CMS ENERGY CORP, 10-Q filed on 4/29/2021
Quarterly Report
v3.21.1
Cover page - shares
3 Months Ended
Mar. 31, 2021
Apr. 12, 2021
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 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   289,459,560
Entity Central Index Key 0000811156  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q1  
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, $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: $4.50 Series  
Trading Symbol CMS-PB  
Security Exchange Name NYSE  
v3.21.1
Consolidated Statements of Income (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Operating Revenue $ 2,083 $ 1,864
Operating Expenses    
Fuel for electric generation 138 103
Purchased power – related parties 18 18
Maintenance and other operating expenses 323 315
Depreciation and amortization 340 316
General taxes 123 114
Total operating expenses 1,598 1,496
Operating Income 485 368
Other Income (Expense)    
Interest income 1 1
Interest and dividend income – related parties 0 7
Allowance for equity funds used during construction 1 1
Income from equity method investees 2 3
Non-operating retirement benefits, net 41 31
Other income 1 0
Other expense (2) (4)
Total other income 44 39
Interest Charges    
Interest on long-term debt 119 116
Interest expense – related parties 3 3
Other interest expense 15 19
Allowance for borrowed funds used during construction (1) (1)
Total interest charges 136 137
Income Before Income Taxes 393 270
Income Tax Expense 51 27
Net Income 342 243
Loss Attributable to Noncontrolling Interests (7) 0
Net Income Available to Common Stockholders $ 349 $ 243
Basic earnings per average common share (in dollars per share) $ 1.21 $ 0.86
Diluted earnings per average common share (in dollars per share) $ 1.21 $ 0.85
Consumers Energy Company    
Operating Revenue $ 1,937 $ 1,744
Operating Expenses    
Fuel for electric generation 106 79
Purchased and interchange power 367 347
Purchased power – related parties 18 18
Cost of gas sold 278 270
Maintenance and other operating expenses 292 278
Depreciation and amortization 329 312
General taxes 118 111
Total operating expenses 1,508 1,415
Operating Income 429 329
Other Income (Expense)    
Interest income 1 1
Interest and dividend income – related parties 1 1
Allowance for equity funds used during construction 1 1
Non-operating retirement benefits, net 38 29
Other income 1 0
Other expense (2) (3)
Total other income 40 29
Interest Charges    
Interest on long-term debt 73 74
Interest expense – related parties 3 3
Other interest expense 2 3
Allowance for borrowed funds used during construction (1) (1)
Total interest charges 77 79
Income Before Income Taxes 392 279
Income Tax Expense 56 44
Net Income 336 235
Net Income Available to Common Stockholders 336 235
Purchased and interchange power    
Operating Expenses    
Cost of goods and services sold 377 357
Cost of gas sold    
Operating Expenses    
Cost of goods and services sold $ 279 $ 273
v3.21.1
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Net Income $ 342 $ 243
Retirement Benefits Liability    
Amortization of net actuarial loss, net of tax 1 1
Derivatives    
Unrealized gain (loss) on derivative instruments, net of tax of $— and $(1) 1 (4)
Other Comprehensive Income (Loss) 2 (3)
Comprehensive Income 344 240
Comprehensive Loss Attributable to Noncontrolling Interests (7) 0
Comprehensive Income Attributable to CMS Energy 351 240
Consumers Energy Company    
Net Income 336 235
Retirement Benefits Liability    
Amortization of net actuarial loss, net of tax 0 0
Derivatives    
Other Comprehensive Income (Loss) 0 0
Comprehensive Income $ 336 $ 235
v3.21.1
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Amortization of net actuarial loss, TAX $ 0 $ 0
Unrealized loss on derivative instruments, TAX 0 (1)
Consumers Energy Company    
Amortization of net actuarial loss, TAX $ 0 $ 1
v3.21.1
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Cash Flows from Operating Activities    
Net Income $ 342 $ 243
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 340 316
Deferred income taxes and investment tax credits 48 67
Other non‑cash operating activities and reconciling adjustments (17) 9
Pension contributions 0 (531)
Changes in assets and liabilities    
Accounts and notes receivable and accrued revenue 30 (17)
Inventories 168 171
Accounts payable and accrued rate refunds (103) (54)
Other current and non‑current assets and liabilities 24 (3)
Net cash provided by operating activities 832 201
Cash Flows from Investing Activities    
Capital expenditures (excludes assets placed under finance lease) (437) (523)
Increase in EnerBank notes receivable (76) (4)
Purchase of notes receivable by EnerBank (2) (8)
Proceeds from sale of EnerBank notes receivable 263 0
Cost to retire property and other investing activities (31) (24)
Net cash used in investing activities (283) (559)
Cash Flows from Financing Activities    
Proceeds from issuance of debt 0 1,198
Retirement of debt (2) (2)
Decrease in EnerBank certificates of deposit (73) (7)
