0000811156 us-gaap:ForeignCorporateDebtSecuritiesMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-12-310000811156cms:IndustrialUtilityServiceMembercms:ElectricUtilityMembercms:ConsumersEnergyCompanyMemberus-gaap:OperatingSegmentsMember2019-01-012019-12-31

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20192020
OR
☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to_____
Commission File Number
Registrant; State of Incorporation;
Address; and Telephone Number
IRS Employer Identification No.
1-9513CMS ENERGY CORPORATION38-2726431
(A Michigan Corporation)
One Energy Plaza, Jackson, Michigan49201
(517) 788‑0550
1-5611CONSUMERS ENERGY COMPANY38-0442310
(A Michigan Corporation)
One Energy Plaza, Jackson, Michigan49201
(517) 788‑0550
Securities registered pursuant to Section 12(b)Commission File NumberRegistrant; State of the Act:Incorporation; Address; and Telephone NumberIRS Employer Identification No.
1-9513CMS ENERGY CORPORATION
Title of each classTrading Symbol(s)Name of each exchange on which registered
CMS Energy Corporation Common Stock, $0.01 par valueCMSNew York Stock Exchange
CMS Energy Corporation 5.625% Junior Subordinated Notes due 2078CMSANew York Stock Exchange
CMS Energy Corporation 5.875% Junior Subordinated Notes due 2078CMSCNew York Stock Exchange
CMS Energy Corporation 5.875% Junior Subordinated Notes due 2079CMSDNew York Stock Exchange
Consumers Energy Company Cumulative Preferred Stock, $100 par value: $4.50 SeriesCMS-PBNew York Stock Exchange38-2726431
(A Michigan Corporation)
One Energy Plaza, Jackson, Michigan 49201
(517) 788‑0550
Securities registered pursuant to Section 12(g) of the Act:1-5611NoneCONSUMERS ENERGY COMPANY38-0442310
(A Michigan Corporation)
One Energy Plaza, Jackson, Michigan 49201
(517) 788‑0550
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
CMS Energy Corporation Common Stock, $0.01 par valueCMSNew York Stock Exchange
CMS Energy Corporation 5.625% Junior Subordinated Notes due 2078CMSANew York Stock Exchange
CMS Energy Corporation 5.875% Junior Subordinated Notes due 2078CMSCNew York Stock Exchange
CMS Energy Corporation 5.875% Junior Subordinated Notes due 2079CMSDNew York Stock Exchange
Consumers Energy Company Cumulative Preferred Stock, $100 par value: $4.50 SeriesCMS-PBNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
CMS Energy Corporation:Yes☒No☐Consumers Energy Company:Yes☒No☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
CMS Energy Corporation:Yes☐No☒Consumers Energy Company:Yes☐No☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
CMS Energy Corporation:Yes☒No☐Consumers Energy Company:Yes☒No☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
CMS Energy Corporation:Yes☒No☐Consumers Energy Company:Yes☒No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
CMS Energy Corporation:Consumers Energy Company:
Large accelerated filer☒Large accelerated filer☐
Non‑accelerated filer☐Non‑accelerated filer☒
Accelerated filer☐Accelerated filer☐
Smaller reporting company☐Smaller reporting company☐
Emerging growth company☐Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
CMS Energy Corporation:☐Consumers Energy Company:☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
CMS Energy Corporation:☒Consumers Energy Company:☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act).
CMS Energy Corporation:Yes☐No☒Consumers Energy Company:Yes☐No☒
The aggregate market value of CMS Energy voting and non‑voting common equity held by non‑affiliates was $16.352$16.647 billion for the 282,365,464284,957,910 CMS Energy Corporation Common Stock shares outstanding on June 30, 20192020 based on the closing sale price of $57.91$58.42 for CMS Energy Corporation Common Stock, as reported by the New York Stock Exchange on such date. There were no shares of Consumers common equity held by non‑affiliates as of June 30, 2019.2020.
There were 283,882,207288,943,354 shares of CMS Energy Corporation Common Stock outstanding on January 10, 2020, including 12,322 shares owned by Consumers.15, 2021. On January 10, 2020,15, 2021, CMS Energy held all 84,108,789 outstanding shares of common stock of Consumers.
Documents incorporated by reference in Part III: CMS Energy’s and Consumers’ proxy statement relating to their 20202021 Annual Meetings of Shareholders to be held May 1, 2020.7, 2021.


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CMS Energy Corporation
Consumers Energy Company
Annual Reports on Form 10-K to the Securities and Exchange Commission for the Year Ended December 31, 20192020
Table of Contents
Glossary
2
Filing Format
10
Forward-Looking Statements and Information
10
Part I
14
Item 1.
14
Item 1A.
3336
Item 1B.
4546
Item 2.
4546
Item 3.
4547
Item 4.
4547
Part II
4647
Item 5.
4647
Item 6.
4850
Item 7.
5052
Item 7A.
8389
Item 8.
8591
Item 9.
182189
Item 9A.
182189
Item 9B.
184191
Part III
184191
Item 10.
184191
Item 11.
185192
Item 12.
185192
Item 13.
186193
Item 14.
186193
Part IV
187195
Item 15.
187195
Item 16.
199207
Signatures
200208


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Glossary
Certain terms used in the text and financial statements are defined below.
2016 Energy Law
Michigan’s Public Acts 341 and 342 of 2016 which became effective in April 2017
ABATE
The Association of Businesses Advocating Tariff Equity
ABO
Accumulated benefit obligation; the liabilities of a pension plan based on service and pay to date, which differs from the PBO in that it does not reflect expected future salary increases
AFUDC
Allowance for borrowed and equity funds used during construction
AOCI
Accumulated other comprehensive income (loss)
ARO
Asset retirement obligation
ASC 715
Financial Accounting Standards Board Accounting Standards Codification Topic 715, Retirement Benefits
ASU
Financial Accounting Standards Board Accounting Standards Update
Aviator Wind
Aviator Wind, LLC, a VIE in which Aviator Wind Equity Holdings holds a Class B membership interest
Aviator Wind Equity Holdings
Aviator Wind Equity Holdings, LLC, a VIE in which Grand River Wind, LLC, a wholly owned subsidiary of CMS Enterprises, has a 51‑percent interest
Bay Harbor
A residential/commercial real estate area located near Petoskey, Michigan, in which CMS Energy sold its interest in 2002
bcf
Billion cubic feet
Cantera Gas Company
Cantera Gas Company LLC, a non‑affiliated company, formerly known as CMS Field Services
Cantera Natural Gas, Inc.
Cantera Natural Gas, Inc., a non‑affiliated company that purchased CMS Field Services
CAO
Chief Accounting Officer
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CARES Act
Coronavirus Aid, Relief, and Economic Security Act of 2020
CCR
Coal combustion residual
CDC
U.S. Centers for Disease Control and Prevention
CEO
Chief Executive Officer
CERCLA
The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended


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CFO
Chief Financial Officer
city-gate contract
An arrangement made for the point at which a local distribution company physically receives gas from a supplier or pipeline
Clean Air Act
Federal Clean Air Act of 1963, as amended
Clean Energy Plan
Consumers’ long-term strategy for delivering clean, reliable, and affordable energy to its customers through the increased use of energy efficiency and customer demand management programs, additional renewable energy generation, and conservation voltage reduction
Clean Water Act
Federal Water Pollution Control Act of 1972, as amended
CMS Capital
CMS Capital, L.L.C., a wholly owned subsidiary of CMS Energy
CMS Energy
CMS Energy Corporation and its consolidated subsidiaries, unless otherwise noted; the parent of Consumers, and CMS Enterprises, and EnerBank
CMS Enterprises
CMS Enterprises Company,, a wholly owned subsidiary of CMS Energy
CMS ERM
CMS Energy Resource Management Company,, formerly known as CMS MST, a wholly owned subsidiary of CMS Enterprises
CMS Field Services
CMS Field Services, Inc., a former wholly owned subsidiary of CMS Gas Transmission
CMS Gas Transmission
CMS Gas Transmission Company,, a wholly owned subsidiary of CMS Enterprises
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CMS Land
CMS Land Company,, a wholly owned subsidiary of CMS Capital
CMS MST
CMS Marketing, Services and Trading Company, a wholly owned subsidiary of CMS Enterprises, whose name was changed to CMS ERM in 2004
Consumers
Consumers Energy Company and its consolidated subsidiaries, unless otherwise noted; a wholly owned subsidiary of CMS Energy
Consumers 2014 Securitization Funding
Consumers 2014 Securitization Funding LLC,, a wholly owned consolidated bankruptcy-remote subsidiary of Consumers and special-purpose entity organized for the sole purpose of purchasing and


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owning securitization property, issuing securitization bonds, and pledging its interest in securitization property to a trustee to collateralize the securitization bonds
Craven
Craven County Wood Energy Limited Partnership,, a variable interest entityVIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of CMS Enterprises, has a 50-percent interest
COVID‑19
Coronavirus disease 2019, a respiratory illness that was declared a pandemic in March 2020 and to which public and private agencies have responded by instituting social-distancing and other measures designed to slow the spread of the disease
CSAPR
The Cross-State Air Pollution Rule of 2011, as amended
DB Pension Plan A
Defined benefit pension plan of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries, created as of December 31, 2017 for active employees who were covered under the defined benefit pension plan that closed in 2005
DB Pension Plan B
Defined benefit pension plan of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries, amended as of December 31, 2017 to include only retired and former employees who were covered under the defined benefit pension plan that closed in 2005
DB Pension Plans
Defined benefit pension plans of CMS Energy and Consumers, comprising DB Pension Plan A and DB Pension Plan B
DB SERP
Defined Benefit Supplemental Executive Retirement Plan
DCCP
Defined Company Contribution Plan
DC SERP
Defined Contribution Supplemental Executive Retirement Plan
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DIG
Dearborn Industrial Generation, L.L.C., a wholly owned subsidiary of Dearborn Industrial Energy, L.L.C., a wholly owned subsidiary of CMS Energy
Discount Window
Federal Reserve lending program to depository institutions
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
DTE Electric
DTE Electric Company, a non‑affiliated company
EBITDAEEI
Earnings before interest, taxes, depreciation, and amortizationEdison Electric Institute, an association representing all U.S. investor-owned electric companies
EGLE
The Michigan Department of Environment, Great Lakes, and Energy, formerly known as the Michigan Department of Environmental Quality
EnerBank
EnerBank USA,, a wholly owned subsidiary of CMS Capital


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energy waste reduction
The reduction of energy consumption through energy efficiency and demand-side energy conservation, as established under the 2016 Energy Law
Entergy
Entergy Corporation, a non‑affiliated company
EPA
U.S. Environmental Protection Agency
EPS
Earnings per share
Exchange Act
Securities Exchange Act of 1934
FDIC
Federal Deposit Insurance Corporation
Federal Reserve
Federal Reserve System, the central bank of the U.S.
FERC
The Federal Energy Regulatory Commission
FICO
Fair Isaac Corporation, a non-affiliated company providing data analytic services, with a focus on credit scoring services
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First Mortgage Bond Indenture
The indenture dated as of September 1, 1945 between Consumers and The Bank of New York Mellon, as Trustee, as amended and supplemented
FLI Liquidating Trust
Trust formed in Missouri bankruptcy court to accomplish the liquidation of Farmland Industries, Inc., a non‑affiliated entity
FTR
Financial transmission right
GAAP
U.S. Generally Accepted Accounting Principles
GCC
Gas Customer Choice, which allows gas customers to purchase gas from alternative suppliers
GCR
Gas cost recovery
Genesee
Genesee Power Station Limited Partnership,, a variable interest entityVIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of CMS Enterprises, has a 50-percent interest
Grayling
Grayling Generating Station Limited Partnership,, a variable interest entityVIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of CMS Enterprises, has a 50-percent interest
GWh
Gigawatt-hour, a unit of energy equal to one billion watt-hours


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Internal Revenue Code
Internal Revenue Code of 1986, as amended
IRP
Integrated resource plan
IRS
Internal Revenue Service
ITCIT
International Transmission Company, wholly owned by ITC Holdings Corp., a non‑affiliated companyInformation Technology
kV
Thousand volts, a unit used to measure the difference in electrical pressure along a current
kVA
Thousand volt-amperes, a unit used to reflect the electrical power capacity rating of equipment or a system
kWh
Kilowatt-hour, a unit of energy equal to one thousand watt-hours
LIBOR
The London Interbank Offered Rate
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Ludington
Ludington pumped-storage plant, jointly owned by Consumers and DTE Electric
MATS
Mercury and Air Toxics Standards, which limit mercury, acid gases, and other toxic pollution from coal‑fueled and oil‑fueled power plants
mcf
Thousand cubic feet
MCV Facility
A 1,647 MW natural gas-fueled, combined-cycle cogeneration facility operated by the MCV Partnership
MCV Partnership
Midland Cogeneration Venture Limited Partnership
MCV PPA
PPA between Consumers and the MCV Partnership
METC
Michigan Electric Transmission Company, LLC, wholly owned by ITC Holdings, Corp., a non‑affiliated company
MGP
Manufactured gas plant


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Michigan Mercury Rule
Michigan Air Pollution Control Rules of 2009, as amended: Part 15, Emission Limitations and Prohibitions—Mercury
MISO
Midcontinent Independent System Operator, Inc.
MISS DIG Act
MISS DIG Underground Facility Damage Prevention and Safety Act of 2013
mothball
To place a generating unit into a state of extended reserve shutdown in which the unit is inactive and unavailable for service for a specified period, during which the unit can be brought back into service after receiving appropriate notification and completing any necessary maintenance or other work; generation owners in MISO must request approval to mothball a unit, and MISO then evaluates the request for reliability impacts
MPSC
Michigan Public Service Commission
MRV
Market-related value of plan assets
MW
Megawatt, a unit of power equal to one million watts
MWh
Megawatt-hour, a unit of energy equal to one million watt-hours
NAAQS
National Ambient Air Quality Standards
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NERC
The North American Electric Reliability Corporation, a non‑affiliated company responsible for developing and enforcing reliability standards, monitoring the bulk power system, and educating and certifying industry personnel
NPDES
National Pollutant Discharge Elimination System, a permit system for regulating point sources of pollution under the Clean Water Act
NREPA
Part 201 of Michigan’s Natural Resources and Environmental Protection Act of 1994, as amended
NSR
New Source Review, a construction-permitting program under the Clean Air Act
OPEB
Other Post-Employment Benefits
OPEB Plan
Postretirement health care and life insurance plans of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries


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OSHA
Occupational Safety and Health Administration
Palisades
Palisades nuclear power plant, sold by Consumers to Entergy in 2007
PBO
Projected benefit obligation
PCB
Polychlorinated biphenyl
PFAS
Per- and polyfluoroalkyl substances
PHMSA
The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration
PISP
Performance Incentive Stock Plan
PPA
Power purchase agreement
PSCR
Power supply cost recovery
PURPA
The Public Utility Regulatory Policies Act of 1978
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RCRA
The Federal Resource Conservation and Recovery Act of 1976
REC
Renewable energy credit
ROA
Retail Open Access, which allows electric generation customers to choose alternative electric suppliers pursuant to Michigan’s Public Acts 141 and 142 of 2000, as amended
S&P
Standard & Poor’s Financial Services LLC
SEC
U.S. Securities and Exchange Commission
securitization
A financing method authorized by statute and approved by the MPSC which allows a utility to sell its right to receive a portion of the rate payments received from its customers for the repayment of securitization bonds issued by a special-purpose entity affiliated with such utility


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Smart Energy
Consumers’ Smart Energy grid modernization project, which includes the installation of smart meters that transmit and receive data, a two-way communications network, and modifications to Consumers’ existing information technologyIT system to manage the data and enable changes to key business processes
TCJA
Tax Cuts and Jobs Act of 2017
T.E.S. Filer City
T.E.S. Filer City Station Limited Partnership,, a variable interest entityVIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of CMS Enterprises, has a 50-percent interest
USW
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC
UWUA
Utility Workers Union of America, AFL-CIO
VEBA trust
Voluntary employees’ beneficiary association trusts accounts established specifically to set aside employer-contributed assets to pay for future expenses of the OPEB Plan

VIE
Variable interest entity

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Filing Format
This combined Form 10‑K is separately filed by CMS Energy and Consumers. Information in this combined Form 10‑K relating to each individual registrant is filed by such registrant on its own behalf. Consumers makes no representation regarding information relating to any other companies affiliated with CMS Energy other than its own subsidiaries. None of CMS Energy, CMS Enterprises, EnerBank, nor any of CMS Energy’s other subsidiaries (other than Consumers) has any obligation in respect of Consumers’ debt securities or preferred stock and holders of such debt securities should not consider the financial resources or results of operations of CMS Energy, CMS Enterprises, EnerBank, nor any of CMS Energy’s other subsidiaries (other than Consumers and its own subsidiaries (in relevant circumstances)) in making a decision with respect to Consumers’ debt securities.securities or preferred stock. Similarly, neither Consumers nor any other subsidiary of CMS Energy has any obligation in respect of debt securities of CMS Energy.
Forward-Looking Statements and Information
This Form 10‑K and other CMS Energy and Consumers disclosures may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. The use of “might,” “may,” “could,” “should,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “forecasts,” “predicts,” “assumes,” and other similar words is intended to identify forward-looking statements that involve risk and uncertainty. This discussion of potential risks and uncertainties is designed to highlight important factors that may impact CMS Energy’s and Consumers’ businesses and financial outlook. CMS Energy and Consumers have no obligation to update or revise forward-looking statements regardless of whether new information, future events, or any other factors affect the information contained in the statements. These forward-looking statements are subject to various factors that could cause CMS Energy’s and Consumers’ actual results to differ materially from the results anticipated in these statements. These factors include, but are not limited to, the following, all of which are potentially significant:
•the impact of the COVID-19 pandemic and the related economic disruption on CMS Energy’s and Consumers’ revenues, expenses, uncollectible accounts, energy efficiency programs, pension funding, PSCR and GCR costs, capital investment programs, cash flows, liquidity, maintenance of existing assets, and other operating expenses
•the impact of new regulation by the MPSC, FERC, and other applicable governmental proceedings and regulations, including any associated impact on electric or gas rates or rate structures
•potentially adverse regulatory treatment or failure to receive timely regulatory orders affecting Consumers that are or could come before the MPSC, FERC, or other governmental authorities
•changes in the performance of or regulations applicable to MISO, METC, pipelines, railroads, vessels, or other service providers that CMS Energy, Consumers, or any of their affiliates rely on to serve their customers
•the adoption of federal or state laws or regulations or challenges to federal or state laws or regulations or changes in applicable laws, rules, regulations, principles, or practices, or in their interpretation, such as those related to energy policy, ROA, and PURPA, infrastructure integrity or security, gas pipeline safety, gas pipeline capacity, energy waste reduction, the environment, regulation or deregulation, reliability, health care reforms (including comprehensive health care reform enacted in 2010), taxes, accounting matters, climate change, air emissions, renewable energy, potential effects of the Dodd-Frank Act, and other business
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issues that could have an impact on CMS Energy’s, Consumers’, or any of their affiliates’ businesses or financial results
•factors affecting operations, such as costs and availability of personnel, equipment, and materials; weather conditions; natural disasters; catastrophic weather-related damage; scheduled or unscheduled equipment outages; maintenance or repairs; environmental incidents; failures of


