of sites under 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, 2021, Consumers had a recorded liability of $57 million for its remaining obligations for these sites. This amount represents the present value of long-term projected costs, using a discount rate of 2.57 percent and an inflation rate of 2.5 percent. The undiscounted amount of the remaining
obligation is $62 million. Consumers expects to pay the following amounts for remediation and other response activity costs during the remainder of 2021 and in each of the next five years:
In Millions
202120222023202420252026
Consumers
Remediation and other response activity costs$$$$24 $11 $
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, 2021, Consumers had a regulatory asset of $114 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, 2021, Consumers had a recorded liability of $1 million, the minimum amount in the range of its estimated probable liability, as no amount in the range was considered a better estimate than any other amount.
Ray Compressor Station: On January 30, 2019, Consumers experienced a fire at the Ray Compressor Station, which resulted in the Ray Storage Field being off‑line or operating at significantly reduced capacity, which negatively affected Consumers’ natural gas supply and delivery capacity. This incident, which occurred during the extreme polar vortex weather condition, required Consumers to request voluntary reductions in customer load, to implement contingency gas supply purchases, and to implement a curtailment of natural gas deliveries for industrial and large commercial customers pursuant to Consumers’ MPSC curtailment tariff. The curtailment and request for voluntary reductions of customer loads were canceled as of midnight, February 1, 2019. Consumers investigated the cause of the incident, and filed a report on the incident with the MPSC in April 2019. In response, the MPSC issued an order in July 2019, directing Consumers to file additional reports regarding the incident and to include detail of the resulting costs in a future rate proceeding. The compressor station is presently operating at full capacity.
In May 2020, the MPSC approved an administrative settlement agreement between Consumers and the MPSC Staff, which resulted in a $10,000 civil penalty in connection with the fire. Consumers may also be subject to various claims from impacted customers and claims for damages.
In September 2020, the MPSC disallowed the recovery of $7 million in incremental gas purchases related to the fire. In January 2021, the MPSC denied Consumers’ petition for a rehearing challenging this disallowance. In February 2021, Consumers filed an appeal of the MPSC’s denial with the Michigan Court of Appeals. Consumers could also be subject to disallowances of costs associated with the repair and modification of the Ray Compressor Station. At September 30, 2021, Consumers had incurred capital expenditures of $17 million to restore and modify the compressor station.
As of September 30, 2021, Consumers had recorded an insurance recovery of $10 million related to the compressor station. Consumers recognized $4 million of the insurance recovery as a reduction to plant, property, and equipment, $3 million as a reduction of maintenance and other operating expenses, and $3 million as operating revenue, which represented recovery of incremental gas purchases related to the fire.
At this time, Consumers cannot predict the outcome of these matters or other gas-related incidents and a reasonable estimate of a total loss cannot be made, but they could have a material adverse effect on CMS Energy’s and Consumers’ results of operations, financial condition, or liquidity, and could subject Consumers’ gas utility to increased regulatory scrutiny.
Guarantees
Presented in the following table are CMS Energy’s and Consumers’ guarantees at September 30, 2021:
In Millions
Guarantee DescriptionIssue DateExpiration DateMaximum ObligationCarrying Amount
CMS Energy, including Consumers
Indemnity obligations from purchase of VIE1
September 2020indefinite$320 $— 
Indemnity obligations from stock and asset sale agreements2
variousindefinite153 
Guarantee3
July 2011indefinite30 — 
Consumers
Guarantee3
July 2011indefinite$30 $— 
1In conjunction with the purchase of its interest in Aviator Wind Equity Holdings, CMS Enterprises assumed certain indemnity obligations that protect the associated tax equity investor against losses incurred as a result of breaches of representations and warranties provided by Aviator Wind Equity Holdings and its subsidiaries. These obligations are generally capped at an amount equal to the tax equity investor’s capital contributions plus a specified return, less any distributions and tax benefits it receives, in connection with its membership interest in Aviator Wind. CMS Enterprises would recover 49 percent of any amounts paid to the tax equity investor from the other owner of Aviator Wind Equity Holdings. Additionally, Aviator Wind holds insurance coverage that would partially protect against losses incurred as a result of certain failures to qualify for production tax credits. For further details on CMS Enterprises’ ownership interest in Aviator Wind Equity Holdings, see Note 12, Variable Interest Entities.
2These obligations arose from stock and asset sale agreements under which CMS Energy or a subsidiary of CMS Energy indemnified the purchaser for losses resulting from various matters, primarily claims related to taxes. The maximum obligation amount is mostly related to the Equatorial Guinea tax claim discussed in the CMS Energy Contingencies section of this Note. CMS Energy believes the likelihood of material loss to be remote for the indemnity obligations not recorded as liabilities.