Decrease in notes payable 0 (90)
Issuance of common stock, net of issuance costs 9 101
Payment of dividends on common stock (126) (116)
Other financing costs (18) (22)
Net cash provided by (used in) financing activities (210) 1,062
Net Increase in Cash and Cash Equivalents, Including Restricted Amounts 339 704
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period 185 157
Cash and Cash Equivalents, Including Restricted Amounts, End of Period 524 861
Non‑cash transactions    
Capital expenditures not paid 87 95
Consumers Energy Company    
Cash Flows from Operating Activities    
Net Income 336 235
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 329 312
Deferred income taxes and investment tax credits 51 44
Other non‑cash operating activities and reconciling adjustments (10) 0
Pension contributions 0 (518)
Changes in assets and liabilities    
Accounts and notes receivable and accrued revenue 39 31
Inventories 168 170
Accounts payable and accrued rate refunds (99) (54)
Other current and non‑current assets and liabilities 27 18
Net cash provided by operating activities 841 238
Cash Flows from Investing Activities    
Capital expenditures (excludes assets placed under finance lease) (433) (520)
Cost to retire property and other investing activities (25) (22)
Net cash used in investing activities (458) (542)
Cash Flows from Financing Activities    
Proceeds from issuance of debt 0 873
Decrease in notes payable 0 (90)
Decrease in notes payable – related parties (250) 0
Stockholder contribution 150 350
Payment of dividends on common stock (276) (219)
Other financing costs (8) (10)
Net cash provided by (used in) financing activities (384) 904
Net Increase in Cash and Cash Equivalents, Including Restricted Amounts (1) 600
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period 35 28
Cash and Cash Equivalents, Including Restricted Amounts, End of Period 34 628
Non‑cash transactions    
Capital expenditures not paid $ 84 $ 85
v3.21.1
Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Mar. 31, 2021
Dec. 31, 2020
Current Assets    
Cash and cash equivalents $ 496 $ 168
Restricted cash and cash equivalents 28 17
Accounts receivable and accrued revenue 839 863
Notes receivable, less allowance of $29 in 2021 and $32 in 2020 284 275
Accounts receivable – related parties 17 19
Inventories at average cost    
Gas in underground storage 195 353
Materials and supplies 162 155
Generating plant fuel stock 50 68
Deferred property taxes 267 332
Regulatory assets 30 42
Prepayments and other current assets 145 112
Total current assets 2,513 2,404
Plant, Property, and Equipment    
Plant, property, and equipment, gross 28,457 27,907
Less accumulated depreciation and amortization 8,178 7,953
Plant, property, and equipment, net 20,279 19,954
Construction work in progress 928 1,085
Total plant, property, and equipment 21,207 21,039
Other Non‑current Assets    
Regulatory assets 2,613 2,653
Accounts and notes receivable, less allowance of $89 in 2021 and $91 in 2020 2,445 2,631
Investments 72 70
Other 873 869
Total other non‑current assets 6,003 6,223
Total Assets 29,723 29,666
Current Liabilities    
Current portion of long-term debt, finance leases, and other financing 1,506 1,506
Accounts payable 538 671
Accounts payable – related parties 7 7
Accrued rate refunds 2 20
Accrued interest 113 106
Accrued taxes 360 457
Regulatory liabilities 204 151
Other current liabilities 155 156
Total current liabilities 2,885 3,074
Non‑current Liabilities    
Long-term debt 13,561 13,634
Non-current portion of finance leases and other financing 51 56
Regulatory liabilities 3,772 3,744
Postretirement benefits 151 152
Asset retirement obligations 564 553
Deferred investment tax credit 114 115
Deferred income taxes 1,926 1,863
Other non‑current liabilities 397 398
Total non‑current liabilities 20,536 20,515
Commitments and Contingencies
Common stockholders’ equity    
Common stock 3 3
Other paid-in capital 5,371 5,365
Accumulated other comprehensive loss (84) (86)
Retained earnings 437 214
Total common stockholders’ equity 5,727 5,496
Noncontrolling interests 575 581
Total equity 6,302 6,077
Total Liabilities and Equity 29,723 29,666
Consumers Energy Company    
Current Assets    
Cash and cash equivalents 9 20
Restricted cash and cash equivalents 25 15
Accounts receivable and accrued revenue 801 828
Accounts receivable – related parties 9 18
Inventories at average cost    
Gas in underground storage 195 353
Materials and supplies 156 149
Generating plant fuel stock 49 67
Deferred property taxes 267 332
Regulatory assets 30 42
Prepayments and other current assets 119 68
Total current assets 1,660 1,892
Plant, Property, and Equipment    
Plant, property, and equipment, gross 27,299 26,757
Less accumulated depreciation and amortization 8,058 7,844
Plant, property, and equipment, net 19,241 18,913
Construction work in progress 887 1,058
Total plant, property, and equipment 20,128 19,971
Other Non‑current Assets    
Regulatory assets 2,613 2,653
Accounts and notes receivable, less allowance of $89 in 2021 and $91 in 2020 25 25