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equipment or materials; electric transmission and distribution or gas pipeline system constraints; interconnection requirements; political and social unrest; general strikes; the government and/or paramilitary response to political or social events; and changes in trade policies or regulations
increases in demand for renewable energy by customers seeking to meet sustainability goals
•the ability of Consumers to execute its cost-reduction strategies
•potentially adverse regulatory or legal interpretations or decisions regarding environmental matters, or delayed regulatory treatment or permitting decisions that are or could come before EGLE, the EPA, and/or the U.S. Army Corps of Engineers, and potential environmental remediation costs associated with these interpretations or decisions, including those that may affect Consumers’ routine maintenance, repair, and replacement classification under NSR regulations
•changes in energy markets, including availability and price of electric capacity and the timing and extent of changes in commodity prices and availability and deliverability of coal, natural gas, natural gas liquids, electricity, oil, and certain related products
•the price of CMS Energy common stock, the credit ratings of CMS Energy and Consumers, capital and financial market conditions, and the effect of these market conditions on CMS Energy’s and Consumers’ interest costs and access to the capital markets, including availability of financing to CMS Energy, Consumers, or any of their affiliates
•the potential effects of a future transition from LIBOR to an alternative reference interest rate in the credit and capital markets
•the investment performance of the assets of CMS Energy’s and Consumers’ pension and benefit plans, the discount rates, mortality assumptions, and future medical costs used in calculating the plans’ obligations, and the resulting impact on future funding requirements
•the impact of the economy, particularly in Michigan, and potential future volatility in the financial and credit markets on CMS Energy’s, Consumers’, or any of their affiliates’ revenues, ability to collect accounts receivable from customers, or cost and availability of capital
•changes in the economic and financial viability of CMS Energy’s and Consumers’ suppliers, customers, and other counterparties and the continued ability of these third parties, including those in bankruptcy, to meet their obligations to CMS Energy and Consumers
•population changes in the geographic areas where CMS Energy and Consumers conduct business
•national, regional, and local economic, competitive, and regulatory policies, conditions, and developments
•loss of customer demand for electric generation supply to alternative electric suppliers, increased use of self-generation including distributed generation, or energy waste reduction and storage
•increased renewable energy demand due to customers seeking to meet their own sustainability goals
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•adverse consequences of employee, director, or third-party fraud or non‑compliance with codes of conduct or with laws or regulations
•federal regulation of electric sales, and transmission of electricity, including periodic re‑examination by federal regulators of CMS Energy’s and Consumers’ market-based sales authorizations


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the impact of credit markets, economic conditions, increased competition, and any new banking and consumer protection regulations on EnerBank
•the availability, cost, coverage, and terms of insurance, the stability of insurance providers, and the ability of Consumers to recover the costs of any insurance from customers
•the effectiveness of CMS Energy’s and Consumers’ risk management policies, procedures, and strategies, including strategies to hedge risk related to interest rates and future prices of electricity, natural gas, and other energy-related commodities
•factors affecting development of electric generation projects, andgas transmission, gas and electric transmission and distribution infrastructure replacement, conversion, and expansion projects, including factors related to project site identification, construction material pricing, schedule delays, availability of qualified construction personnel, permitting, acquisition of property rights, and government approvals
•potential disruption to, interruption of, or other impacts on facilities, utility infrastructure, operations, or backup systems due to accidents, explosions, physical disasters, global pandemics, cyber incidents, civil unrest, vandalism, war, or terrorism, and the ability to obtain or maintain insurance coverage for these events
•changes or disruption in fuel supply, including but not limited to supplier bankruptcy and delivery disruptions
•potential costs, lost revenues, reputational harm, or other consequences resulting from misappropriation of assets or sensitive information, corruption of data, or operational disruption in connection with a cyber attack or other cyber incident
•potential disruption to, interruption or failure of, or other impacts on information technologyIT backup or disaster recovery systems
•technological developments in energy production, storage, delivery, usage, and metering
•the ability to implement technology successfully
•the impact of CMS Energy’s and Consumers’ integrated business software system and its effects on their operations, including utility customer billing and collections
•adverse consequences resulting from any past, present, or future assertion of indemnity or warranty claims associated with assets and businesses previously owned by CMS Energy or Consumers, including claims resulting from attempts by foreign or domestic governments to assess taxes on or to impose environmental liability associated with past operations or transactions
•the outcome, cost, and other effects of any legal or administrative claims, proceedings, investigations, or settlements
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•the reputational impact on CMS Energy and Consumers of operational incidents, violations of corporate policies, regulatory violations, inappropriate use of social media, and other events
•restrictions imposed by various financing arrangements and regulatory requirements on the ability of Consumers and other subsidiaries of CMS Energy to transfer funds to CMS Energy in the form of cash dividends, loans, or advances


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earnings volatility resulting from the application of fair value accounting to certain energy commodity contracts or interest rate contracts
•changes in financial or regulatory accounting principles or policies (e.g., the adoption of the hypothetical liquidation at book value method of accounting for certain non-regulated renewable energy projects)
•other matters that may be disclosed from time to time in CMS Energy’s and Consumers’ SEC filings, or in other public documents
All forward-looking statements should be considered in the context of the risk and other factors described above and as detailed from time to time in CMS Energy’s and Consumers’ SEC filings. For additional details regarding these and other uncertainties, see Item 1A. Risk Factors; Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook; and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters and Note 4, Contingencies and Commitments.


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Part I
Item 1.    Business
General
CMS Energy
CMS Energy was formed as a corporation in Michigan in 1987 and is an energy company operating primarily in Michigan. It is the parent holding company of several subsidiaries, including Consumers, an electric and gas utility; CMS Enterprises, primarily a domestic independent power producer and marketer; and EnerBank, an industrial bank located in Utah. Consumers serves individuals and businesses operating in the alternative energy, automotive, chemical, food, and metal products industries, as well as a diversified group of other industries. CMS Enterprises, through its subsidiaries and equity investments, is engaged in domestic independent power production, including the development and operation of renewable generation, and the marketing of independent power production. EnerBank provides primarily unsecured, consumerfixed-rate installment loans largely for financingthroughout the U.S. to finance home improvements.
CMS Energy manages its businesses by the nature of services each provides, and operates principally in four business segments: electric utility; gas utility; enterprises, its non‑utility operations and investments; and EnerBank. Consumers’ consolidated operations account for the substantial majority of CMS Energy’s total assets, income, and operating revenue. CMS Energy’s consolidated operating revenue was $6.7 billion in 2020, $6.8 billion in 2019, and $6.9 billion in 2018, and $6.6 billion in 2017.2018.
For further information about operating revenue, income, and assets and liabilities attributable to all of CMS Energy’s business segments and operations, see Item 6. Selected Financial Data and Item 8. Financial Statements and Supplementary Data—CMS Energy Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
Consumers
Consumers has served Michigan customers since 1886. Consumers was incorporated in Maine in 1910 and became a Michigan corporation in 1968. Consumers owns and operates electric generation transmission, and distribution facilities and gas transmission, storage, and distribution facilities. It provides electricity and/or natural gas to 6.76.8 million of Michigan’s 10 million residents. Consumers’ rates and certain other aspects of its business are subject to the jurisdiction of the MPSC and FERC, as well as to NERC reliability standards, as described in Item 1. Business—CMS Energy and Consumers Regulation.
Consumers’ consolidated operating revenue was $6.2 billion in 2020, $6.4 billion in 2019, and $6.5 billion in 2018, and $6.2 billion in 2017.2018. For further information about operating revenue, income, and assets and liabilities attributable to Consumers’ electric and gas utility operations, see Item 6. Selected Financial Data and Item 8. Financial Statements and Supplementary Data—Consumers Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
Consumers owns its principal properties in fee, except that most electric lines and gas mains are located below or adjacent to public roads or on land owned by others and are accessed by Consumers through easements and other rights. Almost all of Consumers’ properties are subject to the lien of its First Mortgage Bond Indenture. For additional information on Consumers’ properties, see Item 1. Business—Business Segments—Consumers Electric Utility—Electric Utility Properties and Business Segments—Consumers Gas Utility—Gas Utility Properties.


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In 2019,2020, Consumers served 1.81.9 million electric customers and 1.8 million gas customers in Michigan’s Lower Peninsula. Presented in the following map are Consumers’ service territories:
map-migeneratingfacilities.jpgcms-20201231_g1.jpg
Electric Service Territory
Gas Service Territory
Combination Electric and
Gas Service Territory
•Electric Generation Facilities
CMS Energy and Consumers – The Triple Bottom Line
For information regarding CMS Energy’s and Consumers’ purpose and impact on the “triple bottom line” of people, planet, and profit, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview.
Business Segments
Consumers Electric Utility
Electric Utility Operations: Consumers’ electric utility operations, which include the generation, purchase, transmission, distribution, and sale of electricity, generated operating revenue of $4.4 billion in 2020 and 2019, and $4.6 billion in 2018, and $4.4 billion in 2017.2018. Consumers’ electric utility customer base consists of a mix of primarily residential, commercial, and diversified industrial customers in Michigan’s Lower Peninsula.


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Presented in the following illustration is Consumers’ 20192020 electric utility operating revenue of $4.4 billion by customer class:
chart-ceelectricutiloperrev.jpgcms-20201231_g2.jpg
Consumers’ electric utility operations are not dependent on a single customer, or even a few customers, and the loss of any one or even a few of Consumers’ largest customers is not reasonably likely to have a material adverse effect on Consumers’ financial condition.
In 2020, Consumers’ electric deliveries were 35 billion kWh, which included ROA deliveries of three billion kWh, resulting in net bundled sales of 32 billion kWh. In 2019, Consumers’ electric deliveries were 37 billion kWh, which included ROA deliveries of four billion kWh, resulting in net bundled sales of 33 billion kWh. In 2018, Consumers’ electric deliveries were 38 billion kWh, which included ROA deliveries of four billion kWh, resulting in net bundled sales of 34 billion kWh.
Consumers’ electric utility operations are seasonal. The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment.


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Presented in the following illustration are Consumers’ monthly weather-normalized electric deliveries (deliveries adjusted to reflect normal weather conditions) to its customers, including ROA deliveries, during 20192020 and 2018:2019:
chart-ceweathnormelectricdel.jpgcms-20201231_g3.jpg
Consumers’ 20192020 summer peak demand was 8,0398,215 MW, which included ROA demand of 562540 MW. For the 2018-20192019-2020 winter season, Consumers’ peak demand was 5,7455,602 MW, which included ROA demand of 440464 MW. As required by MISO reserve margin requirements, Consumers owns or controls, through long-term PPAs and short-term capacity purchases, all of the capacity required to supply its projected firm peak load and necessary reserve margin for summer 2020.2021.
Electric Utility Properties: Consumers owns and operates electric generation transmission, and distribution facilities. For details about Consumers’ electric generation facilities, see the Electric Utility Generation and Supply Mix section that follows this Electric Utility Properties section. Consumers’ transmission and distribution systems consistsystem consists of:
213 miles of transmission overhead lines operating at 138 kV
•205 miles of high-voltage distribution overhead lines operating at 138 kV
•4 miles of high-voltage distribution underground lines operating at 138 kV
4,430•4,428 miles of high-voltage distribution overhead lines operating at 46 kV and 69 kV
•19 miles of high-voltage distribution underground lines operating at 46 kV
66,917•77,833 miles of electric distribution overhead lines
9,314•9,264 miles of underground distribution lines
•1,096 substations with an aggregate transformer capacity of 26 million kVA
•two battery facilities with storage capacity of 2 MW
Consumers is interconnected to the interstate high-voltage electric transmission system owned by METC and operated by MISO. Consumers is also interconnected to neighboring utilities and to other transmission systems.


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Electric Utility Generation and Supply Mix: During 2020, Consumers announced a goal of achieving net-zero carbon emissions from its electric business by 2040. This goal includes not only emissions from Consumers’ owned generation, but also emissions from the generation of power purchased through long-term PPAs and from the MISO energy market.
Consumers expects to reduce carbon emissions of its owned generation by more than 90 percent from its 2005 levels by 2040 through execution of its Clean Energy Plan, which calls for replacing its coal-fueled generation predominantly with investment in renewable energy. The remaining emissions will be offset through alternative measures including, but not limited to, carbon sequestration, landfill methane emission capture, and large-scale tree planting. Specifically, the Clean Energy Plan provides for the retirement of the D.E. Karn 1 & 2 coal-fueled generating units in 2023 and the potential retirement of the J.H. Campbell 1 & 2 coal-fueled generating units in 2031 or earlier.
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Presented in the following table are details about Consumers’ 20192020 electric generation and supply mix:
Name and Location (Michigan)Number of Units and Year Entered Service2020
Generation Capacity
(MW)
1

2020
Electric Supply
(GWh)
Coal steam generation
J.H. Campbell 1 & 2 – West Olive2 Units, 1962-1967540 1,538 
J.H. Campbell 3 – West Olive2
1 Unit, 1980785 4,804 
D.E. Karn 1 & 2 – Essexville3
2 Units, 1959-1961460 1,618 
1,785 7,960 
Oil/Gas steam generation
D.E. Karn 3 & 4 – Essexville2 Units, 1975-19771,058 37 
Hydroelectric
Ludington – Ludington6 Units, 1973975 4(371)5
Conventional hydro generation – various locations35 Units, 1906-194976 482 
1,051 111 
Gas combined cycle
Jackson – Jackson1 Unit, 2002547 1,786 
Zeeland – Zeeland3 Units, 2002534 3,465 
1,081 5,251 
Gas combustion turbines
Zeeland (simple cycle) – Zeeland2 Units, 2001318 601 
Wind generation
Cross Winds® Energy Park – Tuscola County
114 Turbines,
2014, 2018, and 2019		39 722 
Lake Winds® Energy Park – Mason County
56 Turbines, 201216 273 
Gratiot Farms Wind Project – Gratiot County60 Turbines, 2020— 22 
55 1,017 
Solar generation
Solar Gardens – Allendale and Kalamazoo15,100 Panels, 20162 6 
Total owned generation5,350 14,983 
Purchased power6
Coal generation – T.E.S. Filer City60 513 
Gas generation – MCV Facility7
1,240 6,110 
Other gas generation – various locations152 1,236 
Nuclear generation – Palisades7
813 6,898 
Wind generation – various locations64 1,160 
Solar generation – various locations4 8 
Other renewable generation – various locations244 1,057 
2,577 16,982 
Net interchange power8
— 2,655 
Total purchased and interchange power2,577 19,637 
Total supply7,927 34,620 
Less distribution and transmission loss2,810 
Total net bundled sales31,810 
1Represents generation capacity during the summer months (planning year 2020 capacity as reported to MISO and limited by interconnection service limits), except for the Gratiot Farms Wind Project, which
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 Number of Units and Year Entered Service2019 Generation Capacity
1 
        2019 Electric Supply
 
Name and Location (Michigan)(MW)
 (GWh)
 
Coal steam generation     
J.H. Campbell 1 & 2 – West Olive2 Units, 1962-1967609
 3,124
 
J.H. Campbell 3 – West Olive2
1 Unit, 1980782
 4,890
 
D.E. Karn 1 & 2 – Essexville3
2 Units, 1959-1961503
 1,762
 
  1,894
 9,776
 
Oil/Gas steam generation     
D.E. Karn 3 & 4 – Essexville2 Units, 1975-19771,135
 42
 
Hydroelectric     
Ludington – Ludington6 Units, 19731,097
4 
(308)
5 
Conventional hydro generation – various locations35 Units, 1906-194975
 512
 
  1,172
 204
 
Gas combined cycle     
Jackson – Jackson1 Unit, 2002547
 2,177
 
Zeeland – Zeeland3 Units, 2002533
 3,740
 
  1,080
 5,917
 
Gas combustion turbines     
Zeeland (simple cycle) – Zeeland2 Units, 2001317
 335
 
Wind generation     
Cross Winds® Energy Park – Tuscola County
114 Turbines,
2014, 2018, and 2019		29
 473
 
Lake Winds® Energy Park – Mason County
56 Turbines, 201218
 268
 
  47
 741
 
Solar generation     
Solar Gardens – Allendale and Kalamazoo15,100 Panels, 20163
 5
 
Total owned generation 5,648
 17,020
 
Purchased power6
     
Coal generation – primarily T.E.S. Filer City 60
 462
 
Gas generation – MCV Facility7
 1,240
 5,677
 
Other gas generation – various locations 172
 1,135
 
Nuclear generation – Palisades7
 813
 6,946
 
Wind generation – various locations 61
 1,156
 
Solar generation – various locations 3
 7
 
Other renewable generation – various locations 244
 1,224
 
  2,593
 16,607
 
Net interchange power8
 —
 2,059
 
Total purchased and interchange power 2,593
 18,666
 
Total supply 8,241
 35,686
 
Less distribution and transmission loss   2,636
 
Total net bundled sales   33,050
 


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began operation in December 2020. For wind and solar generation, the amount represents the effective load-carrying capability.
1
2Represents Consumers’ share of the capacity of the J.H. Campbell 3 unit, net of the 6.69-percent ownership interest of the Michigan Public Power Agency and Wolverine Power Supply Cooperative, Inc.
3Consumers plans to retire these coal-fueled generating units in 2023.
4Represents Consumers’ 51-percent share of the capacity of Ludington. DTE Electric holds the remaining 49-percent ownership interest.
5Represents Consumers’ share of net pumped-storage generation. The pumped-storage facility consumes electricity to pump water during off-peak hours for storage in order to generate electricity later during peak‑demand hours.
6Represents purchases under long-term PPAs.
7For information about Consumers’ long-term PPAs related to the MCV Facility and Palisades, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments—Contractual Commitments.
8Represents purchases from the MISO energy market.
Represents generation capacity during the summer months (planning year 2019 capacity as reported to MISO and limited by interconnection service limits), except for Cross Winds® Energy Park Phase III, which began operation in December 2019. For wind and solar generation, the amount represents the effective load-carrying capability.
2
Represents Consumers’ share of the capacity of the J.H. Campbell 3 unit, net of the 6.69-percent ownership interest of the Michigan Public Power Agency and Wolverine Power Supply Cooperative, Inc.
3
Consumers plans to retire these coal-fueled generating units in 2023.
4
Represents Consumers’ 51-percent share of the capacity of Ludington. DTE Electric holds the remaining 49-percent ownership interest.
5
Represents Consumers’ share of net pumped-storage generation. The pumped-storage facility consumes electricity to pump water during off-peak hours for storage in order to generate electricity later during peak‑demand hours.
6
Represents purchases under long-term PPAs.
7
For information about Consumers’ long-term PPAs related to the MCV Facility and Palisades, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments—Contractual Commitments.
8
Represents purchases from the MISO energy market.