3This obligation comprises a guarantee provided by Consumers to the U.S. Department of Energy in connection with a settlement agreement regarding damages resulting from the department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by Consumers.
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. At September 30, 2021, the carrying value of these indemnity obligations was $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 1, 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.
v3.21.2
Financings And Capitalization
9 Months Ended
Sep. 30, 2021
Debt Instrument [Line Items]  
Financings and Capitalization Financings and Capitalization
Financings: Presented in the following table is a summary of major long-term debt issuances during the nine months ended September 30, 2021:
Principal
(In Millions)
Interest RateIssuance DateMaturity Date
Consumers
First mortgage bonds$300 2.650%August 2021August 2052
In July 2020, Consumers purchased, in lieu of redemption, $35 million of variable-rate tax-exempt revenue bonds that mature in April 2035. In October 2021, Consumers remarketed the $35 million variable-rate tax-exempt revenue bonds, bearing interest at a rate of 0.875 percent through October 2026, at which time the rate will reset.
In October 2021, CMS Energy retired its $200 million term loan with a maturity of November 2021.
Credit Facilities: The following credit facilities with banks were available at September 30, 2021:
In Millions
Expiration DateAmount of FacilityAmount BorrowedLetters of Credit OutstandingAmount Available
CMS Energy, parent only
June 5, 2024
$550 $— $18 $532 
September 23, 20221
31 — 31 — 
CMS Enterprises, including subsidiaries
September 25, 20252
$39 $— $39 $— 
September 30, 20253
18 — 10 
Consumers4
June 5, 2024
$850 $— $12 $838 
November 19, 2022
250 — 249 
April 18, 2022
30 — 30 — 
1The maximum aggregate of letters of credit that may be issued under this facility is $50 million. The amount remaining under the facility is uncommitted.
2This letter of credit facility is available to Aviator Wind Equity Holdings. For more information regarding Aviator Wind Equity Holdings, see Note 12, Variable Interest Entities.
3Under 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.
4Obligations 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, investment-grade commercial paper notes with maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities and may have an aggregate principal amount outstanding of up to $500 million. While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At September 30, 2021, there were no commercial paper notes outstanding under this program.
In December 2020, Consumers renewed a short-term credit agreement with CMS Energy, permitting Consumers to borrow up to $350 million at an interest rate of one month LIBOR minus 0.100 percent. In October 2021, Consumers increased the limit at which it could borrow under the agreement to $500 million. At September 30, 2021, there were no outstanding loans under the agreement.
Dividend Restrictions: At September 30, 2021, payment of dividends by CMS Energy on its common stock was limited to $5.9 billion under provisions of the Michigan Business Corporation Act of 1972.
Under the provisions of its articles of incorporation, at September 30, 2021, Consumers had $1.8 billion of unrestricted retained earnings available to pay dividends on its common stock to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that, under a variety of circumstances, dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.
During the nine months ended September 30, 2021, Consumers paid $570 million in dividends on its common stock to CMS Energy.
Issuance of Common Stock: In 2020, CMS Energy entered into an equity offering program under which it may sell, from time to time, shares of CMS Energy common stock. Under the 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 may sell shares of its common stock having an aggregate sales price of up to $500 million. Presented in the following table are details of CMS Energy’s forward sales contracts under this program at September 30, 2021:
Forward Price Per Share
Contract DateMaturity DateNumber of SharesInitialSeptember 30, 2021
September 15, 2020June 30, 2022846,759$61.04 $59.01 
December 22, 2020June 22, 2022115,59561.81 60.27 
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 are 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, 2021, CMS Energy would have been required to deliver 10,266 shares.
Issuance of Preferred Stock: On July 1, 2021, CMS Energy issued 9.2 million depositary shares, each representing 1/1,000th share of its Series C preferred stock, at a price of $25.00 per depositary share. The transaction resulted in net proceeds of $224 million, which will be used for general corporate purposes. Dividends on the preferred stock accumulate at an annual rate of 4.200 percent and are payable quarterly, commencing on October 15, 2021.
The Series C preferred stock has no maturity or mandatory redemption date and is not redeemable at the option of the holders. CMS Energy may, at its option, redeem the Series C preferred stock, in whole or in part, at a price equal to $25,000 per share (equivalent to $25.00 per depositary share), plus accumulated and unpaid dividends, at any time on or after July 15, 2026. The Series C preferred stock ranks senior to CMS Energy’s common stock with respect to dividend rights and distribution rights upon liquidation.
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 issuances during the nine months ended September 30, 2021:
Principal
(In Millions)
Interest RateIssuance DateMaturity Date
Consumers
First mortgage bonds$300 2.650%August 2021August 2052