Accounts and notes receivable – related parties 104 105
Other 750 753
Total other non‑current assets 3,492 3,536
Total Assets 25,280 25,399
Current Liabilities    
Current portion of long-term debt, finance leases, and other financing 384 384
Notes payable – related parties 57 307
Accounts payable 501 636
Accounts payable – related parties 12 7
Accrued rate refunds 2 20
Accrued interest 79 72
Accrued taxes 364 458
Regulatory liabilities 204 151
Other current liabilities 106 104
Total current liabilities 1,709 2,139
Non‑current Liabilities    
Long-term debt 7,743 7,742
Non-current portion of finance leases and other financing 51 56
Regulatory liabilities 3,772 3,744
Postretirement benefits 111 112
Asset retirement obligations 541 530
Deferred investment tax credit 114 115
Deferred income taxes 2,159 2,094
Other non‑current liabilities 314 311
Total non‑current liabilities 14,805 14,704
Commitments and Contingencies
Common stockholders’ equity    
Common stock 841 841
Other paid-in capital 6,174 6,024
Accumulated other comprehensive loss (36) (36)
Retained earnings 1,750 1,690
Total common stockholders’ equity 8,729 8,519
Cumulative preferred stock, $4.50 series 37 37
Total equity 8,766 8,556
Total Liabilities and Equity $ 25,280 $ 25,399
v3.21.1
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2021
Dec. 31, 2020
Accounts receivable and accrued revenue, ALLOWANCE $ 27 $ 29
Notes receivable, ALLOWANCE 29 32
Accounts and notes receivable, ALLOWANCE $ 89 $ 91
Common stock authorized (in shares) 350,000,000.0 350,000,000.0
Common stock outstanding (in shares) 289,500,000 288,900,000
Consumers Energy Company    
Accounts receivable and accrued revenue, ALLOWANCE $ 27 $ 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
v3.21.1
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
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) $ 37 $ 7,737 $ 841 $ 5,374 $ (28) $ (28) $ 1,513 $ 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                
Common stock issued     106                          
Common stock repurchased     (12)                          
Stockholder contribution                       350        
Amortization of net actuarial loss 1       1         0            
Unrealized gain (loss) on derivative instruments (4)         (4)                    
Net Income 243           243   0 235         235  
Dividends declared on common stock             (116)               (219)  
Contribution from noncontrolling interest                 0              
Total Equity at End of Period at Mar. 31, 2020 $ 5,222 3 5,207 (76) (68) (8) 51   37 8,103 841 5,724 (28) (28) 1,529 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                
Dividends declared per common share (in dollars per share) $ 0.4075                              
Total Equity at Beginning of Period at Dec. 31, 2020 $ 6,077 3 5,365 (86) (80) (6) 214 $ 0 581 8,556 841 6,024 (36) (36) 1,690 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                
Common stock issued     15                          
Common stock repurchased     (9)                          
Stockholder contribution                       150        
Amortization of net actuarial loss 1       1         0            
Unrealized gain (loss) on derivative instruments 1         1                    
Net Income 342           349   (7) 336         336  
Dividends declared on common stock             (126)               (276)  
Contribution from noncontrolling interest                 1              
Total Equity at End of Period at Mar. 31, 2021 $ 6,302 $ 3 $ 5,371 $ (84) $ (79) $ (5) $ 437   $ 575 $ 8,766 $ 841 $ 6,174 $ (36) $ (36) $ 1,750 $ 37
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                
Dividends declared per common share (in dollars per share) $ 0.4350                              
v3.21.1
Regulatory Matters
3 Months Ended
Mar. 31, 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 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.
Reserve for Customer Refunds: In December 2020, the MPSC issued an order authorizing Consumers to refund $28 million voluntarily to utility customers. In February 2021, Consumers submitted a filing proposing that 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. Consumers’ proposal indicates that if it does not achieve the incremental spending, the remaining balance would be provided to electric or gas utility customers through a bill credit. Consumers had recorded a current regulatory liability of $28 million at March 31, 2021 and 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; this application was approved by the MPSC in February 2021. Consumers will share the gain through incremental service restoration spending in 2021 above amounts included in rates or through a bill credit to electric utility customers in 2022. As a result, the $14 million gain to be shared
with customers was recorded on Consumers’ consolidated balance sheets as a current regulatory liability at March 31, 2021 and December 31, 2020.