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Presented in the following table are the sources of Consumers’ electric supply for the last three years:
GWh
Years Ended December 31202020192018
Owned generation
Coal7,960 9,776 9,804 
Gas5,883 6,289 5,272 
Renewable energy1,505 1,258 1,187 
Oil6 5 5 
Net pumped storage1
(371)(308)(325)
Total owned generation14,983 17,020 15,943 
Purchased power2
Gas generation7,346 6,812 6,712 
Nuclear generation6,898 6,946 6,749 
Renewable energy generation2,225 2,387 2,379 
Coal generation513 462 511 
Net interchange power3
2,655 2,059 4,953 
Total purchased and interchange power19,637 18,666 21,304 
Total supply34,620 35,686 37,247 
GWh 
Years Ended December 312019
2018
2017
Owned generation   
Coal9,776
9,804
10,098
Gas6,289
5,272
5,190
Renewable energy1,258
1,187
1,078
Oil5
5
12
Net pumped storage1
(308)(325)(290)
Total owned generation17,020
15,943
16,088
Purchased power2
   
Gas generation6,812
6,712
5,521
Nuclear generation6,946
6,749
6,780
Renewable energy generation2,387
2,379
2,288
Coal generation462
511
491
Net interchange power3
2,059
4,953
4,384
Total purchased and interchange power18,666
21,304
19,464
Total supply35,686
37,247
35,552
1Represents Consumers’ share of net pumped-storage generation. During 2020, the pumped-storage facility consumed 1,369 GWh of electricity to pump water during off-peak hours for storage in order to generate 998 GWh of electricity later during peak-demand hours.
1
2Represents purchases under long-term PPAs.
3Represents purchases from the MISO energy market.
Represents Consumers’ share of net pumped-storage generation. During 2019, the pumped-storage facility consumed 1,110 GWh of electricity to pump water during off-peak hours for storage in order to generate 802 GWh of electricity later during peak-demand hours.
2
Represents purchases under long-term PPAs.
3
Represents purchases from the MISO energy market.
During 2019,2020, Consumers acquired 5257 percent of the electricity it provided to customers through long-term PPAs and the MISO energy market. Consumers offers its generation into the MISO energy market on a day-ahead and real-time basis and bids for power in the market to serve the demand of its customers. Consumers is a net purchaser of power and supplements its generation capability with purchases from the MISO energy market to meet its customers’ needs during peak demandpeak-demand periods.
At December 31, 2019,2020, Consumers had future commitments to purchase capacity and energy under long-term PPAs with various generating plants. These contracts require monthly capacity payments based on the plants’ availability or deliverability. The payments for 20202021 through 2040 are estimated to total $9.4$9.0 billion and, for each of the next five years, range from $0.6$0.7 billion to $1.1 billion annually. These amounts may vary depending on plant availability and fuel costs. For further information about Consumers’ future capacity and energy purchase obligations, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources and Liquidity—Contractual Obligations and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments—Contractual Commitments.
During 2019, 272020, 23 percent of the energy Consumers provided to customers was generated by its coal-fueled generating units, which burned sixfive million tons of coal and produced a combined total of 9,7767,960 GWh of electricity. In order to obtain the coal it needs, Consumers enters into physical coal supply contracts.


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At December 31, 2019,2020, Consumers had future commitments to purchase coal through 2021;2022; payment obligations under these contracts totaled $84$88 million. Most of Consumers’ rail-supplied coal contracts have fixed prices, although some contain market-based pricing. Consumers’ vessel-supplied coal contracts have fixed base prices that are adjusted monthly to reflect changes to the fuel cost of vessel transportation. At December 31, 2019,2020, Consumers had 7776 percent of its 20202021 expected coal requirements under contract, as well as a 44-day54-day supply of coal on hand.
In conjunction with its coal supply contracts, Consumers leases a fleet of railcars and has transportation contracts with various companies to provide rail and vessel services for delivery of purchased coal to Consumers’ generating facilities. Consumers’ coal transportation contracts are future commitments and expire on various dates through 2024;2025; payment obligations under these contracts totaled $732$718 million at December 31, 2019.2020.
During 2019, 182020, 17 percent of the energy Consumers provided to customers was generated by its natural gas‑fueled generating units, which burned 4543 bcf of natural gas and produced a combined total of 6,2895,883 GWh of electricity.
In order to obtain the gas it needs for electric generation fuel, Consumers’ electric utility purchases gas from the market near the time of consumption, at prices that allow it to compete in the electric wholesale market. For units 3 & 4 of D.E. Karn and for the Jackson and Zeeland plants, Consumers utilizes an agent that owns firm transportation rights to each plant to purchase gas from the market and transport the gas to the facilities.
Electric Utility Competition: Consumers’ electric utility business is subject to actual and potential competition from many sources, in both the wholesale and retail markets, as well as in electric generation, electric delivery, and retail services.
Michigan law allows electric customers in Consumers’ service territory to buy electric generation service from alternative electric suppliers in an aggregate amount capped at ten percent of Consumers’ sales, with certain exceptions. At December 31, 2019,2020, electric deliveries under the ROA program were at the ten‑percent limit. Of Consumers’ 1.81.9 million electric customers, 285 customers,fewer than 300, or 0.02 percent, purchased electric generation service under the ROA program. For additional information, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook—Consumers Electric Utility Outlook and Uncertainties.
Consumers also faces competition or potential competition associated with industrial customers relocating all or a portion of their production capacity outside of Consumers’ service territory for economic reasons; municipalities owning or operating competing electric delivery systems; and customer self-generation. Consumers addresses this competition in various ways, including:
•aggressively controlling operating, maintenance, and fuel costs and passing savings on to customers
•providing renewable energy options and energy waste reduction programs
•providing competitive rate-design options, particularly for large energy-intensive customers
•offering tariff-based incentives that support economic development
providing non‑energy services and value to customers
•monitoring activity in adjacent geographical areas


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Consumers Gas Utility
Gas Utility Operations: Consumers’ gas utility operations, which include the purchase, transmission, storage, distribution, and sale of natural gas, generated operating revenue of $1.8 billion in 2020, and $1.9 billion in 2019 $1.9 billion in 2018, and $1.8 billion in 2017.2018. Consumers’ gas utility customer base consists of a mix of primarily residential, commercial, and diversified industrial customers in Michigan’s Lower Peninsula.
Presented in the following illustration is Consumers’ 20192020 gas utility operating revenue of $1.9$1.8 billion by customer class:
chart-cegasutiloperrev.jpgcms-20201231_g4.jpg
Consumers’ gas utility operations are not dependent on a single customer, or even a few customers, and the loss of any one or even a few of Consumers’ largest customers is not reasonably likely to have a material adverse effect on Consumers’ financial condition.
In 2020, deliveries of natural gas through Consumers’ pipeline and distribution network, including off-system transportation deliveries, totaled 360 bcf, which included GCC deliveries of 36 bcf. In 2019, deliveries of natural gas through Consumers’ pipeline and distribution network, including off-system transportation deliveries, totaled 391 bcf, which included GCC deliveries of 41 bcf. In 2018, deliveries of natural gas through Consumers’ pipeline and distribution network, including off-system transportation deliveries, totaled 386 bcf, which included GCC deliveries of 44 bcf. Consumers’ gas utility operations are seasonal. The consumption of natural gas typically increases in the winter, due primarily to colder temperatures and the resulting use of natural gas as heating fuel. Consumers injects natural gas into storage during the summer months for use during the winter months. During 2019, 402020, 43 percent of the natural gas supplied to all customers during the winter months was supplied from storage.


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Presented in the following illustration are Consumers’ monthly weather-normalized natural gas deliveries (deliveries adjusted to reflect normal weather conditions) to its customers, including GCC deliveries, during 20192020 and 2018:2019:
chart-ceweathnormgasdeliv.jpgcms-20201231_g5.jpg
Gas Utility Properties: Consumers’ gas transmission, storage, and distribution system consists of:
2,426•2,410 miles of transmission lines
•15 gas storage fields with a total storage capacity of 309 bcf and a working gas volume of 151 bcf
27,729•27,958 miles of distribution mains
•eight compressor stations with a total of 163,543167,017 installed and available horsepower

In 2019, Consumers released its Methane Reduction Plan, which set a goal of net-zero methane emissions from its natural gas delivery system by 2030. Consumers plans to reduce methane emissions from its system by about 80 percent by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices. The remaining emissions will be offset by purchasing and/or producing renewable natural gas.

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Gas Utility Supply: In 2019,2020, Consumers purchased 8384 percent of the gas it delivered from U.S. suppliers. The remaining 1716 percent was purchased from authorized GCC suppliers and delivered by Consumers to customers in the GCC program. Presented in the following illustration are the supply arrangements for the gas Consumers delivered to GCC and GCR customers during 2019:2020:
chart-cegasutilsupplagreemts.jpgcms-20201231_g6.jpg
Firm gas transportation or firm city-gate contracts are those that define a fixed amount, price, and delivery time frame. Consumers’ firm gas transportation contracts are with Panhandle Eastern Pipe Line Company and Trunkline Gas Company, LLC, each a non‑affiliated company. Under these contracts, Consumers purchases and transports gas to Michigan for ultimate delivery to its customers. Consumers’ firm gas transportation contracts expire on various dates through 2023 and provide for the delivery of 3931 percent of Consumers’ total gas supply requirements in 2020.2021. Consumers purchases the balance of its required gas supply under firm city-gate contracts and through authorized suppliers under the GCC program.
Gas Utility Competition: Competition exists in various aspects of Consumers’ gas utility business. Competition comes from GCC and from alternative fuels and energy sources, such as propane, oil, and electricity.
Enterprises Segment—Non-Utility Operations and Investments
CMS Energy’s enterprises segment, through various subsidiaries and certain equity investments, is engaged in domestic independent power production, including the development and operation of renewable generation, and the marketing of independent power production. The enterprises segment’s operating revenue was $229 million in 2020, $248 million in 2019, and $252 million in 2018, and $229 million in 2017.2018.


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Independent Power Production: Presented in the following table is information about the independent power plants in which CMS Energy had an ownership interest at December 31, 2019:2020:
LocationOwnership Interest
(%)		Primary Fuel TypeGross Capacity
(MW)
1

2020 Net Generation
(GWh)
Dearborn, Michigan100 Natural gas770 5,029 
Gaylord, Michigan100 Natural gas134 4 
Paulding County, Ohio100 Wind105 286 
Comstock, Michigan100 Natural gas76 78 
Delta Township, Michigan100 Solar24 42 
Phillips, Wisconsin100 Solar3 5 
Coke County, Texas2
51 Wind525 537 
Filer City, Michigan50 Coal73 510 
New Bern, North Carolina50 Wood waste50 229 
Flint, Michigan50 Wood waste40 91 
Grayling, Michigan50 Wood waste38 66 
Total1,838 6,877 
 Ownership Interest 
Gross Capacity¹

2019 Net Generation
Location(%)Primary Fuel Type(MW)
(GWh)
Dearborn, Michigan100Natural gas770
5,363
Gaylord, Michigan100Natural gas156
13
Paulding County, Ohio100Wind105
314
Comstock, Michigan100Natural gas76
61
Delta Township, Michigan100Solar24
37
Phillips, Wisconsin100Solar3
4
Filer City, Michigan50Coal73
452
New Bern, North Carolina50Wood waste50
327
Flint, Michigan50Wood waste40
88
Grayling, Michigan50Wood waste38
171
Total  1,335
6,830
1Represents the intended full-load sustained output of each plant. The amount of capacity relating to CMS Energy’s ownership interest was 1,480 MW at December 31, 2020.
1
2Began operation in September 2020.
Represents the intended full-load sustained output of each plant. The amount of capacity relating to CMS Energy’s ownership interest was 1,234 MW at December 31, 2019.
The operating revenue from independent power production was $32 million in 2020 and 2019, and $19 million in 2018, and $16 million in 2017.2018.
Energy Resource Management: CMS ERM purchases and sells energy commodities in support of CMS Energy’s generating facilities with a focus on optimizing CMS Energy’s independent power production portfolio. In 2019,2020, CMS ERM marketed sixfive bcf of natural gas and 6,7227,080 GWh of electricity. Electricity marketed by CMS ERM was generated by independent power production of the enterprises segment and by unrelated third parties. CMS ERM’s operating revenue was $197 million in 2020, $216 million in 2019, and $233 million in 2018, and $213 million in 2017.2018.
Enterprises Segment Competition: The enterprises segment competes with other independent power producers. The needs of this market are driven by electric demand and the generation available.
EnerBank
EnerBank Operations: EnerBank is a Utah state-chartered, FDIC-insured industrial bank providing primarily unsecured, consumerfixed-rate installment loans largely for financingthroughout the U.S. to finance home improvements. EnerBank works with strategic business partners and contractors throughout the U.S. to provide homeowners with payment options for home improvements. Strategic business partners include manufacturers, distributors, franchisors, member or trade associations, and major retailers of home improvement, remodeling, and energy-saving products and services.
EnerBank’s operating revenue was $262 million in 2020, $221 million in 2019, and $157 million in 2018,2018. EnerBank’s average loan size is $10,000 and $132 million in 2017. Allall of the loans originated by EnerBank in 20192020 were fixed-rate consumer installment loans. The distribution of borrowers throughout the U.S. is generally consistent with the population distribution by state. EnerBank’s average loan size is $10,000.


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EnerBank Competition: EnerBank competes with FDIC-insured banks, credit unions, consumer finance companies, and financial technology companies. EnerBank addresses this competition by:
•offering competitive loan features and pricing
•maintaining a stable funding model
•providing convenient loan processes for contractors and homeowners
•providing strong marketing support for strategic business partners and authorized contractors
•focusing on customer service
CMS Energy and Consumers Regulation
CMS Energy, Consumers, and their subsidiaries are subject to regulation by various federal, state, and local governmental agencies, including those described in the following sections. If CMS Energy or Consumers failed to comply with applicable laws and regulations, they could become subject to fines, penalties, or disallowed costs, or be required to implement additional compliance, cleanup, or remediation programs, the cost of which could be material. For more information on the potential impacts of government regulation affecting CMS Energy and Consumers, see Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook, and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters.
FERC and NERC
FERC has exercised limited jurisdiction over several independent power plants and exempt wholesale generators in which CMS Enterprises has ownership interests, as well as over CMS ERM, CMS Gas Transmission, and DIG. FERC’s jurisdiction includes, among other things, acquisitions, operations, disposals of certain assets and facilities, services provided and rates charged, and conduct among affiliates. FERC also has limited jurisdiction over holding company matters with respect to CMS Energy. FERC, in connection with NERC and with regional reliability organizations, also regulates generation and transmission owners and operators, load serving entities, purchase and sale entities, and others with regard to reliability of the bulk power system.
FERC regulates limited aspects of Consumers’ gas business, principally compliance with FERC capacity release rules, shipping rules, the prohibition against certain buy/sell transactions, and the price-reporting rule.
FERC also regulates certain aspects of Consumers’ electric operations, including compliance with FERC accounting rules, wholesale and transmission rates, operation of licensed hydroelectric generating plants, transfers of certain facilities, corporate mergers, and issuances of securities.
MPSC
Consumers is subject to the jurisdiction of the MPSC, which regulates public utilities in Michigan with respect to retail utility rates, accounting, utility services, certain facilities, certain asset transfers, corporate mergers, and other matters.
The Michigan Attorney General, ABATE, the MPSC Staff, and certain other parties typically participate in MPSC proceedings concerning Consumers. 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.
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Rate Proceedings: For information regarding open rate proceedings, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters.