Energy Waste Reduction Plan Incentive: Consumers will file its 2020 energy waste reduction reconciliation in 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 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.
Reserve for Customer Refunds: In December 2020, the MPSC issued an order authorizing Consumers to refund $28 million voluntarily to utility customers. In February 2021, Consumers submitted a filing proposing that 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. Consumers’ proposal indicates that if it does not achieve the incremental spending, the remaining balance would be provided to electric or gas utility customers through a bill credit. Consumers had recorded a current regulatory liability of $28 million at March 31, 2021 and 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; this application was approved by the MPSC in February 2021. Consumers will share the gain through incremental service restoration spending in 2021 above amounts included in rates or through a bill credit to electric utility customers in 2022. As a result, the $14 million gain to be shared
with customers was recorded on Consumers’ consolidated balance sheets as a current regulatory liability at March 31, 2021 and December 31, 2020.
Energy Waste Reduction Plan Incentive: Consumers will file its 2020 energy waste reduction reconciliation in 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.
v3.21.1
Contingencies and Commitments
3 Months Ended
Mar. 31, 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 March 31, 2021, CMS Energy had a recorded liability of $45 million for its remaining obligations for environmental remediation. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.34 percent and an inflation rate of one percent on annual operating and maintenance costs. The undiscounted amount of the remaining obligation is $56 million. CMS Energy expects to pay the following amounts for long-term 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 March 31, 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 March 31, 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.
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 March 31, 2021, Consumers had a recorded liability of $56 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 $61 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$$$23 $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 March 31, 2021, Consumers had a regulatory asset of $118 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 March 31, 2021, Consumers had a recorded liability of less than $1 million, the minimum amount in the range of its estimated probable liability, as no amount in the range was considered a better estimate than any other amount.
Ray Compressor Station: On January 30, 2019, Consumers experienced a fire at the Ray Compressor Station, which resulted in the Ray Storage Field being off‑line or operating at significantly reduced capacity, which negatively affected Consumers’ natural gas supply and delivery capacity. This incident, which occurred during the extreme polar vortex weather condition, required Consumers to request voluntary reductions in customer load, to implement contingency gas supply purchases, and to implement a curtailment of natural gas deliveries for industrial and large commercial customers pursuant to Consumers’ MPSC curtailment tariff. The curtailment and request for voluntary reductions of customer loads were canceled as of midnight, February 1, 2019. Consumers investigated the cause of the incident, and filed a report on the incident with the MPSC in April 2019. In response, the MPSC issued an order in July 2019, directing Consumers to file additional reports regarding the incident and to include detail of the resulting costs in a future rate proceeding. The compressor station is presently operating at full capacity.
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 March 31, 2021, Consumers had incurred capital expenditures of $17 million to restore and modify the compressor station.
As of March 31, 2021, Consumers had recorded an insurance recovery of $10 million related to the compressor station; of this amount, $7 million represented recovery of the costs to repair the station and $3 million represented recovery of incremental gas purchases related to the fire. 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.
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 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 March 31, 2021:
In Millions
Guarantee DescriptionIssue DateExpiration DateMaximum ObligationCarrying Amount
CMS Energy, including Consumers
Indemnity obligations from purchase of VIE1
September 2020indefinite$341 $— 
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 13, 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. The carrying value of these indemnity obligations is $1 million. CMS Energy and Consumers consider the likelihood that they would be required to perform or incur substantial losses related to these indemnities to be remote.
Other Contingencies
In addition to the matters disclosed in this Note and Note 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 March 31, 2021, CMS Energy had a recorded liability of $45 million for its remaining obligations for environmental remediation. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.34 percent and an inflation rate of one percent on annual operating and maintenance costs. The undiscounted amount of the remaining obligation is $56 million. CMS Energy expects to pay the following amounts for long-term 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 March 31, 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 March 31, 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.
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 March 31, 2021, Consumers had a recorded liability of $56 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 $61 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$$$23 $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 March 31, 2021, Consumers had a regulatory asset of $118 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 March 31, 2021, Consumers had a recorded liability of less than $1 million, the minimum amount in the range of its estimated probable liability, as no amount in the range was considered a better estimate than any other amount.
Ray Compressor Station: On January 30, 2019, Consumers experienced a fire at the Ray Compressor Station, which resulted in the Ray Storage Field being off‑line or operating at significantly reduced capacity, which negatively affected Consumers’ natural gas supply and delivery capacity. This incident, which occurred during the extreme polar vortex weather condition, required Consumers to request voluntary reductions in customer load, to implement contingency gas supply purchases, and to implement a curtailment of natural gas deliveries for industrial and large commercial customers pursuant to Consumers’ MPSC curtailment tariff. The curtailment and request for voluntary reductions of customer loads were canceled as of midnight, February 1, 2019. Consumers investigated the cause of the incident, and filed a report on the incident with the MPSC in April 2019. In response, the MPSC issued an order in July 2019, directing Consumers to file additional reports regarding the incident and to include detail of the resulting costs in a future rate proceeding. The compressor station is presently operating at full capacity.
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 March 31, 2021, Consumers had incurred capital expenditures of $17 million to restore and modify the compressor station.
As of March 31, 2021, Consumers had recorded an insurance recovery of $10 million related to the compressor station; of this amount, $7 million represented recovery of the costs to repair the station and $3 million represented recovery of incremental gas purchases related to the fire. 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.
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 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 March 31, 2021:
In Millions
Guarantee DescriptionIssue DateExpiration DateMaximum ObligationCarrying Amount
CMS Energy, including Consumers
Indemnity obligations from purchase of VIE1
September 2020indefinite$341 $— 
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 13, 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. The carrying value of these indemnity obligations is $1 million. CMS Energy and Consumers consider the likelihood that they would be required to perform or incur substantial losses related to these indemnities to be remote.
Other Contingencies
In addition to the matters disclosed in this Note and Note 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.
v3.21.1
Financings And Capitalization
3 Months Ended
Mar. 31, 2021
Debt Instrument [Line Items]  
Financings and Capitalization Financings and Capitalization
Credit Facilities: The following credit facilities with banks were available at March 31, 2021:
In Millions
Expiration DateAmount of FacilityAmount BorrowedLetters of Credit OutstandingAmount Available
CMS Energy, parent only
June 5, 2023
$550 $— $18 $532 
CMS Enterprises, including subsidiaries
September 25, 20251
$39 $— $39 $— 
September 30, 20252
18 — 10 
Consumers3
June 5, 2023$850 $— $12 $838 
November 19, 2022250 — 249 
April 18, 202230 — 30 — 
1This letter of credit facility is available to Aviator Wind Equity Holdings. For more information regarding Aviator Wind Equity Holdings, see Note 13, Variable Interest Entities.
2Under 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.
3Obligations 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 March 31, 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. At March 31, 2021, $57 million was outstanding under the agreement at an interest rate of 0.014 percent.
Dividend Restrictions: At March 31, 2021, payment of dividends by CMS Energy on its common stock was limited to $5.7 billion under provisions of the Michigan Business Corporation Act of 1972.
Under the provisions of its articles of incorporation, at March 31, 2021, Consumers had $1.7 billion of unrestricted retained earnings available to pay dividends on its common stock to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that, under a variety of circumstances, dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.
For the three months ended March 31, 2021, Consumers paid $276 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 March 31, 2021:
Forward Price Per Share
Contract DateMaturity DateNumber of SharesInitialMarch 31, 2021
September 15, 2020June 30, 2022846,759$61.04 $60.01 
December 22, 2020June 22, 2022115,59561.81 61.31 
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 March 31, 2021, CMS Energy would have been required to deliver 16,758 shares.
Consumers Energy Company  
Debt Instrument [Line Items]  
Financings and Capitalization Financings and Capitalization
Credit Facilities: The following credit facilities with banks were available at March 31, 2021:
In Millions
Expiration DateAmount of FacilityAmount BorrowedLetters of Credit OutstandingAmount Available
CMS Energy, parent only
June 5, 2023
$550 $— $18 $532 
CMS Enterprises, including subsidiaries
September 25, 20251
$39 $— $39 $— 
September 30, 20252
18 — 10 
Consumers3
June 5, 2023$850 $— $12 $838 
November 19, 2022250 — 249 
April 18, 202230 — 30 — 
1This letter of credit facility is available to Aviator Wind Equity Holdings. For more information regarding Aviator Wind Equity Holdings, see Note 13, Variable Interest Entities.
2Under 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.
3Obligations 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 March 31, 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. At March 31, 2021, $57 million was outstanding under the agreement at an interest rate of 0.014 percent.
Dividend Restrictions: At March 31, 2021, payment of dividends by CMS Energy on its common stock was limited to $5.7 billion under provisions of the Michigan Business Corporation Act of 1972.
Under the provisions of its articles of incorporation, at March 31, 2021, Consumers had $1.7 billion of unrestricted retained earnings available to pay dividends on its common stock to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that, under a variety of circumstances, dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.
For the three months ended March 31, 2021, Consumers paid $276 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 March 31, 2021:
Forward Price Per Share
Contract DateMaturity DateNumber of SharesInitialMarch 31, 2021
September 15, 2020June 30, 2022846,759$61.04 $60.01 
December 22, 2020June 22, 2022115,59561.81 61.31 
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 March 31, 2021, CMS Energy would have been required to deliver 16,758 shares.
v3.21.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements Fair Value Measurements
Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. When measuring fair value, CMS Energy and Consumers are required to incorporate all assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. A fair value hierarchy prioritizes inputs used to measure fair value according to their observability in the market. The three levels of the fair value hierarchy are as follows:
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 inputs are observable, market-based inputs, other than Level 1 prices. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, and inputs derived from or corroborated by observable market data.