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Other Regulation
The U.S. Secretary of Energy regulates imports and exports of natural gas and has delegated various aspects of this jurisdiction to FERC and the U.S. Department of Energy’s Office of Fossil Fuels.
The U.S. Department of Transportation’s Office of Pipeline Safety regulates the safety and security of gas pipelines through the Natural Gas Pipeline Safety Act of 1968 and subsequent laws.
EnerBank is regulated by the Utah Department of Financial Institutions and the FDIC.
CMS Energy and Consumers Environmental Strategy and Compliance
CMS Energy and Consumers are committed to protecting the environment; this commitment extends beyond compliance with applicable laws and regulations. CMS EnergyIn February 2020, Consumers announced a goal of achieving net-zero carbon emissions from its electric business by 2040. This goal includes not only emissions from Consumers’ owned generation, but also emissions from the generation of power purchased through long-term PPAs and Consumers continue to focus on opportunities to reduce their carbon footprint in electric generation. Through its Clean Energy Plan, from the MISO energy market.
Consumers expects to reduce carbon emissions of its owned generation by more than 90 percent from its 2005 levels by 2040 bythrough execution of its Clean Energy Plan, which calls for replacing its coal-fueled generation predominantly with investment in renewable energy.
The remaining emissions will be offset through alternative measures including, but not limited to, carbon sequestration, landfill methane emission capture, and large-scale tree planting. During 2019,2020, Consumers provided 1011 percent of its electricity (self-generated and purchased) from renewable sources. Consumers owns and operates two wind farms: Lake Winds® Energy Park and Cross Winds® Energy Park. A third phase of Consumers’ Cross Winds® Energy Park, with nameplate capacity of 76 MW, began operations in December 2019. During 2019,Additionally, Consumers began constructionoperation of Gratiot Farms Wind Project, a 150-MW wind generation project, in December 2020 and entered into an agreementexpects to take full ownership and begin commercial operation of another with capacity of up to 166 MW in early 2021. Furthermore, Consumers has executed agreements to purchase another wind generation project under development, with capacity of up to 166 MW; both projects are expected to begin commercial operations in 2020. Additionally, Consumers entered into a 20‑year agreement to purchase 100201 MW, of renewable energy fromand a solar generating facility expectedunder development, with capacity of up to 150 MW. For each of these projects, Consumers expects to take full ownership and begin operationscommercial operation of the project in 2021.2022.
In addition to Consumers’ efforts to reduce the electric utility’s carbon footprint, it is also making efforts to reduce the gas utility’s methane footprint. In 2019, Consumers released its Methane Reduction Plan, which set a goal of net-zero methane emissions from its natural gas delivery system by 2030. Consumers plans to reduce methane emissions from its system by about 80 percent by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices. The remaining emissions will be offset by purchasing and/or producing renewable natural gas.
CMS Energy, Consumers, and their subsidiaries are subject to various federal, state, and local environmental regulations for air and water quality, solid waste management, and other matters. Consumers expects to recover costs to comply with environmental regulations in customer rates, but cannot guarantee this result. For additional information concerning environmental matters, see Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook, and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments.
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CMS Energy has recorded a $46$45 million liability for its subsidiaries’ obligations associated with Bay Harbor and Consumers has recorded a $68$56 million liability for its obligations at a number of former MGP sites. For additional information, see Item 1A. Risk Factors and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments.
Solid Waste Disposal: Costs related to the construction, operation, corrective action, and closure of solid waste disposal facilities for coal ash are significant. Consumers’ coal ash disposal areas are regulated under Michigan’s solid waste rules and by the EPA’s rules regulating CCRs. To address some of the requirements of these rules, Consumers has converted all of its fly ash handling systems to dry systems. In addition, Consumers’ ash facilities have programs designed to protect the environment and are subject to quarterly EGLE inspections. Consumers’ estimate of capital and cost of removal expenditures to comply with regulations relating to ash disposal is $134$156 million from 20202021 through 2024.2025.


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Water: Consumers uses substantial amounts of water to operate and cool its electric generating plants.plants and gas compression stations. Water discharge quality is regulated and administered by EGLE under the federal NPDES program. To comply with such regulation, Consumers’ facilities have discharge monitoring programs. The EPA issued final regulations for wastewater discharges from electric generating plants in 2015 and amended them in 2017. The EPA proposed additional changes to its wastewater discharges regulations in November 2019, but has not finalized revisions.2017 and 2020. Consumers’ estimate of capital expenditures to comply with these regulations as presently promulgated is $56$23 million from 20202021 through 2024.2025.
In 2014, the EPA finalized its cooling water intake rule for electric generating units, which requires Consumers to evaluate the biological impact of its cooling water intake systems and ensure that it is using the best technology available to minimize adverse environmental impacts. Consumers’ estimate of capital expenditures to comply with these regulations is $42$38 million from 20202021 through 2024.2025.
Air: Consumers is subject to federal and state environmental regulations that require extensive reductions in nitrogen oxides, sulfur dioxides, particulate matter, and mercury emissions. To comply with these regulations, Consumers has invested in emissions control equipment at its electric generating plants. Consumers’ estimate of ongoing capital expenditures to comply with these regulations is $43 million from 20202021 through 2024.2025.
Consumers’ future costs to comply with solid waste disposal, water, and air environmental regulations may vary depending on future legislation, litigation, executive orders, treaties, or rulemaking.
For further information concerning estimated capital expenditures related to solid waste disposal, water, and air, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook—Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook.
Insurance
CMS Energy and its subsidiaries, including Consumers, maintain insurance coverage generally similar to comparable companies in the same lines of business. The insurance policies are subject to terms, conditions, limitations, and exclusions that might not fully compensate CMS Energy or Consumers for all losses. A portion of each loss is generally assumed by CMS Energy or Consumers in the form of deductibles and self-insured retentions that, in some cases, are substantial. As CMS Energy or Consumers renews its policies, it is possible that some of the present insurance coverage may not be renewed or obtainable on commercially reasonable terms due to restrictive insurance markets.


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Table of Contents

Human Capital
Employees
CMS Energy and Consumers employ a highly trained and skilled workforce comprised of union, non‑union, and seasonal employees, and also uses contractors. Presented in the following table are the number of employees and contractors of CMS Energy and Consumers:
December 31202020192018
CMS Energy, including Consumers
Full-time employees8,148 8,128 7,957 
Seasonal employees1
603 594 603 
Part-time employees86 67 65 
Contractors508 509 656 
Total workforce9,345 9,298 9,281 
Consumers
Full-time employees7,617 7,642 7,504 
Seasonal employees1
603 594 603 
Part-time employees10 17 14 
Contractors508 509 656 
Total workforce8,738 8,762 8,777 
1Consumers’ seasonal workforce peaked at 603 employees during 2020, and 614 employees during 2019 and 2018. Seasonal employees work primarily during the construction season.
At December 31, 2020, unions represented 41 percent of CMS Energy’s employees and 44 percent of Consumers’ employees. The UWUA represents Consumers’ operating, maintenance, construction, and customer contact center employees. The USW represents Zeeland plant employees. For information about CMS Energy’s and Consumers’ collective bargaining agreements, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook—Other Outlook and Uncertainties and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 12, Retirement Benefits.
The safety of employees, customers, and the general public is a priority of CMS Energy and Consumers. Accordingly, CMS Energy and Consumers have worked to integrate a set of safety principles into their business operations and culture. These principles include complying with applicable safety, health, and security regulations and implementing programs and processes aimed at continually improving safety and security conditions. On an annual basis, CMS Energy and Consumers set various safety goals, with their primary measure being the number of recordable incidents. There were 101 recordable incidents in 2020 and 105 recordable incidents in 2019. The target for 2021 is no more than 81 recordable incidents. Over the last ten years, Consumers’ OSHA recordable incident rate has decreased by over 53 percent and ranks in the first quartile of its EEI peer group.
In response to the COVID-19 pandemic, CMS Energy and Consumers have issued a response plan that is focused on the health, safety, and well-being of their co-workers, customers, and communities. CMS Energy and Consumers have aligned with safety and health guidelines from the CDC, OSHA, and the Michigan Department of Health and Human Services in order to protect their employees, customers, and contractors to ensure the continued delivery of critical energy services. For more information about CMS Energy’s and Consumers’ response to the COVID-19 pandemic, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview.
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December 312019
2018
2017
CMS Energy, including Consumers1
   
Full-time employees8,128
7,957
7,822
Seasonal employees2
594
603
74
Part-time employees67
65
56
Total employees8,789
8,625
7,952
Consumers1
   
Full-time employees7,642
7,504
7,408
Seasonal employees2
594
603
74
Part-time employees17
14
14
Total employees8,253
8,121
7,496
1
For information about CMS Energy’s and Consumers’ collective bargaining agreements, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 12, Retirement Benefits.
2
Consumers’ seasonal workforce peaked at 614 employees during 2019 and 2018, and 598 employees during 2017. Seasonal employees work primarily during the construction season and are subject to yearly layoffs.


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Table of Contents

Within the utility industry, there is strong competition for rare, high-demand talent, including those related to renewable energy generation, technology, and data analytics. In order to address this competition and to be able to meet its human capital needs, CMS Energy and Consumers provide compensation and benefits that are competitive with industry peers. Furthermore, the companies have developed a comprehensive talent strategy, the Talent Roadmap, to attract, develop, and retain highly skilled employees. The strategy focuses on three areas, which are summarized below.
•Cultivating a Purpose-Driven Culture: This goal is aimed at ensuring all co-workers understand how their work drives the companies’ key strategic goals. The companies’ progress toward a purpose-driven culture is measured through an engagement index and an empowerment index developed from data obtained through an annual employee engagement survey of union and non-union co-workers administered by a third party. For the year ended December 31, 2020, the employee engagement index score was 83 percent, which ranked in the first quartile of U.S. utilities. The employee empowerment index score, which measures the percentage of employees that feel the workplace promotes empowerment, was 63 percent. Each employee empowerment question was individually benchmarked and ranked in the second quartile of high-performing companies. The high-performing benchmark was created by the third party who administered the survey through a targeted sampling of working adults within the U.S. who work for firms with widely respected reputations. CMS Energy and Consumers have a goal to achieve a first-quartile score by 2024.
•Creating a Breakthrough Employee Experience: A breakthrough employee experience is one that instills pride and ownership in one’s work. To measure progress toward a breakthrough employee experience, the companies measure employees’ satisfaction with people processes, such as performance management and hiring and onboarding new employees. For the year ended December 31, 2020, the employee experience index was 52 percent; the companies have a goal to achieve a score of 80 percent within the next ten years.
•Building Skill Sets at Scale: With an overarching goal of ensuring employees have the right skills to succeed, the companies measure progress in this area through achievement of workforce planning and hiring milestones and through a first-time skill attainment index to evaluate the effectiveness of training. The companies develop skill sets in co-workers through a variety of means, including union apprenticeship programs and yearly trainings for newly required skills. In 2021, the companies will launch a full-scale development program for leaders to enable robust succession planning and improve employee engagement and empowerment.
This talent strategy allows CMS Energy and Consumers to shape employees’ experience and enable leaders to coach and develop co-workers, source talent, and anticipate and adjust to changing skill sets in the business environment.
Diversity, Equity, and Inclusion
As a part of the companies’ Talent Roadmap, CMS Energy and Consumers also employ a comprehensive diversity, equity, and inclusion strategy designed to embed diversity, equity, and inclusion into all aspects of their business. This is done through embedding standards for diversity, equity, and inclusion into all company processes and ensuring these standards are incorporated into all employee experiences. To measure their success, the companies utilize select questions in the annual engagement survey to create a diversity, equity, and inclusion index. For the year ended December 31, 2020, the diversity, equity, and inclusion index score was 76 percent; the companies have a goal to achieve a score of 78 percent in 2021.
Co-workers are also empowered to engage in employee resource groups and events that encourage candid conversations around diversity, equity, and inclusion. There are seven employee resource groups available to all co-workers; these groups are, by date of origin:
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•the Women’s Advisory Panel, contributing to the achievement of the corporate strategy by supporting the retention, development, and success of women
•the Minority Advisory Panel, promoting a culture of diversity and inclusion among all racial and ethnic minorities through education, leadership, development, and networking
•the Women’s Engineering Network, connecting and empowering women in the science, technology, engineering, and mathematics fields, while building capabilities to support company objectives
•the Veteran’s Advisory Panel, supporting former and active military personnel and assisting in recruiting and retaining veterans through career development
•GEN-ERGY, a multigenerational group designed to bridge the gap of learning, networking, and mentoring across the generations of the companies’ workforce
•the Pride Alliance of Consumers Energy, promoting an inclusive environment that is safe, supportive, and respectful for lesbian, gay, bi-sexual, and transgender persons and allies
•capABLE, aimed at removing barriers and creating pathways to meaningful work for employees of all abilities
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Information About CMS Energy’s and Consumers’ Executive Officers
Presented in the following table are the company positions held during the last five years for each of CMS Energy’s and Consumers’ executive officers as of February 1, 2020:
2021:
Name, Age, Position(s)Period
Patricia K. PoppeGarrick J. Rochow (age 51)46)
CMS Energy
President, CEO, and CEODirector12/2020 – Present
Executive Vice President1/2020 – 12/2020
Senior Vice President7/2016 – Present1/2020
Director5/2016 – Present
Senior Vice President3/2015 – 7/2016
Consumers
President, CEO, and CEODirector12/2020 – Present
Executive Vice President1/2020 – 12/2020
Senior Vice President7/2016 – Present1/2020
DirectorVice President5/201610/2010 – Present7/2016
Senior Vice PresidentCMS Enterprises3/2015 – 7/2016
Vice President1/2011 – 3/2015
CMS Enterprises
Chairman of the Board, CEO, and Director7/201612/2020 – Present
President7/2016 – 9/2017
Rejji P. Hayes (age 45)46)1
CMS Energy
Executive Vice President and CFO5/2017 – Present
Consumers
Executive Vice President and CFO5/2017 – Present
CMS Enterprises
Executive Vice President, CFO, and Director5/2017 – Present
EnerBank
Chairman of the Board and Director10/2018 – Present
Garrick J. Rochow (age 45)
CMS Energy
Executive Vice President1/2020 – Present
Senior Vice President7/2016 – 1/2020
Vice President3/2015 – 7/2016
Consumers
Executive Vice President1/2020 – Present
Senior Vice President7/2016 – 1/2020
Vice President10/2010 – 7/2016
Jean-Francois Brossoit (age 52)53)2
CMS Energy
Senior Vice President4/2017 – Present
Vice President11/2016 – 4/2017
Consumers
Senior Vice President4/2017 – Present
Vice President11/2016 – 4/2017


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Table of Contents

Name, Age, Position(s)Period
Catherine A. Hendrian (age 51)52)
CMS Energy
Senior Vice President4/2017 – Present
Vice President3/2015 – 4/2017
Director of Human Resources10/2012 – 3/2015
Consumers
Senior Vice President4/2017 – Present
Vice President3/2015 – 4/2017
Director of Human Resources10/2012 – 3/2015
Brandon J. Hofmeister (age 43)44)
CMS Energy
Senior Vice President7/2017 – Present
Consumers
Senior Vice President7/2017 – Present
Vice President7/2016 – 7/2017
Executive Director, Policy Research, Analysis, and Public Affairs6/2015 – 7/2016
Executive Director, Policy Research and Analysis9/2013 – 6/2015
CMS Enterprises
Senior Vice President9/2017 – Present
Shaun M. Johnson (age 41)42)3
CMS Energy
Senior Vice President and General Counsel5/2019 – Present
Vice President and Deputy General Counsel4/2016 – 5/2019
Consumers
Senior Vice President and General Counsel5/2019 – Present
Vice President and Deputy General Counsel4/2016 – 5/2019
CMS Enterprises
Senior Vice President, General Counsel, and Director4/2019 – Present
Vice President and General Counsel10/2018 – 4/2019
EnerBank
Senior Vice President and General Counsel8/2018 – Present6/2020
Venkat Dhenuvakonda Rao (age 49)50)
CMS Energy
Senior Vice President9/2016 – Present
Vice President and Treasurer7/2012 – 9/2016
Consumers
Senior Vice President9/2016 – Present
Vice President and Treasurer7/2012 – 9/2016
CMS Enterprises
Director11/2017 – Present
Senior Vice President9/2016 – Present
Vice President and Treasurer7/2012 – 9/2016
EnerBank
Chairman of the Board9/2016 – 5/2017


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Table of Contents

Name, Age, Position(s)Period
Brian F. Rich (age 45)46)
CMS Energy
Senior Vice President and Chief Customer Officer8/2019 – Present
Senior Vice President and Chief Information Officer7/2016 – 8/2019
Vice President and Chief Information Officer7/2014 – 7/2016
Consumers
Senior Vice President and Chief Customer Officer8/2019 – Present
Senior Vice President and Chief Information Officer7/2016 – 8/2019
Vice President and Chief Information Officer7/2014 – 7/2016
LeeRoy Wells, Jr. (age 42)
CMS Energy
Senior Vice President12/2020 – Present
Consumers
Senior Vice President12/2020 – Present
Vice President8/2017 – 12/2020
Executive Director, Electric Systems Operations and Maintenance12/2015 – 8/2017
Glenn P. Barba (age 54)55)
CMS Energy
Vice President, Controller, and CAO2/2003 – Present
Consumers
Vice President, Controller, and CAO1/2003 – Present
CMS Enterprises
Vice President, Controller, and CAO11/2007 – Present
1
1Prior to joining CMS Energy and Consumers, Mr. Hayes was executive vice president and CFO for ITC Holdings Corp., a non‑affiliated company, from May 2014 through November 2016. Mr. Hayes started with ITC Holdings Corp. in 2012 as vice president of finance and treasurer.
2Prior to joining CMS Energy and Consumers, Mr. Brossoit was vice president of manufacturing operations for United Technologies Corp., a non‑affiliated company. Mr. Brossoit started with United Technologies Corp. in 2006.
3
Prior to joining CMS Energy and Consumers, Mr. Hayes was executive vice president and CFO for ITC Holdings Corp., a non‑affiliated company, from May 2014 through November 2016. Mr. Hayes started with ITC Holdings Corp. in 2012 as vice president of finance and treasurer.
2
Prior to joining CMS Energy and Consumers, Mr. Brossoit was vice president of manufacturing operations for United Technologies Corp., a non‑affiliated company. Mr. Brossoit started with United Technologies Corp. in 2006.
3
Prior to joining CMS Energy and Consumers, Mr. Johnson was a partner with Dykema Gossett PLLC, a non‑affiliated company, from 2012 to 2016. Mr. Johnson started with Dykema Gossett PLLC in 2005.
There are no family relationships among executive officers and directors of CMS Energy or Consumers. The list of directors and their biographies will be included in CMS Energy’s and Consumers’ definitive proxy statement for their 20202021 Annual Meetings of Shareholders to be held May 1, 2020.7, 2021. The term of office of each of the executive officers extends to the first meeting of each of the Boards of Directors of CMS Energy and Consumers after the next annual election of Directors of CMS Energy and Consumers (to be held on May 1, 2020)7, 2021).