Level 3 inputs are unobservable inputs that reflect CMS Energy’s or Consumers’ own assumptions about how market participants would value their assets and liabilities.
CMS Energy and Consumers classify fair value measurements within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement in its entirety.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Presented in the following table are CMS Energy’s and Consumers’ assets and liabilities recorded at fair value on a recurring basis:
In Millions
CMS Energy, including ConsumersConsumers
March 31
2021
December 31
2020
March 31
2021
December 31
2020
Assets1
Restricted cash equivalents$28 $17 $25 $15 
Nonqualified deferred compensation plan assets24 23 19 18 
Derivative instruments— — 
Total assets$52 $41 $44 $34 
Liabilities1
Nonqualified deferred compensation plan liabilities$24 $23 $19 $18 
Derivative instruments14 17 — — 
Total liabilities$38 $40 $19 $18 
1All assets and liabilities were classified as Level 1 with the exception of derivative contracts, which were classified as Level 2 or Level 3.
Restricted Cash Equivalents: Restricted cash equivalents consist of money market funds with daily liquidity. For further details, see Note 11, Cash and Cash Equivalents.
Nonqualified Deferred Compensation Plan Assets and Liabilities: The nonqualified deferred compensation plan assets consist of mutual funds, which are valued using the daily quoted net asset values. CMS Energy and Consumers value their nonqualified deferred compensation plan liabilities based on the fair values of the plan assets, as they reflect the amount owed to the plan participants in accordance with their investment elections. CMS Energy and Consumers report the assets in other non‑current assets and the liabilities in other non‑current liabilities on their consolidated balance sheets.
Derivative Instruments: CMS Energy and Consumers value their derivative instruments using either a market approach that incorporates information from market transactions, or an income approach that discounts future expected cash flows to a present value amount. CMS Energy’s and Consumers’ derivatives are classified as Level 2 or Level 3.
The derivatives classified as Level 2 are interest rate swaps at CMS Energy, which are valued using market-based inputs. CMS Energy uses interest rate swaps to manage its interest rate risk on certain long‑term debt obligations and certain notes receivable at EnerBank.
A subsidiary of CMS Enterprises uses floating-to-fixed interest rate swaps to reduce the impact of interest rate fluctuations associated with future interest payments on certain long‑term variable-rate debt. The interest rate swaps are accounted for as cash flow hedges of the future variability of interest payments on debt with a notional amount of $83 million at March 31, 2021 and $85 million at December 31, 2020. Gains or losses on these swaps are initially reported in other comprehensive income (loss) and then, as interest payments are made on the hedged debt, are recognized in earnings within interest on long-term debt on CMS Energy’s consolidated statements of income. CMS Energy recorded a gain of $1 million in other comprehensive income (loss) for the three months ended March 31, 2021 and a loss of $5 million in other comprehensive income (loss) for the three months ended March 31, 2020. There were no material impacts on interest on long-term debt associated with these swaps during the periods presented. The fair value of these swaps recorded in other liabilities on CMS Energy’s consolidated balance sheets totaled $7 million at March 31, 2021 and $9 million at December 31, 2020. CMS Energy also has other interest rate swaps that economically hedge interest rate risk on debt, but that do not qualify for cash flow hedge accounting; the amounts associated with these swaps were not material for the periods presented.
EnerBank uses fixed-to-floating interest rate swaps to manage interest rate risk exposure associated with changes in the fair value of certain long‑term fixed‑rate loans. The interest rate swaps qualify as fair value hedges of long‑term, fixed‑rate notes receivable with a notional amount of $134 million at March 31, 2021 and December 31, 2020. The fair value of these interest rate swaps recorded in other liabilities was $5 million at March 31, 2021 and $6 million at December 31, 2020. CMS Energy is adjusting the carrying value of the hedged notes receivable for the change in their fair value due to the hedged risk. Both gains and losses on the swaps and changes to the carrying value of the hedged notes receivable are recorded within operating revenue on CMS Energy’s consolidated statements of income. The net impact of these hedges on operating revenue was not material for the three months ended March 31, 2021 and 2020.
The majority of derivatives classified as Level 3 are FTRs held by Consumers. Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements. There was no material activity within the Level 3 categories of assets and liabilities during the periods presented.