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Available Information
CMS Energy’s internet address is www.cmsenergy.com. CMS Energy routinely posts important information on its website and considers the Investor Relations section, www.cmsenergy.com/investor-relations, a channel of distribution. Information contained on CMS Energy’s website is not incorporated
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herein. CMS Energy’s and Consumers’ annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports on Form 8-K, and any amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act are accessible free of charge on CMS Energy’s website. These reports are available soon after they are electronically filed with the SEC. Also on CMS Energy’s website are CMS Energy’s and Consumers’:
•Corporate Governance Principles
•Articles of Incorporation
•Bylaws
•Charters and Codes of Conduct (including the Charters of the Audit Committee, Compensation and Human Resources Committee, Finance Committee, and Governance, Sustainability and Public Responsibility Committee, as well as the Employee, Board of Directors, EnerBank, and Third Party Codes of Conduct)
CMS Energy will provide this information in print to any stockholder who requests it.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address is www.sec.gov.
Item 1A.    Risk Factors
Actual results in future periods for CMS Energy and Consumers could differ materially from historical results and the forward-looking statements contained in this report. Factors that might cause or contributeare exposed to these differences include those discussed in the following sections. CMS Energy’s and Consumers’ businesses are influenced by manya variety of factors, often beyond their control, that are difficult to predict and that involve uncertainties that may materially adversely affect CMS Energy’s or Consumers’ business, liquidity, financial condition, or results and that are often beyond their control.of operations. Additional risks and uncertainties not presently known or that management believes to be immaterial may also adversely affect CMS Energy or Consumers. The risk factors described in the following sections, as well as the other information included in this report and in other documents filed with the SEC, should be considered carefully before making an investment in securities of CMS Energy or Consumers. Risk factors of Consumers are also risk factors of CMS Energy. All of these risk factors are potentially significant.
Investment/Financial Risks
CMS Energy depends on dividends from its subsidiaries to meet its debt service obligations.
Due to its holding company structure, CMS Energy depends on dividends from its subsidiaries to meet its debt service and other payment obligations. If sufficient dividends were not paid to CMS Energy by its subsidiaries, CMS Energy might not be able to generate the funds necessary to fulfill its payment obligations, which could have a material adverse effect on CMS Energy’s liquidity and financial condition.obligations.
Consumers’ ability to pay dividends or acquire its own stock from CMS Energy is limited by restrictions contained in Consumers’ preferred stock provisions and potentially by other legal restrictions, such as certain terms in its articles of incorporation and FERC requirements.


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CMS Energy has indebtedness that could limit its financial flexibility and its ability to meet its debt service obligations.
The level of CMS Energy’s present and future indebtedness could have several important effects on its future operations, including, among others, that:
•a significant portion of CMS Energy’s cash flow from operations could be dedicated to the payment of principal and interest on its indebtedness and would not be available for other purposes
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•covenants contained in CMS Energy’s existing debt arrangements, which require it to meet certain financial tests, could affect its flexibility in planning for, and reacting to, changes in its business
•CMS Energy’s ability to obtain additional financing for working capital, capital expenditures, acquisitions, and general corporate and other purposes could become limited
•CMS Energy could be placed at a competitive disadvantage to its competitors that are less leveraged
•CMS Energy’s vulnerability to adverse economic and industry conditions could increase
•CMS Energy’s future credit ratings could fluctuate
CMS Energy’s ability to meet its debt service obligations and to reduce its total indebtedness will depend on its future performance, which will be subject to general economic conditions, industry cycles, changes in laws or regulatory decisions, and financial, business, and other factors affecting its operations, many of which are beyond its control. CMS Energy cannot make assurances that its businesses will continue to generate sufficient cash flow from operations to service its indebtedness. Ifindebtedness, which could require CMS Energy were unable to generate sufficient cash flows from operations, it could be required to sell assets or obtain additional financing.
CMS Energy and Consumers have financing needs and could be unable to obtain bank financing or access the capital markets.
CMS Energy and Consumers may be subject to liquidity demands under commercial commitments, guarantees, indemnities, letters of credit, and other contingent liabilities. Consumers’ capital requirements are expected to be substantial over the next several years. CMS Energy and Consumers rely on the capital markets, as well as on bank syndications, to meet their financial commitments and short-term liquidity needs if sufficient internal funds are not available from Consumers’ operations and, in the case of CMS Energy, from dividends paid by Consumers and its other subsidiaries. CMS Energy and Consumers also use letters of credit issued under certain of their revolving credit facilities to support certain operations and investments.otherwise funded internally.
Disruptions in the capital and credit markets, as a resultor the inability to obtain required FERC authorization for issuances of uncertainty, changing or increased regulation, or failures of significant financial institutionssecurities including debt, could adversely affect CMS Energy’s and Consumers’ access to liquidity needed for their businesses. Consumers’ inability to obtain prior FERC authorization for any securities issuances, including publicly offered debt, as is required under the Federal Power Act, could adversely affect Consumers’ access to liquidity. Any liquidity disruption could require CMS Energy and Consumers to take measures to conserve cash. These measures could include,cash including, but are not limited to, deferring capital expenditures, changing CMS Energy’s and Consumers’ commodity purchasing strategystrategies to avoid collateral-posting requirements, and reducing or eliminating future share repurchases, dividend payments, or other discretionary uses of cash.
CMS Energy continues to explore financing opportunities to supplement its financial strategy. These potential opportunities include refinancing and/or issuing new debt, preferred stock and/or common equity, commercial paper, and bank financing. Similarly, Consumers may seek funds through the capital


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markets, commercial lenders, and leasing arrangements. Entering into new financings is subject in part to capital market receptivity to utility industry securities in general and to CMS Energy’s and Consumers’ securities in particular. CMS Energy and Consumers continue to explore financing opportunities to supplement their respective financial strategies. These potential opportunities include refinancing and/or issuing new debt, issuing CMS Energy preferred stock and/or common equity, or entering into commercial paper, bank financing, and leasing arrangements. CMS Energy and Consumers cannot guarantee the capital markets’ acceptance of their securities. CMS Energy may also, from time to time, repurchase (either in open market transactions or through privately negotiated transactions), redeem, or otherwise retire its outstanding debt. Such activities, if any, will depend on prevailing market conditions, contractual restrictions, and other factors. The amounts involved may or may not be material.
Certain of CMS Energy’s and Consumers’ securities and those of their affiliates are rated by various credit rating agencies. A reduction or withdrawal of one or more of its credit ratings could have a material adverse impact on CMS Energy’s or Consumers’ ability to access capital on acceptable terms and maintain commodity lines of credit, could increase itstheir cost of borrowing, and could cause CMS Energy or Consumers to reduce capital expenditures. If iteither or both were unable to maintain commodity lines of credit, CMS Energy or Consumers might have to post collateral or make prepayments to certain suppliers under existing contracts. Further, since Consumers provides dividends to CMS Energy, any adverse developments affecting Consumers that result in a lowering of its credit ratings could have an adverse effect on CMS Energy’s credit ratings.
If
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Market performance and other changes could decrease the value of employee benefit plan assets, which then could require substantial funding.
The performance of various markets affects the value of assets that are held in trust to satisfy future obligations under CMS Energy’s and Consumers’ pension and postretirement benefit plans. CMS Energy and Consumers have significant obligations under these plans and hold significant assets in these trusts. These assets are subject to market fluctuations and will yield uncertain returns, which could fall below CMS Energy’s and Consumers’ forecasted return rates. A decline in the market value of the assets or Consumers were unablea change in the level of interest rates used to obtain bank financing or accessmeasure the capital markets to incur or refinance indebtedness, or were unable to obtain commercially reasonable terms for any financing, thisrequired minimum funding levels could have a material adverse effect on its liquidity, financial condition, and results of operations.
There are risks associated with Consumers’ substantial capital investment program planned forsignificantly increase the next ten years.
Consumers’ planned investments include the construction or acquisition of power generation, electric and gas infrastructure, conversions and expansions, environmental controls, electric grid modernization technology, and other electric and gas investments to upgrade delivery systems, as well as decommissioning of older facilities. The successfunding requirements of these capital investments depends on or could be affected by a variety of factors that include, but are not limited to:
effective pre-acquisition evaluation of asset values, future operating costs, potential environmental and other liabilities, and other factors beyond Consumers’ control
effective cost and schedule management of new capital projects
availability of qualified construction personnel
obligations. Also, changes in commodity and other prices
governmental approvals and permitting
operational performance
demographics, including an increased number of retirements or changes in environmental, legislative,life expectancy assumptions, could significantly increase the funding requirements of the obligations related to the pension and regulatory requirementspostretirement benefit plans.
regulatory cost recovery
It is possible that adverse events associated with these factors could have a material adverse effect on Consumers’ liquidity, financial condition, and results of operations.Industry/Regulatory Risks
Changes to ROA could have a material adverse effect on CMS Energy’s and Consumers’ businesses.
Michigan law allows electric customers in Consumers’ service territory to buy electric generation service from alternative electric suppliers in an aggregate amount capped at ten percent of Consumers’ sales, with certain exceptions. Presently, theThe proportion of Consumers’ electric deliveries under the ROA program and on the ROA waiting list is 27over ten percent. Consumers’ rates are regulated by the MPSC, while alternative electric suppliers charge market-based rates, putting competitive pressure on Consumers’ electric supply. If the ROA limit were increased or if electric generation service in Michigan were deregulated, it could have a material adverse effect on Consumers’ financial resultsCMS Energy and operations.


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Consumers.
CMS Energy and Consumers are subject to rate regulation, which could have an adverse effect on financial results.
CMS Energy and Consumers are subject to rate regulation. Consumers’ electric and gas retail rates are set by the MPSC and cannot be changed without regulatory authorization. If rate regulators fail to provide adequate rate relief, it could have a material adverse effect on Consumers or Consumers’ plans for making significant capital investments. Regulators seeking to avoid or minimize rate increases could resist raising customer rates sufficiently to permit Consumers to recover the full cost of these investments. In addition, because there are statutory requirements mandating that regulators allow Consumers to recover from customers certain costs, such as resource additions to meet Michigan’s renewable resource standard, energy waste reduction, and environmental compliance, regulators could be more inclined to oppose rate increases for other requested items and investments. Rate regulators could also face pressure to avoid or limit rate increases for a number of reasons, including an economic downturn in the state or diminishment of Consumers’ customer base. In addition to its potential effects on Consumers’ investment program, any limitation of cost recovery through rates could have a material adverse effect on Consumers’ liquidity, financial condition, and results of operations.
Orders of the MPSC could limit recovery of costs of providing service including, but not limited to, environmental and safety related expenditures for coal-fueled plants and other utility properties, regulatory assets, power supply and natural gas supply costs, operating and maintenance expenses, additional utility-based investments, sunk investment in mothballed or retired generating plants, costs associated with the proposed retirement and decommissioning of facilities, depreciation expense, MISO energy and transmission costs, costs associated with energy waste reduction investments and state or federally mandated renewable resource standards, or expenditures subject to tracking mechanisms.service. These orders could also result in adverse regulatory treatment of other matters. For example, MPSC orders could prevent or curtail Consumers from shutting off non‑paying customers or could prevent or curtaillimit the implementation of a gas revenue mechanism.
FERC authorizes certain subsidiaries of CMS Energy to sell electricity at market-based rates. Failure of these subsidiaries to maintain this FERC authority could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. Transmission rates are also set by FERC. FERC orders related to transmission costs could have a material adverse effect on Consumers’ liquidity, financial condition, and results of operations.
The various risks associated with the MPSC and FERC regulation of CMS Energy’s and Consumers’ businesses, which include the risk of adverse decisions in any number of rate or regulatory proceedings before either agency, as well as judicial proceedings challenging any agency decisions, could have a material adverse effect on CMS Energy’sEnergy and Consumers’ liquidity, financial condition, investment plans, and resultsConsumers.
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Utility regulation, state or federal legislation, and compliance could have a material adverse effect on CMS Energy’s and Consumers’ businesses.
CMS Energy and Consumers are subject to, or affected by, extensive utility regulation and state and federal legislation. If it were determined that CMS Energy andor Consumers believe that theyfailed to comply with applicable laws and regulations. If it were determined thatregulations, they failed to comply, CMS Energy or Consumers could become subject to fines, penalties, or disallowed costs, or be required to implement additional compliance, cleanup, or remediation programs, the cost of which could be material. AdoptionCMS Energy and Consumers cannot predict the impact of new laws, rules, regulations, principles, or practices by federal or state agencies, or challenges or changes to present laws, rules, regulations, principles, or practices and the interpretation of any adoption or change, could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of


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operations.change. Furthermore, any state or federal legislation concerning CMS Energy’s or Consumers’ operations could also have a similarmaterial adverse effect.
Utility regulation could be impacted by various matters, such as electric industry restructuring, hydro relicensing, asset reclassification, gas pipeline capacity and gas storage, new generation facilities or investments, transmission charges, environmental controls, climate change, air emissions, renewable energy, energy policy and ROA, distributed generation, battery storage, regulation or deregulation, energy capacity standards or markets, reliability, and safety. CMS Energy and Consumers cannot predict the impact of these matters on their liquidity, financial condition, and results of operations.
FERC, through NERC, oversees reliability of certain portions of the electric grid. CMS Energy and Consumers cannot predict the impact of FERC orders regarding electric system reliabilityreliability.
Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact CMS Energy and Consumers.
CMS Energy and Consumers are required to make judgments regarding the potential tax effects of various financial transactions and results of operations in order to estimate their obligations to taxing authorities. The tax obligations include income taxes, real estate taxes, sales and use taxes, employment-related taxes, and ongoing issues related to these tax matters. The judgments include determining reserves for potential adverse outcomes regarding tax positions that have been taken and may be subject to challenge by the IRS and/or other taxing authorities. Unfavorable settlements of any of the issues related to these reserves or other tax matters at CMS Energy or Consumers could have a material adverse effecteffect. Additionally, changes in federal, state, or local tax rates or other changes in tax laws could have adverse impacts.
CMS Energy and its subsidiaries, including Consumers and EnerBank, must comply with the Dodd-Frank Act and its related regulations, which are subject to change and could involve material costs or affect operations.
Regulations that are intended to implement the Dodd-Frank Act have been and are still being adopted and modified by the appropriate agencies. The Dodd-Frank Act added a new Section 13 to the Bank Holding Company Act. Known, together with its implementing regulations, as the Volcker Rule, it generally restricts certain banking entities (such as EnerBank) and their subsidiaries or affiliates from engaging in proprietary trading activities and from owning equity in or sponsoring any private equity funds or hedge funds (or certain other private issuing entities). The activities of CMS Energy and its subsidiaries (including EnerBank) have not been and are not expected to be materially affected by the Volcker Rule; however, they are restricted from engaging in proprietary trading, investing in third‑party hedge or private equity funds (and certain other private issuing entities), and sponsoring these funds (and entities) in the future unless CMS Energy qualifies for an exemption from the rule. CMS Energy and its subsidiaries are also subject to certain ongoing compliance requirements pursuant to the regulations. CMS Energy cannot predict the full impact of the Volcker Rule, including any impact resulting from changes to implementing regulations, on CMS Energy’s or Consumers’ liquidity,EnerBank’s operations or financial condition,condition.
All companies that directly or indirectly control an FDIC-insured bank are required to serve as a source of financial strength for that institution. As a result, CMS Energy could be called upon by the FDIC to infuse additional capital into EnerBank to the extent that EnerBank fails to satisfy its capital requirements. In addition, CMS Energy is contractually required (i) to make cash capital contributions to EnerBank in the event that EnerBank does not maintain required minimum capital ratios and results(ii) to provide EnerBank
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financial support, in an amount and duration as may be necessary for EnerBank to meet the cash needs of its depositors and other operations.
In addition, the Dodd-Frank Act provides for regulation by the Commodity Futures Trading Commission of certain commodity-related contracts. Although CMS Energy, Consumers, EnerBank, and certain subsidiaries of CMS Enterprises qualify for an end-user exception from mandatory clearing of commodity-related swaps, these regulations could affect the ability of these entities to participate in these markets and could add additional regulatory oversight over their contracting activities.
CMS Energy and Consumers could incur substantial costs to comply with environmental requirements.
CMS Energy and Consumers are subject to costly and stringent environmental regulations that will likely require additional significant capital expenditures for emissions control equipment, CCR disposal and storage, cooling water intake equipment, effluent treatment, and PCB remediation. In addition, regulatory action on PFAS at the state and/or federal level could cause CMSEnergy and Consumers to further test and remediate some sites if PFAS is present at certain levels. Present and reasonably anticipated state and federal environmental statutes and regulations will continue to have a material effect on CMS Energy and Consumers.
CMS Energy and Consumers have interests in fossil-fuel-fired power plants and other types of power plants that produce greenhouse gases. Federal and state environmental laws and rules, as well as international accords and treaties, could require CMS Energy and Consumers to install additional equipment for emission controls, undertake heat-rate improvement projects, purchase carbon emissions allowances, curtail operations, invest in generating capacity with fewer carbon dioxide emissions, or take other significant steps to manage or lower the emission of greenhouse gases.
The following risks related to climate change, emissions, and environmental regulations could also have a material adverse impact on CMS Energy’sEnergy and Consumers’ liquidity, financial condition, and results of operations:Consumers:
•litigation originated by third parties against CMS Energy or Consumers due to CMS Energy’s or Consumers’ greenhouse gas or other emissions or CCR disposal and storage
•impairment of CMS Energy’s or Consumers’ reputation due to their greenhouse gas or other emissions and public perception of their response to potential environmental regulations, rules, and legislation
•extreme weather conditions, such as severe storms or flooding, that may affect customer demand, company operations, or assets
Consumers retired seven smaller coal-fueled electric generating units in 2016. Consumers may encounter previously unknown environmental conditions that will need to be addressed in a timely fashion with state and federal environmental regulators as facilities and equipment on these sites are taken out of service.
Consumers expects to collect fully from its customers, through the ratemaking process, expenditures incurred to comply with environmental regulations, but cannot guarantee this outcome. If Consumers were unable to recover these expenditures from customers in rates, it could negatively affect


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CMS Energy’s or Consumers’ liquidity, results of operations, and financial condition and CMS Energy or Consumers could be required to seek significant additional financing to fund these expenditures.
For additional information regarding compliance with environmental regulations, see Item 1. Business—CMS Energy and Consumers Environmental Strategy and Compliance and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook—Consumers Electric Utility Outlook and Uncertainties and Consumers Gas Utility Outlook and Uncertainties.
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CMS Energy’s and Consumers’ businesses could be affected adversely by any delay in meeting environmental requirements.
A delay or failure by CMS Energy or Consumers to obtain or maintain any necessary environmental permits or approvals to satisfy any applicable environmental regulatory requirements or install emission or pollution control equipment could:
•prevent the construction of new facilities
•prevent the continued operation and sale of energy from existing facilities
•prevent the suspension of operations at existing facilities
•prevent the modification of existing facilities
•result in significant additional costs that could have a material adverse effect on their liquidity, financial condition, and results of operations
CMS Energy and Consumers expect to incur additional substantial costs related to remediation of legacy environmental sites.
Consumers expects to incur additional substantial costs related to the remediation of its former MGP sites and other response activity costs at a number of other sites under NREPA and CERCLA. Consumers believes these costs should be recoverable in rates, but cannot guarantee that outcome.
In addition, certain CMS Energy subsidiaries retained environmental remediation obligationsBusiness/Operations Risks
There are risks associated with Consumers’ substantial capital investment program planned for the collection, treatment,next ten years.
Consumers’ planned investments include the construction or acquisition of electric generation, electric and dischargegas infrastructure, conversions and expansions, environmental controls, electric grid modernization technology, and other electric and gas investments to upgrade delivery systems, as well as decommissioning of leachate at Bay Harbor after selling their interestsolder facilities. The success of these capital investments depends on or could be affected by a variety of factors that include, but are not limited to:
•effective pre-acquisition evaluation of asset values, future operating costs, potential environmental and other liabilities, and other factors beyond Consumers’ control
•effective cost and schedule management of new capital projects
•availability of qualified construction personnel
•changes in the developmentcommodity and other prices
•governmental approvals and permitting
•operational performance
•changes in 2002. Leachateenvironmental, legislative, and regulatory requirements
•regulatory cost recovery
It is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site. Certain CMS Energy subsidiariespossible that adverse events associated with these factors could have signed agreements with the EPA and EGLE relating to Bay Harbor. If these CMS Energy subsidiaries were unable to meet their commitments under these agreements, or if unanticipated events occurred, these CMS Energy subsidiaries could incur additionala material costs relating to their Bay Harbor remediation obligations.adverse effect on Consumers.
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CMS Energy and Consumers could be affected adversely by legacy litigation and retained liabilities.
CMS Energy, CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company were named as defendants in various lawsuits arising as a result of alleged inaccurate natural gas price reporting. Remaining allegations include price-fixing conspiracies, restraint of trade, and artificial inflation of natural gas retail prices in Kansas and Wisconsin. CMS Energy cannot predict the outcome of these lawsuits or the amount of damages for which CMS Energy may be liable. It is possible that the outcome of the lawsuits could have a material adverse effect on CMS Energy’s liquidity, financial condition, and results of operations.


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The agreements that CMS Energy and Consumers enter into for the sale of assets customarily include provisions whereby they are required to:
•retain specified preexisting liabilities, such as for taxes, pensions, or environmental conditions
•indemnify the buyers against specified risks, including the inaccuracy of representations and warranties that CMS Energy and Consumers make
•make payments to the buyers depending on the outcome of post-closing adjustments, litigation, audits, or other reviews, including claims resulting from attempts by foreign or domestic governments to assess taxes on past operations or transactions
Many of these contingent liabilities can remain open for extended periods of time after the sales are closed. Depending on the extent to which the buyers might ultimately seek to enforce their rights under these contractual provisions, and the resolution of any disputes concerning them, there could be a material adverse effect on CMS Energy’s or Consumers’ liquidity, financial condition, and results of operations.
In 2002, CMS Energy sold its oil, gas, and methanol investments in Equatorial Guinea. The government of Equatorial Guinea claims that, in connection with the sale, CMS Energy owes $152 million in taxes, plus substantial penalties and interest that could be up to or exceed the amount of the taxes claimed. In 2015, the matter was proceeding to formal arbitration; however, since then, the government of Equatorial Guinea has stopped communicating. CMS Energy has concluded that the government’s tax claim is without merit and will continue to contest the claim, but cannot predict the financial impact or outcome of the matter. An unfavorable outcome
Consumers is exposed to risks related to general economic conditions in its service territories.
Consumers’ electric and gas utility businesses are affected by the economic conditions impacting the customers they serve. If the Michigan economy becomes sluggish or declines, Consumers could have a material adverse effect on CMS Energy’s liquidity,experience reduced demand for electricity or natural gas that could result in decreased earnings and cash flow. In addition, economic conditions in Consumers’ service territory affect its collections of accounts receivable and levels of lost or stolen gas.
Consumers is exposed to changes in customer usage that could impact financial condition,results.
Technology advances, government incentives and resultssubsidies, and recent regulatory decisions could increase the cost effectiveness of operations.customer-owned methods of producing electricity and managing energy use resulting in reduced load, cross subsidization, and increased costs.
Customers could also reduce their consumption through demand-side energy conservation and energy waste reduction programs.
CMS Energy’s and Consumers’ energy sales and operations are affected by seasonal factors and varying weather conditions from year to year.
CMS Energy’s and Consumers’ utility operations are seasonal. The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment, while peak demand for natural gas typically occurs in the winter due to colder temperatures and the resulting use of natural gas as heating fuel. Accordingly, CMS Energy’s and Consumers’ overall results may fluctuate substantially on a seasonal basis. Mild temperatures during the summer cooling season and winter heating season as well as the impact of extreme weather events on Consumers’ system could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and resultseffect.
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Consumers is exposed to risks related to general economic conditions in its service territories.
Consumers’ electric and gas utility businesses are affected by the economic conditions impacting the customers they serve. If the Michigan economy becomes sluggish or declines, Consumers could experience reduced demand for electricity or natural gas that could result in decreased earnings and cash flow. In addition, economic conditions in Consumers’ service territory affect its collections of accounts receivable and levels of lost or stolen gas, which in turn impact its liquidity, financial condition, and results of operations.
CMS Energy and Consumers are subject to information security risks, risks of unauthorized access to their systems, and technology failures.
In the regular course of business, CMS Energy and Consumers handle a range of sensitive confidential security and customer information. CMS Energy and Consumers are subject to laws and rules issued by various agencies concerning safeguarding and maintaining the confidentiality of this information. A security breach of CMS Energy’s and Consumers’ information or control systems could involve theft or the


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inappropriate release of certain types of information, such as confidential customer information or, separately, system operating information. These events could disrupt operations, subject CMS Energy and Consumers to possible financial liability, damage their reputation and diminish the confidence of customers, and have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial conditions, and results of operations.
In addition, CMS Energy and Consumers operate in a highly regulated industry that requires the continued operation of sophisticated information and control technology systems and network infrastructure. Despite implementation of security measures, technology systems, including disaster recovery and backup systems, are vulnerable to failure, cyber crime, unauthorized access, and being disabled. These events could impact the reliability of electric generation and electric and gas delivery and also subject CMS Energy and Consumers to financial harm. Cyber crime, which includes the use of malware, computer viruses, and other means for disruption or unauthorized access against companies, including CMS Energy and Consumers, has increasedis increasing in frequency, scope, and potential impact in recent years.impact. While CMS Energy and Consumers have not been subject to cyber crime incidents that have had a material impact on their operations to date, their security measures in place may be insufficient to prevent a major cyber incident in the future. If technology systems, including disaster recovery and backup systems, were to fail or be breached, CMS Energy and Consumers might not be able to fulfill critical business functions, and sensitive confidential and proprietary data could be compromised, which could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.compromised. In addition, because CMS Energy’s and Consumers’ generation, transmission, and distribution systems are part of an interconnected system, a disruption caused by a cyber incident at another utility, electric generator, system operator, or commodity supplier could also adversely affect CMS Energy’sEnergy or Consumers’ businesses, financial condition, and results of operations.Consumers.
A variety of technological tools and systems, including both company-owned information technologyIT and technological services provided by outside parties, support critical functions. The failure of these technologies, including backup systems, or the inability of CMS Energy and Consumers to have these technologies supported, updated, expanded, or integrated into other technologies, could hinder their business operations and materially adversely affect their liquidity, financial condition, and results of operations. A breach or failure of technology, including disaster recovery or backup systems, could also have a negative impact on CMS Energy’s banking subsidiary, EnerBank.
CMS Energy’s and Consumers’ businesses have liability risks.
Consumers’ electric and gas delivery systems, power plants, gas infrastructure including storage facilities, wind energy or solar equipment, and energy products, and the independent power plants owned in whole or in part by CMS Energy could be involved in incidents, failures, or accidents that result in injury, loss of life, or property loss to customers, employees, or the public. Although CMS Energy and Consumers have insurance coverage for many potential incidents (subject to deductibles, limitations, and self-insurance amounts that could be material), depending upon the nature or severity of any incident, failure, or accident, CMS Energy or Consumers could suffer financial loss, reputational damage, and negative repercussions from regulatory agencies or other public authorities.
CMS Energy’sEnergy and Consumers’ revenues and results of operationsConsumers are subject to risks that are beyond their control, including but not limited to natural disasters, civil unrest, terrorist attacks and related acts of war, cyber incidents, vandalism, and other catastrophic events.
The impact of naturalNatural disasters, severe weather, wars, terrorist acts, civil unrest, vandalism, theft, cyber incidents, pandemics, and other catastrophic events on the facilities and operations of CMS Energy and Consumers could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. These events could result in severe damage to CMS Energy’s and Consumers’ assets


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beyond what could be recovered through insurance policies (which are subject to deductibles and limits), could require CMS Energy and Consumers to incur significant upfront costs, and could severely disrupt operations, resulting in loss of service to customers. There is also a risk that regulators could, after the fact, conclude that Consumers’ preparedness or response to such an event was inadequate and take adverse actions as a result.
CMS Energy and Consumers are exposed to significant reputational risks.
CMS Energy and Consumers could suffer negative impacts to their reputations as a result
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Consumers is exposed to changes in customer usage that could impact financial results.
Distributed electricity generation: Technology advances, government incentives and subsidies, and recent regulatory decisions could increase the cost effectiveness of customer-owned methods of producing electricity and managing energy use, such as fuel cells, batteries, microturbines, wind turbines, and solar photovoltaics, resulting in reduced load, cross subsidization, and increased costs. This could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.
Energy waste reduction: Customers could reduce their consumption through demand-side energy conservation and energy waste reduction programs. These reductions could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.
Energy risk management strategies might not be effective in managing fuel and electricity pricing risks, which could result in unanticipated liabilities to CMS Energy and Consumers or increased volatility in their earnings.
CMSEnergy and Consumers are exposed to changes in market prices for natural gas, coal, electric capacity, electric energy, emission allowances, gasoline, diesel fuel, and RECs. Prices for these commodities may fluctuate substantially over relatively short periods of time and expose CMSEnergy and Consumers to price risk. CMSEnergy and Consumers manage commodity price risk using established policies and procedures, and they may use various contracts to manage this risk, including swaps, options, futures, and forward contracts. No assurance can be made that these strategies will be successful in managing CMSEnergy’s and Consumers’ risk or that they will not result in net liabilities to CMSEnergy or Consumers as a result of future volatility.
A substantial portion of Consumers’ operating expenses for its electric generating plants and vehicle fleet consists of the costs of obtaining these commodities. The contracts associated with Consumers’ fuel for electric generation and purchased power are executed in conjunction with the PSCR mechanism, which is designed to allow Consumers to recover prudently incurred costs associated with its positions in these commodities. If the MPSC determined that any of these contracts or related contracting policies were imprudent, recovery of these costs could be disallowed.
Natural gas prices in particular have been historically volatile. Consumers routinely enters into contracts for natural gas to mitigate exposure to the risks of demand, market effects of weather, and changes in commodity prices associated with itsthe gas distribution business. These contracts are executed in conjunction with the GCR mechanism, which is designed to allow Consumers to recover prudently incurred costs associated with its


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natural gas positions. If the MPSC determined that any of these contracts or related contracting policies were imprudent, recovery of these costs could be disallowed.
CMSEnergy and Consumers do not always hedge any or all of the exposure of their operations from commodity price volatility. Furthermore, the ability to hedge exposure to commodity price volatility depends on liquid commodity markets. As a result, to the extent the commodity markets are illiquid, CMSEnergy and Consumers might not be able to execute their risk management strategies, which could result in larger unhedged positions than preferred at a given time. To the extent that unhedged positions exist, fluctuating commodity prices could have a negative effect on CMS Energy’sEnergy and Consumers’ liquidity, financial condition, and results of operations.Consumers. Changes in laws that limit CMSEnergy’s and Consumers’ ability to hedge could also have a negative effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.
CMS Energy and Consumers are exposed to counterparty risk.
Adverse economic conditions or financial difficulties experienced by counterparties with whom CMS Energy and Consumers do business could impair the ability of these counterparties to pay for CMS Energy’s and Consumers’ services and/or fulfill their contractual obligations, including performance and payment of damages. CMS Energy and Consumers depend on these counterparties to remit payments and perform contracted services in a timely fashion. Any delay or default in payment or performance of contractual obligations could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.
Volatility and disruptions in capital and credit markets could have a negative impact on CMS Energy’s and Consumers’ lenders, vendors, contractors, suppliers, customers, and other counterparties, causing them to fail to meet their obligations. Adverse economic conditions could also have a negative impact on the loan portfolio of CMS Energy’s banking subsidiary, EnerBank.Consumers.
Consumers might not be able to obtain an adequate supply of natural gas or coal, which could limit its ability to operate its electric generation facilities or serve its natural gas customers.
Consumers has natural gas and coal supply and transportation contracts in place for the natural gas and coal it requires for its electric generating capacity. Consumers also has interstate transportation and supply agreements in place to facilitate delivery of natural gas to its customers. Apart from the contractual and monetary remedies available to Consumers in the event of a counterparty’s failure to perform under any of these contracts, there can be no assurances that the counterparties to these contracts will fulfill their obligations to provide natural gas or coal to Consumers. The counterparties under the agreements could experience financial or operational problems that inhibit their ability to fulfill their obligations to Consumers. In addition, counterparties under these contracts might not be required to supply natural gas or coal to Consumers under certain circumstances, such as in the event of a natural disaster or severe weather.
If for its electric generating capacity, Consumers were unable to obtain its natural gas or coal requirements, or for its natural gas delivery to customers, Consumers were unable to obtain its natural gas supply requirements, it could be required to purchase natural gas or coal at higher prices or implement its natural gas curtailment program filed with the MPSC. These alternatives
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Unplanned outages or maintenance could increasebe costly for CMS Energy or Consumers.
Unforeseen outages or maintenance of the electric and gas delivery systems, power plants, gas infrastructure including storage facilities and compression stations, wind energy or solar equipment, and energy products owned in whole or in part by CMS Energy or Consumers may be required for many reasons. When unplanned outages occur, CMS Energy and Consumers will not only incur unexpected maintenance expenses, but may also have to make spot market purchases of electric and gas commodities that may exceed CMS Energy’s or Consumers’ working capital requirementsexpected cost of generation or gas supply, be forced to curtail services, or retire a given asset if the cost or timing of the maintenance is not reasonable and prudent. Unplanned generator outages could reduce the capacity credit CMS Energy or Consumers receives from MISO and could decrease its revenues.