Consumers Energy Company  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements Fair Value Measurements
Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. When measuring fair value, CMS Energy and Consumers are required to incorporate all assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. A fair value hierarchy prioritizes inputs used to measure fair value according to their observability in the market. The three levels of the fair value hierarchy are as follows:
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 inputs are observable, market-based inputs, other than Level 1 prices. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, and inputs derived from or corroborated by observable market data.
Level 3 inputs are unobservable inputs that reflect CMS Energy’s or Consumers’ own assumptions about how market participants would value their assets and liabilities.
CMS Energy and Consumers classify fair value measurements within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement in its entirety.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Presented in the following table are CMS Energy’s and Consumers’ assets and liabilities recorded at fair value on a recurring basis:
In Millions
CMS Energy, including ConsumersConsumers
March 31
2021
December 31
2020
March 31
2021
December 31
2020
Assets1
Restricted cash equivalents$28 $17 $25 $15 
Nonqualified deferred compensation plan assets24 23 19 18 
Derivative instruments— — 
Total assets$52 $41 $44 $34 
Liabilities1
Nonqualified deferred compensation plan liabilities$24 $23 $19 $18 
Derivative instruments14 17 — — 
Total liabilities$38 $40 $19 $18 
1All assets and liabilities were classified as Level 1 with the exception of derivative contracts, which were classified as Level 2 or Level 3.
Restricted Cash Equivalents: Restricted cash equivalents consist of money market funds with daily liquidity. For further details, see Note 11, Cash and Cash Equivalents.
Nonqualified Deferred Compensation Plan Assets and Liabilities: The nonqualified deferred compensation plan assets consist of mutual funds, which are valued using the daily quoted net asset values. CMS Energy and Consumers value their nonqualified deferred compensation plan liabilities based on the fair values of the plan assets, as they reflect the amount owed to the plan participants in accordance with their investment elections. CMS Energy and Consumers report the assets in other non‑current assets and the liabilities in other non‑current liabilities on their consolidated balance sheets.
Derivative Instruments: CMS Energy and Consumers value their derivative instruments using either a market approach that incorporates information from market transactions, or an income approach that discounts future expected cash flows to a present value amount. CMS Energy’s and Consumers’ derivatives are classified as Level 2 or Level 3.
The derivatives classified as Level 2 are interest rate swaps at CMS Energy, which are valued using market-based inputs. CMS Energy uses interest rate swaps to manage its interest rate risk on certain long‑term debt obligations and certain notes receivable at EnerBank.
A subsidiary of CMS Enterprises uses floating-to-fixed interest rate swaps to reduce the impact of interest rate fluctuations associated with future interest payments on certain long‑term variable-rate debt. The interest rate swaps are accounted for as cash flow hedges of the future variability of interest payments on debt with a notional amount of $83 million at March 31, 2021 and $85 million at December 31, 2020. Gains or losses on these swaps are initially reported in other comprehensive income (loss) and then, as interest payments are made on the hedged debt, are recognized in earnings within interest on long-term debt on CMS Energy’s consolidated statements of income. CMS Energy recorded a gain of $1 million in other comprehensive income (loss) for the three months ended March 31, 2021 and a loss of $5 million in other comprehensive income (loss) for the three months ended March 31, 2020. There were no material impacts on interest on long-term debt associated with these swaps during the periods presented. The fair value of these swaps recorded in other liabilities on CMS Energy’s consolidated balance sheets totaled $7 million at March 31, 2021 and $9 million at December 31, 2020. CMS Energy also has other interest rate swaps that economically hedge interest rate risk on debt, but that do not qualify for cash flow hedge accounting; the amounts associated with these swaps were not material for the periods presented.
EnerBank uses fixed-to-floating interest rate swaps to manage interest rate risk exposure associated with changes in the fair value of certain long‑term fixed‑rate loans. The interest rate swaps qualify as fair value hedges of long‑term, fixed‑rate notes receivable with a notional amount of $134 million at March 31, 2021 and December 31, 2020. The fair value of these interest rate swaps recorded in other liabilities was $5 million at March 31, 2021 and $6 million at December 31, 2020. CMS Energy is adjusting the carrying value of the hedged notes receivable for the change in their fair value due to the hedged risk. Both gains and losses on the swaps and changes to the carrying value of the hedged notes receivable are recorded within operating revenue on CMS Energy’s consolidated statements of income. The net impact of these hedges on operating revenue was not material for the three months ended March 31, 2021 and 2020.
The majority of derivatives classified as Level 3 are FTRs held by Consumers. Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements. There was no material activity within the Level 3 categories of assets and liabilities during the periods presented.
v3.21.1
Financial Instruments
3 Months Ended
Mar. 31, 2021
Financial Instruments [Line Items]  
Financial Instruments Financial Instruments
Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value. The table excludes cash, cash equivalents, short-term financial instruments, and trade accounts receivable and payable whose carrying amounts approximate their fair values. For information about assets and liabilities recorded at fair value and for additional details regarding the fair value hierarchy, see Note 4, Fair Value Measurements.
In Millions
March 31, 2021December 31, 2020
Carrying AmountFair ValueCarrying AmountFair Value
TotalLevelTotalLevel
123123
CMS Energy, including Consumers
Assets
Long-term receivables1
$16 $16 $— $— $16 $17 $17 $— $— $17 
Notes receivable2
2,710 3,006 — — 3,006 2,887 3,248 — — 3,248 
Securities held to maturity3
34 34 — 34 — 28 29 — 29 — 
Liabilities
Long-term debt4
15,046 16,233 1,206 13,108 1,919 15,120 17,512 1,249 14,178 2,085 
Long-term payables5
33 35 — — 35 33 35 — — 35 
Consumers
Assets
Long-term receivables1
$16 $16 $— $— $16 $17 $17 $— $— $17 
Notes receivable – related party6
106 106 — — 106 107 107 — — 107 
Liabilities
Long-term debt7
8,107 8,815 — 6,896 1,919 8,106 9,801 — 7,716 2,085 
1Includes current portion of long-term accounts receivable of $11 million at March 31, 2021 and $12 million at December 31, 2020.
2Includes current portion of notes receivable of $284 million at March 31, 2021 and $275 million at December 31, 2020. For further details, see Note 6, Notes Receivable.
3These investment securities consist primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank. There were no unrealized gains during the three months ended March 31, 2021 and $1 million of unrealized gains during the year ended December 31, 2020.
4Includes current portion of long-term debt of $1.5 billion at March 31, 2021 and December 31, 2020.
5Includes current portion of long-term payables of $6 million at March 31, 2021 and December 31, 2020.
6Includes current portion of notes receivable – related party of $7 million at March 31, 2021 and December 31, 2020. For further details on this note receivable, see Note 6, Notes Receivable.
7Includes current portion of long-term debt of $364 million at March 31, 2021 and December 31, 2020.
Consumers Energy Company  
Financial Instruments [Line Items]  
Financial Instruments Financial Instruments
Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value. The table excludes cash, cash equivalents, short-term financial instruments, and trade accounts receivable and payable whose carrying amounts approximate their fair values. For information about assets and liabilities recorded at fair value and for additional details regarding the fair value hierarchy, see Note 4, Fair Value Measurements.
In Millions
March 31, 2021December 31, 2020
Carrying AmountFair ValueCarrying AmountFair Value
TotalLevelTotalLevel
123123
CMS Energy, including Consumers
Assets
Long-term receivables1
$16 $16 $— $— $16 $17 $17 $— $— $17 
Notes receivable2
2,710 3,006 — — 3,006 2,887 3,248 — — 3,248 
Securities held to maturity3
34 34 — 34 — 28 29 — 29 — 
Liabilities
Long-term debt4
15,046 16,233 1,206 13,108 1,919 15,120 17,512 1,249 14,178 2,085 
Long-term payables5
33 35 — — 35 33 35 — — 35 
Consumers
Assets
Long-term receivables1
$16 $16 $— $— $16 $17 $17 $— $— $17 
Notes receivable – related party6
106 106 — — 106 107 107 — — 107 
Liabilities
Long-term debt7
8,107 8,815 — 6,896 1,919 8,106 9,801 — 7,716 2,085 
1Includes current portion of long-term accounts receivable of $11 million at March 31, 2021 and $12 million at December 31, 2020.
2Includes current portion of notes receivable of $284 million at March 31, 2021 and $275 million at December 31, 2020. For further details, see Note 6, Notes Receivable.
3These investment securities consist primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank. There were no unrealized gains during the three months ended March 31, 2021 and $1 million of unrealized gains during the year ended December 31, 2020.
4Includes current portion of long-term debt of $1.5 billion at March 31, 2021 and December 31, 2020.
5Includes current portion of long-term payables of $6 million at March 31, 2021 and December 31, 2020.
6Includes current portion of notes receivable – related party of $7 million at March 31, 2021 and December 31, 2020. For further details on this note receivable, see Note 6, Notes Receivable.
7Includes current portion of long-term debt of $364 million at March 31, 2021 and December 31, 2020.
v3.21.1
Notes Receivable
3 Months Ended
Mar. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Notes Receivable Notes Receivable
Presented in the following table are details of CMS Energy’s and Consumers’ notes receivable:
In Millions
March 31, 2021December 31, 2020
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses$284 $275 
Non‑current
EnerBank notes receivable, net of allowance for loan losses2,426 2,612 
Total notes receivable$2,710 $2,887 
Consumers
Current
DB SERP note receivable – related party$$
Non‑current
DB SERP note receivable – related party99 100