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Market performance and other changes could decrease the value of employee benefit plan assets, which then could require substantial funding.cause CMS Energy or Consumers to incur additional capacity costs in future years.
The performanceCOVID-19 pandemic could materially and adversely affect each of the capital markets affects the value of assets that are held in trust to satisfy future obligations under CMS Energy’s and Consumers’ pensionbusiness, results of operations, financial condition, capital investment program, liquidity, and postretirement benefit plans.cash flows.
The COVID‑19 pandemic has had widespread impacts on people, businesses, economies, and financial markets globally, in the U.S., and in markets where CMS Energy and Consumers conduct business. Future impacts of the pandemic could include a prolonged reduction in economic activity, extended disruption to supply chains and operations, and reduced availability of labor and productivity. CMS Energy and Consumers provide essential services, which means that CMS Energy and Consumers must keep employees, who operate facilities or interact with customers, safe and minimize unnecessary risk of exposure to COVID‑19. CMS Energy and Consumers have significant obligations under these planstaken extra precautions in an effort to protect the health of employees working in the field and hold significant assets in these trusts. These assets are subject to market fluctuations and will yield uncertain returns, which could fall below CMS Energy’s and Consumers’ forecasted return rates. A decline in the market value of the assets or a change in the level of interest rates used to measure the required minimum funding levels could significantly increase the funding requirements of these obligations. Also, changes in demographics, including an increased number of retirements or changes in life expectancy assumptions, could significantly increase the funding requirements of the obligations related to the pension and postretirement benefit plans. Iffacilities. CMS Energy and Consumers were unablehave also implemented work-from-home policies where possible. This is an evolving situation; CMS Energy and Consumers will continue to managemonitor developments and will take additional necessary precautions in order to keep employees, customers, contractors, and communities safe.
The ultimate impact of the COVID‑19 pandemic depends on factors beyond CMS Energy’s and Consumers’ knowledge or control. Consumers has experienced a decline in electric deliveries to commercial and industrial customers and increased uncollectible accounts. Over the long term, the pandemic could have numerous and significant adverse effects on CMS Energy and Consumers. Additionally, EnerBank could experience slower lending growth, higher loan write-offs, and increased loan modifications.
CMS Energy and Consumers cannot predict how the COVID‑19 pandemic will impact CMS Energy and Consumers. The degree to which COVID‑19 will impact CMS Energy and Consumers will depend in part on future developments, including the severity and duration of the outbreak, actions or inactions that may be taken by governmental authorities, and to what extent and when normal economic and operational conditions can resume.
General Risk Factors
CMS Energy and Consumers are exposed to counterparty risk.
Adverse economic conditions or financial difficulties experienced by counterparties with whom CMS Energy and Consumers do business could impair the ability of these counterparties to pay for CMS Energy’s and Consumers’ services and/or fulfill their pensioncontractual obligations, including performance and postretirement plan assets successfully, itpayment of damages. CMS Energy and Consumers depend on these counterparties to remit payments and perform contracted services in a timely fashion. Any delay or default in payment or
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performance of contractual obligations could have a material adverse effect on CMS Energy and Consumers.
Volatility and disruptions in capital and credit markets could have a negative impact on CMS Energy’s and Consumers’ lenders, vendors, contractors, suppliers, customers, and other counterparties, causing them to fail to meet their liquidity, financial condition,obligations. Adverse economic conditions could also have a negative impact on the loan portfolio of CMS Energy’s banking subsidiary, EnerBank.
CMS Energy and resultsConsumers are exposed to significant reputational risks.
CMS Energy and Consumers could suffer negative impacts to their reputations as a result of operations.operational incidents, violations of corporate policies, regulatory violations, inappropriate use of social media, or other events. Reputational damage could have a material adverse effect and could result in negative customer perception and increased regulatory oversight.
A work interruption or other union actions could adversely affect Consumers.
Unions represent 3744 percent of Consumers’ employees. Consumers’ union agreements expire in 2020.2025. If these employees were to engage in a strike, work stoppage, or other slowdown, Consumers could experience a significant disruption in its operations and higher ongoing labor costs.
Failure to attract and retain an appropriately qualified workforce could adversely impact CMS Energy’s and Consumers’ results of operations.
The workforce of CMS Energy and Consumers is aging and a number of employees will become eligible to retire within the next few years. In some areas, competition for skilled employees is high and if CMS Energy and Consumers were unable to match skill sets to future needs, they could encounter operating challenges and increased costs. These challenges could include a lack of resources, loss of knowledge, and delays in skill development. Additionally, higher costs could result from the use of contractors to replace employees, loss of productivity, and safety incidents. Failing to train replacement employees adequately and to transfer internal knowledge and expertise could adversely affect CMS Energy’s and Consumers’ ability to manage and operate their businesses. If CMS Energy and Consumers were unable to attract and retain an appropriately qualified workforce, their financial condition and results of operations could be affected negatively.
Unplanned outages or maintenance could be costly for CMS Energy or Consumers.
Unforeseen outages or maintenance of the independent power plants owned in whole or in part by CMS Energy or Consumers’ electric and gas delivery systems, power plants, gas infrastructure including storage facilities, wind energy or solar equipment, and energy products may be required for many reasons. These reasons could include catastrophic events such as fires, explosions, extreme weather, floods or other acts of God, failures of equipment or materials, operator error, or the need to comply with environmental or safety regulations. When unplanned outages occur, CMS Energy and Consumers will not only incur unexpected maintenance expenses, but may also have to make spot market purchases of electric and gas commodities that may exceed CMS Energy’s or Consumers’ costs of generation or service, be forced to curtail services, or retire a given unit if the cost or timing of the maintenance is not reasonable and prudent. Unplanned outages could reduce the capacity credit CMS Energy or Consumers receives from MISO and could cause CMS Energy or Consumers to incur additional capacity costs in future years. Costs associated with these matters could have a material adverse effect on CMS Energy’s or Consumers’ liquidity, financial condition, and results of operations.


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Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact CMS Energy and Consumers.
CMS Energy and Consumers are required to make judgments regarding the potential tax effects of various financial transactions and results of operations in order to estimate their obligations to taxing authorities. The tax obligations include income taxes, real estate taxes, sales and use taxes, employment-related taxes, and ongoing issues related to these tax matters. The judgments include determining reserves for potential adverse outcomes regarding tax positions that have been taken and may be subject to challenge by the IRS and/or other taxing authorities. Unfavorable settlements of any of the issues related to these reserves or other tax matters at CMS Energy or Consumers could have a material adverse effect on their liquidity, financial condition, and results of operations.
CMS Energy and Consumers are subject to changing tax laws. Changes in federal, state, or local tax rates or other changes in tax laws could have adverse impacts on their liquidity, financial condition, and results of operations.
In December 2017, the TCJA, which changed existing federal tax law and included numerous provisions that affect businesses, was enacted. CMS Energy and Consumers made reasonable estimates in measuring and accounting for the effects of the TCJA and did not recognize any material changes to their estimates during the years ended December 31, 2019 and December 31, 2018. Given expected changes to U.S. Treasury regulations and interpretations of the TCJA by the U.S. Treasury, the final transition impacts of the TCJA may differ from the estimates provided elsewhere in this report.
CMS Energy and its subsidiaries, including Consumers and EnerBank, must comply with the Dodd-Frank Act and its related regulations, which are subject to change and could involve material costs or affect operations.
Regulations that are intended to implement the Dodd-Frank Act have been and are still being adopted and modified by the appropriate agencies. The Dodd-Frank Act added a new Section 13 to the Bank Holding Company Act. Known, together with its implementing regulations, as the Volcker Rule, it generally restricts certain banking entities (such as EnerBank) and their subsidiaries or affiliates from engaging in proprietary trading activities and from owning equity in or sponsoring any private equity or hedge fund. The activities of CMS Energy and its subsidiaries (including EnerBank) have not been and are not expected to be materially affected by the Volcker Rule; however, they are restricted from engaging in proprietary trading, investing in third‑party hedge or private equity funds, and sponsoring these funds in the future unless CMS Energy qualifies for an exemption from the rule. CMS Energy and its subsidiaries are also subject to certain ongoing compliance requirements pursuant to the regulations. CMS Energy cannot predict the full impact of the Volcker Rule, including any impact resulting from changes to implementing regulations, on CMS Energy’s or EnerBank’s operations or financial condition.
All companies that directly or indirectly control an FDIC-insured bank are required to serve as a source of financial strength for that institution. As a result, CMS Energy could be called upon by the FDIC to infuse additional capital into EnerBank to the extent that EnerBank fails to satisfy its capital requirements. In addition, CMS Energy is contractually required (i) to make cash capital contributions to EnerBank in the event that EnerBank does not maintain required minimum capital ratios and (ii) to provide EnerBank financial support, in an amount and duration as may be necessary for EnerBank to meet the cash needs of its depositors and other operations.
In addition, the Dodd-Frank Act provides for regulation by the Commodity Futures Trading Commission of certain commodity-related contracts. Although CMS Energy, Consumers, EnerBank, and certain subsidiaries of CMS Enterprises qualify for an end-user exception from mandatory clearing of


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commodity-related swaps, these regulations could affect the ability of these entities to participate in these markets and could add additional regulatory oversight over their contracting activities.
Item 1B.    Unresolved Staff Comments
None.
Item 2.    Properties
Descriptions of CMS Energy’s and Consumers’ properties are found in the following sections of Item 1. Business, all of which are incorporated by reference in this Item 2:
•General—CMS Energy
•General—Consumers
•Business Segments—Consumers Electric Utility—Electric Utility Properties
•Business Segments—Consumers Gas Utility—Gas Utility Properties
•Business Segments—Enterprises Segment—Non-Utility Operations and Investments—Independent Power Production
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Item 3.    Legal Proceedings
For information regarding CMS Energy’s and Consumers’ significant pending administrative and judicial proceedings involving regulatory, operating, transactional, environmental, and other matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters and Note 4, Contingencies and Commitments.
CMS Energy, Consumers, and certain of their affiliates are also parties to routine lawsuits and administrative proceedings incidental to their businesses involving, for example, claims for personal injury and property damage, contractual matters, various taxes, and rates and licensing.
Item 4.    Mine Safety Disclosures
Not applicable.


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Part II
Item 5.    Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
CMS Energy
CMS Energy’s common stock is traded on the New York Stock Exchange under the symbol CMS. Market prices for CMS Energy’s common stock and related security holder matters are contained in Item 6. Selected Financial Data, which is incorporated by reference herein. At January 10, 2020,15, 2021, the number of registered holders of CMS Energy’s common stock totaled 28,495,28,083, based on the number of record holders.
For additional information regarding securities authorized for issuance under equity compensation plans, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 13, Stock-Based Compensation and Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. For additional information regarding dividends and dividend restrictions, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Financings and Capitalization.
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Comparison of Five-YearFive-year Cumulative Total Return
chart-cms5ycumultotalreturn.jpgcms-20201231_g7.jpg


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Five-Year Cumulative Total ReturnFive-Year Cumulative Total Return
Company/Index2014 2015 2016 2017 2018 2019 Company/Index201520162017201820192020
CMS Energy $100
 $107
 $128
 $149
 $162
 $210
CMS Energy$100 $119 $139 $151 $196 $195 
S&P 500 Index 100
 101
 113
 138
 132
 174
S&P 500 Index100 112 136 130 171 203 
Dow Jones Utility Index 100
 97
 115
 130
 132
 169
Dow Jones Utility Index100 118 134 137 174 177 
S&P 400 Utilities Index 100
 94
 120
 133
 142
 163
S&P 400 Utilities Index100 127 141 151 173 149 
These cumulative total returns assume reinvestments of dividends.
Consumers
Consumers’ common stock is privately held by its parent, CMS Energy, and does not trade in the public market.
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Issuer Repurchases of Equity Securities
Presented in the following table are CMS Energy’s repurchases of equity securities for the three months ended December 31, 2019:2020:
Period
Total Number of Shares Purchased1
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number of Shares That May Yet Be Purchased Under Publicly Announced Plans or Programs
October 1, 2020 to October 31, 2020406 $63.78 — — 
November 1, 2020 to November 30, 2020235 63.92 — — 
December 1, 2020 to December 31, 2020623 59.48 — — 
Total1,264 $61.69 — — 
 Period
Total Number
of Shares
Purchased1
 
Average
Price Paid
per Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
 
Maximum Number of
Shares That May Yet Be
Purchased Under
Publicly Announced
Plans or Programs
 
 
 
 October 1, 2019 to October 31, 2019 —
 $—
 —
 —
 November 1, 2019 to November 30, 2019 8,853
 60.49
 —
 —
 December 1, 2019 to December 31, 2019 9,734
 61.53
 —
 —
 Total 18,587
 $61.03
 —
 —
11All of the common shares were repurchased to satisfy the minimum statutory income tax withholding obligation for common shares that have vested under the PISP. The value of shares repurchased is based on the market price on the vesting date.
All of the common shares were repurchased to satisfy the minimum statutory income tax withholding obligation for common shares that have vested under the PISP. The value of shares repurchased is based on the market price on the vesting date.
Unregistered Sales of Equity Securities
None.


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Item 6.    Selected Financial Data
CMS Energy Corporation
20202019201820172016
Operating revenue (in millions)($)6,680 6,845 6,873 6,583 6,399 
Income from equity method investees (in millions)($)5 10 9 15 13 
Net income (in millions)($)752 682 659 462 553 
Income (loss) attributable to noncontrolling interests (in millions)($)(3)2 2 2 2 
Net income available to common stockholders (in millions)($)755 680 657 460 551 
Average common shares outstanding (in millions)285.0 283.0 282.2 280.0 277.9 
Earnings per average common share
 – Basic($)2.65 2.40 2.33 1.64 1.99 
 – Diluted($)2.64 2.39 2.32 1.64 1.98 
Cash provided by operations (in millions)($)1,276 1,790 1,703 1,705 1,629 
Capital expenditures, excluding assets placed under finance lease (in millions)($)2,317 2,104 2,074 1,665 1,672 
Total assets (in millions)($)29,666 26,837 24,529 23,050 21,622 
Long-term debt, excluding current portion (in millions)($)13,634 11,951 10,615 9,123 8,640 
Non‑current portion of finance leases and other financing (in millions)($)56 76 69 91 110 
Cash dividends declared per common share($)1.63 1.53 1.43 1.33 1.24 
Market price of common stock at year-end($)61.01 62.84 49.65 47.30 41.62 
Book value per common share at year-end($)19.02 17.67 16.78 15.77 15.23 
Total employees at year-end8,837 8,789 8,625 7,952 7,800 
Electric Utility Statistics
Sales (billions of kWh)35 37 38 37 38 
Customers (in thousands)1,866 1,848 1,831 1,826 1,805 
Average sales rate per kWh(¢)11.74 11.64 11.78 11.98 11.63 
Gas Utility Statistics
Sales and transportation deliveries (bcf)360 391 386 352 358 
Customers (in thousands)1
1,804 1,793 1,784 1,776 1,772 
Average sales rate per mcf($)7.60 7.44 7.44 7.51 7.31 
1Excludes off-system transportation customers.
   2019
2018
2017
2016
2015
        
Operating revenue (in millions) ($)6,845
6,873
6,583
6,399
6,456
Income from equity method investees (in millions) ($)10
9
15
13
14
Net income (in millions)¹ ($)682
659
462
553
525
Net income available to common stockholders (in millions) ($)680
657
460
551
523
Average common shares outstanding (in millions)  283.0
282.2
280.0
277.9
275.6
Earnings per average common share       
CMS Energy—Basic ($)2.40
2.33
1.64
1.99
1.90
 —Diluted ($)2.39
2.32
1.64
1.98
1.89
Cash provided by operations (in millions) ($)1,790
1,703
1,705
1,629
1,640
Capital expenditures, excluding assets placed under finance lease (in millions) ($)2,104
2,074
1,665
1,672
1,564
Total assets (in millions) ($)26,837
24,529
23,050
21,622
20,299
Long-term debt, excluding current portion (in millions) ($)11,951
10,615
9,123
8,640
8,400
Non‑current portion of finance leases and other financing (in millions)
 ($)76
69
91
110
118
Cash dividends declared per common share ($)1.53
1.43
1.33
1.24
1.16
Market price of common stock at year-end ($)62.84
49.65
47.30
41.62
36.08
Book value per common share at year-end ($)17.67
16.78
15.77
15.23
14.21
Total employees at year-end  8,789
8,625
7,952
7,800
7,804
Electric Utility Statistics       
Sales (billions of kWh)  37
38
37
38
37
Customers (in thousands)  1,848
1,831
1,826
1,805
1,803
Average sales rate per kWh (¢)11.64
11.78
11.98
11.63
11.39
Gas Utility Statistics       
Sales and transportation deliveries (bcf)  391
386
352
358
356
Customers (in thousands)2
  1,793
1,784
1,776
1,772
1,741
Average sales rate per mcf ($)7.44
7.44
7.51
7.31
7.89
1
Includes income attributable to noncontrolling interests of $2 million in each period.
2
Excludes off-system transportation customers.


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Table of Contents

Consumers Energy Company
20202019201820172016
Operating revenue (in millions)($)6,189 6,376 6,464 6,222 6,064 
Net income (in millions)($)816 743 705 632 616 
Net income available to common stockholder (in millions)($)814 741 703 630 614 
Cash provided by operations (in millions)($)1,218 1,601 1,449 1,715 1,681 
Capital expenditures, excluding assets placed under finance lease (in millions)($)2,170 2,085 1,822 1,632 1,656 
Total assets (in millions)($)25,399 23,699 22,025 21,099 19,946 
Long-term debt, excluding current portion (in millions)($)7,742 7,048 6,779 5,561 5,253 
Non‑current portion of finance leases and other financing (in millions)($)56 76 69 91 110 
Total preferred stock (in millions)($)37 37 37 37 37 
Number of preferred stockholders at year-end922 968 1,017 1,056 1,095 
Total employees at year-end8,230 8,253 8,121 7,496 7,366 
Electric Utility Statistics
Sales (billions of kWh)35 37 38 37 38 
Customers (in thousands)1,866 1,848 1,831 1,826 1,805 
Average sales rate per kWh(¢)11.74 11.64 11.78 11.98 11.63 
Gas Utility Statistics
Sales and transportation deliveries (bcf)360 391 386 352 358 
Customers (in thousands)1
1,804 1,793 1,784 1,776 1,772 
Average sales rate per mcf($)7.60 7.44 7.44 7.51 7.31 
1Excludes off-system transportation customers.
   2019
2018
2017
2016
2015
        
Operating revenue (in millions) ($)6,376
6,464
6,222
6,064
6,165
Net income (in millions) ($)743
705
632
616
594
Net income available to common stockholder (in millions) ($)741
703
630
614
592
Cash provided by operations (in millions) ($)1,601
1,449
1,715
1,681
1,794
Capital expenditures, excluding assets placed under finance lease (in millions) ($)2,085
1,822
1,632
1,656
1,537
Total assets (in millions) ($)23,699
22,025
21,099
19,946
18,635
Long-term debt, excluding current portion (in millions) ($)7,048
6,779
5,561
5,253
5,183
Non‑current portion of finance leases and other financing (in millions)
 ($)76
69
91
110
118
Total preferred stock (in millions) ($)37
37
37
37
37
Number of preferred stockholders at year-end  968
1,017
1,056
1,095
1,156
Total employees at year-end  8,253
8,121
7,496
7,366
7,394
Electric Utility Statistics       
Sales (billions of kWh)  37
38
37
38
37
Customers (in thousands)  1,848
1,831
1,826
1,805
1,803
Average sales rate per kWh (¢)11.64
11.78
11.98
11.63
11.39
Gas Utility Statistics       
Sales and transportation deliveries (bcf)  391
386
352
358
356
Customers (in thousands)1
  1,793
1,784
1,776
1,772
1,741
Average sales rate per mcf ($)7.44
7.44
7.51
7.31
7.89
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1
Excludes off-system transportation customers.


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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is a combined report of CMS Energy and Consumers.
Executive Overview
CMS Energy is an energy company operating primarily in Michigan. It is the parent holding company of several subsidiaries, including Consumers, an electric and gas utility; CMS Enterprises, primarily a domestic independent power producer and marketer; and EnerBank, an industrial bank located in Utah. Consumers’ electric utility operations include the generation, purchase, transmission, distribution, and sale of electricity, and Consumers’ gas utility operations include the purchase, transmission, storage, distribution, and sale of natural gas. Consumers’ customer base consists of a mix of primarily residential, commercial, and diversified industrial customers. CMS Enterprises, through its subsidiaries and equity investments, is engaged in domestic independent power production, including the development and operation of renewable generation, and the marketing of independent power production. EnerBank provides primarily unsecured, consumerfixed-rate installment loans largely for financingthroughout the U.S. to finance home improvements.
CMS Energy and Consumers manage their businesses by the nature of services each provides. CMS Energy operates principally in four business segments: electric utility; gas utility; enterprises, its non‑utility operations and investments; and EnerBank. Consumers operates principally in two business segments: electric utility and gas utility. CMS Energy’s and Consumers’ businesses are affected primarily by:
•regulation and regulatory matters
•state and federal legislation
•economic conditions
•weather
•energy commodity prices
•interest rates
•their securities’ credit ratings
COVID-19 Pandemic
CMS Energy and Consumers continue to respond to the public health emergency caused by the COVID‑19 pandemic by instituting and maintaining measures consistent with guidance provided by local, state, and federal agencies. CMS Energy and Consumers maintain over 60 departmental business continuity plans; these plans were reviewed and enhanced in early 2020 to ensure readiness for the COVID-19 pandemic. CMS Energy and Consumers continue to take steps to protect the safety of employees, customers, and contractors, and have executed their business continuity plans to ensure the continued delivery of critical energy services. Additionally, CMS Energy and Consumers have mitigated the potential impact of the pandemic on their liquidity by completing financing transactions and reducing the need for additional external funding.
The COVID‑19 pandemic is a continually evolving situation. As a result of the pandemic, Consumers has experienced a decline in electric deliveries to commercial and industrial customers, offset partially by an increase in deliveries to residential customers. It has also experienced increased uncollectible accounts and workforce-related expenses, among other cost increases directly attributable to the pandemic. Consumers anticipates that these trends will continue in the near term. In April 2020, the MPSC issued an
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order authorizing Consumers to defer incremental uncollectible accounts expense associated with the pandemic.
Additionally, EnerBank anticipates it could experience slower lending growth, higher loan write-offs, and increased loan modifications in the future as a result of the pandemic. The companies cannot predict the long-term impact of the pandemic on their business, results of operations, financial condition, capital investment program, liquidity, and cash flows. More detailed discussion of the near-term impacts of and future uncertainties related to the COVID‑19 pandemic can be found in Item 1A. Risk Factors and throughout this Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The Triple Bottom Line
CMS Energy’s and Consumers’ purpose is to achieve world class performance while delivering hometown service. In support of this purpose, the companies employ the “Consumers Energy Way,” a lean operating model designed to improve safety, quality, cost, delivery, and employee morale.


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CMS Energy and Consumers measure their progress toward the purpose by considering their impact on the “triple bottom line” of people, planet, and profit, which is underpinned by performance; this consideration takes into account not only the economic value that the companies create for customers and investors, but also their responsibility to social and environmental goals. The triple bottom line balances the interests of the companies’ employees, customers, suppliers, regulators, creditors, Michigan’s residents, the investment community, and other stakeholders, and it reflects the broader societal impacts of the companies’ activities.
cms-20201231_g8.jpg
Consumers’ Sustainability Report, which is available to the public, describes the company’s progress toward world class performance measured in the areas of people, planet, and profit.
People: The people element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to their employees, their customers, the residents of local communities in which the companies do business, and other stakeholders.
The safety of employees, customers, and the general public is a priority of CMS Energy and Consumers. Accordingly, CMS Energy and Consumers have worked to integrate a set of safety principles into their business operations and culture. These principles include complying with applicable safety, health, and security regulations and implementing programs and processes aimed at continually improving safety and security conditions. Over the last ten years, Consumers’ OSHA recordable incident rate has decreased by over 6353 percent.
In response to the COVID-19 pandemic, CMS Energy and Consumers have issued a response plan that is focused on the health, safety, and well-being of their co-workers, customers, and communities. CMS Energy and Consumers have aligned with safety and health guidelines from the CDC, OSHA, and the Michigan Department of Health and Human Services in order to protect their employees, customers,
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and contractors to ensure the continued delivery of critical energy services. To align with, and in addition to, these guidelines, CMS Energy and Consumers have:
•secured the supply chain necessary to provide front-line workers with appropriate personal protective equipment and cleaning supplies
•worked with local health departments and hospital systems to begin administering vaccinations to essential front-line employees
•when necessary, sequestered employees with critical roles at generating plants, gas compression facilities, and electric control rooms
•implemented a paid self-quarantine requirement for employees who are exhibiting symptoms of COVID-19 or who have come into contact with a person suspected to have COVID-19
•prohibited business-related international travel and instituted a mandatory ten-day work remote period for employees who return from personal travel to heavily impacted areas
•required employees to work remotely when possible
•when necessary, reduced service at 13 direct payment offices to drop box and drive-through services only
•initially adjusted work to focus on emergent and critical activities such as electric outages, gas leaks, and other public safety and reliability work; as work restrictions have gradually lifted in Michigan, the companies have resumed normal work with safety measures in place
•contracted a chief medical officer to guide the companies’ response and provide rapid support and supplies for the workforce
•limited access to company facilities, enhanced cleaning protocols, and established a mask-wearing policy
•offered additional paid leave to employees to alleviate child care-related burdens and implemented other interim workforce policies to offer flexibility and reduce employee concerns
In response to the pandemic, CMS Energy and Consumers initially suspended shut-offs of service for non-payment and extended payment protection plans for low-income and senior customers. CMS Energy and Consumers slowly began resuming shut-offs of service for non-payment in late July 2020 for commercial and industrial customers and in October 2020 for residential customers. CMS Energy and Consumers remain committed to assisting customers impacted by the pandemic. During 2020, Consumers provided $12 million to help Michigan residents and small businesses who had experienced difficulty paying their energy bill due to the pandemic. Additionally, in December 2020, Consumers donated another $3 million to agencies that provide energy bill assistance to low-income households.
CMS Energy and Consumers also place a high priority on customer value and on providing a hometown customer experience. Consumers’ customer-driven investment program is aimed at improving safety and increasing electric and gas reliability, which has resulted in measurable improvements in customer satisfaction.
Central to Consumers’ commitment to its customers are the initiatives it has undertaken to keep electricity and natural gas affordable, including:
•replacement of coal-fueled generation and PPAs with a cost-efficient mix of renewable energy and energy waste reduction and demand response programs
•targeted infrastructure investment to reduce maintenance costs and improve reliability and safety and to reduce maintenance costs
•supply chain optimization
•information and control system efficiencies
•employee and retiree health care cost sharing
•workforce productivity enhancements
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In addition, Consumers’ gas commodity costs declined by 6266 percent from 20092010 through 2019,2020, due not only to a decrease in market prices but also to Consumers’ improvements to its gas infrastructure and optimization of its gas purchasing and storage strategy. These gas commodity savings are passed on to customers.
Planet: The planet element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to protect the environment. This commitment extends beyond compliance with various state and federal environmental, health, and safety laws and regulations. Management considers climate change


51

and other environmental risks in the companies’ strategy development, business planning, and enterprise risk management processes.
CMS Energy and Consumers continue to focus on opportunities to protect the environment and to reduce their carbon footprint. As a result of actions already taken by CMS Energy and Consumers, the companies have:
•decreased their combined percentage of electric supply (self-generated and purchased) from coal by 1821 percentage points since 2015
•reduced carbon dioxide emissions by over 35 percent since 2005
•reduced the amount of water used to generate electricity by 31over 30 percent since 2012
•reduced landfill waste disposal by over 1.31.5 million tons since 1992
•reduced methane emissions by 17 percent since 2012
Additionally, over the last 20 years, Consumers has reduced its sulfur dioxide, nitrogen oxide, particulate matter, and mercury emissions by over 90 percent. Presented in the following illustration are Consumers’ reductions in these emissions (Consumers began tracking mercury emissions in 2007):
chart-historicairemissions.jpgcms-20201231_g9.jpg


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Table of Contents

The 2016 Energy Law:
•raised the renewable energy standard to 12.5 percent in 2019 and 15 percent in 2021; Consumers met the 12.5-percent requirement in 2019 and 2020 with a combination of newly generated RECs and previously generated RECs carried over from prior years
•established a goal of 35 percent combined renewable energy and energy waste reduction by 2025; Consumers has achieved 2225 percent of the combined renewable energy and energy waste reduction goal through 20192020
•authorized incentives for demand response programs and expanded existing incentives for energy efficiency programs, referring to the combined initiatives as energy waste reduction programs
•established an integrated planning process for new generation resources
In 2019, the MPSC approved the IRP that Consumers filed an IRP with the MPSC in June 2018, detailingwhich details its Clean Energy Plan. In March 2019, Consumers and a broad coalition of key stakeholders, including business customers, environmental groups, the MPSC Staff, and the Michigan Attorney General, filed an agreement settling the IRP with the MPSC and the MPSC approved it in June 2019.
Under its Clean Energy Plan, Consumers will meet the requirements of the 2016 Energy Law using its clean and lean strategy, which focuses on increasing the generation of renewable energy, helping customers use less energy, and offering demand response programs to reduce demand during critical peak times. Further, Consumers plans to replace its coal-fueled generation predominantly with investment in renewable energy, which will enable Consumers to meet and exceed the 2016 Energy Law renewable energy requirements and fulfill increasing customer demand for renewable energy. Through itsThe Clean Energy Plan Consumers expects to reduce carbon emissions of its owned generation by more than 90 percent from its 2005 levels by 2040. Additionally, the plan will also allow Consumers to achieve a breakthrough goal of at least 50 percent combined renewable energy and energy waste reduction by 2030.

In February 2020, Consumers announced a goal of achieving net-zero carbon emissions from its electric business by 2040. This goal includes not only emissions from Consumers’ owned generation, but also emissions from the generation of power purchased through long-term PPAs and from the MISO energy market. Consumers expects to reduce carbon emissions of its owned generation by more than 90 percent from its 2005 levels by 2040 through execution of its Clean Energy Plan. The remaining emissions will be offset through alternative measures including, but not limited to, carbon sequestration, landfill methane emission capture, and large-scale tree planting.

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Presented in the following illustration is Consumers’ 20192020 capacity portfolio and its future capacity portfolio as projected in the IRP. This illustration includes the effects of purchased capacity and energy waste reduction and uses the nameplate capacity of renewable energy sources:
chart-cecapacitymix.jpgcms-20201231_g10.jpg
In September 2020, Michigan’s Governor signed an executive order creating the Michigan Healthy Climate Plan, which outlines goals for Michigan to achieve economy-wide net-zero greenhouse gas emissions and to be carbon neutral by 2050. The executive order aims for a 28-percent reduction below 2005 levels of greenhouse gas emissions by 2025. Consumers has already surpassed the 28-percent reduction milestone for its owned electric generation and previously announced, in February 2020, a goal of achieving net-zero carbon emissions from its electric business by 2040.
In addition to Consumers’ efforts to reduce the electric utility’s carbon footprint, it is also making efforts to reduce the gas utility’s methane footprint. In October 2019, Consumers released its Methane Reduction Plan, which set a goal of net-zero methane emissions from its natural gas delivery system by 2030. Consumers’ Methane Reduction Plan, released in November 2019, outlines its plan to reach this net-zero emissions goal. Consumers plans to reduce methane emissions from its system by about 80 percent by accelerating the replacement of aging pipe, rehabilitating or retiring outdated infrastructure, and adopting new technologies and practices. The remaining emissions will be eliminatedoffset by purchasing and/or producing renewable natural gas.
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Additionally, to advance its environmental stewardship in Michigan and to minimize the impact of future regulations, Consumers announced the following five‑year targets during 2018:
•to reduce its water use by one billion gallons; during 2018 and 2019,since 2017, Consumers reduced its water usage by over 400880 million gallons cumulatively
•to enhance, restore, or protect 5,000 acres of land; since 2017, Consumers enhanced, restored, or protected over 4,600 acres of land cumulatively
•to reduce the amount of waste taken to landfills by 35 percent; during 2018 and 2019,compared to 2017, Consumers reduced its waste to landfills by 1054 percent in 2020
to enhance, restore, or protect 5,000 acres of land; during 2018 and 2019, Consumers enhanced, restored, or protected over 2,200 acres of land


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CMS Energy, through its non‑utility businesses,CMS Enterprises, continues to pursue further opportunities for the development of renewable generation projects. In recent years,July 2020, CMS Enterprises completed the development of and now operatespurchased an ownership interest in Aviator Wind, a 525-MW wind generation project in Coke County, Texas. The project was completed and three solar generation projects.became operational in September 2020.
CMS Energy and Consumers are monitoring numerous legislative, policy, and regulatory initiatives, including those to regulate greenhouse gases, and related litigation. While CMS Energy and Consumers cannot predict the outcome of these matters, which could have a material effect on the companies, they intend to continue to move forward with their clean and lean strategy.
Profit: The profit element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to meeting their financial objectives and providing economic development opportunities and benefits in the communities in which they do business. CMS Energy’s and Consumers’ financial strength allows them to maintain solid investment-grade credit ratings and thereby reduce funding costs for the benefit of customers and investors, to preserve and create jobs, and to reinvest in the communities they serve.
In 2019,2020, CMS Energy’s net income available to common stockholders was $680$755 million, and diluted EPS were $2.39.$2.64. This compares with net income available to common stockholders of $657$680 million and diluted EPS of $2.32$2.39 in 2018.2019. In 2019,2020, the benefits from electricgas and gaselectric rate increases higher gas sales due primarily to colder weather, cost control measures, and the gain on the sale of transmission equipmentlower operating and maintenance expenses were offset partially by higher depreciation and property taxes reflecting higher capital spending, lower electricgas sales due primarily to unfavorable weather, and higher depreciation and maintenance, higher service restoration costs from 2019 storms, lower earnings at the enterprises segment, and an accrual for a legacy legal obligation.donations. A more detailed discussion of the factors affecting CMS Energy’s and Consumers’ performance can be found in the Results of Operations section that follows this Executive Overview.
Consumers projects that itshas experienced a decline in electric deliveries to commercial and industrial customers as a result of the COVID-19 pandemic. Over the next five years, Consumers expects weather-normalized deliveries will decrease slightlyelectric and gas weather-normalized deliveries willto remain stable through 2024.relative to 2020. This outlook reflects the effects of energy waste reduction programs offset largely by modest growth in electric and gas demand.
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Performance: Impacting the Triple Bottom Line
CMS Energy and Consumers remain committed to achieving world class performance while delivering hometown service. Leveragingservice and positively impacting the triple bottom line of people, planet, and profit. During 2020, CMS Energy and Consumers:
•realized over $100 million in cost reductions by leveraging the Consumers Energy Way CMS Energy and Consumers accomplished the following during 2019:through other initiatives
received approval of Consumers’ IRP, which supports•named a Chief Diversity Officer responsible for setting and monitoring the companies’ cleandiversity, equity, and inclusion strategy
•completed a 90-mile gas pipeline construction project to upgrade gas pipelines and infrastructure throughout three Michigan counties
•announced a new parental leave policy for employees, allowing six months of paid leave to mothers and four months of paid leave to a nonbirthing parent
•pledged to join five other energy goals
launchedcompanies in facilitating the construction of a three-yearMidwest electric vehicle pilot program
committed to invest $7.5 billion in Michigan businesses over the next five years; of that amount,$1.5 billion will be invested in diverse suppliers
completed the deployment of automated gas meters in areas where Consumers provides only natural gas to customers, allowing for drive-by meter reading
ranked the highest in customer satisfaction among large natural gas providers in the Midwest, according to a residential customer satisfaction study conducted by J.D. Power, a global marketing information companycharging network
CMS Energy and Consumers will continue to utilize the Consumers Energy Way to enable them to achieve world class performance and positively impact the triple bottom line. Consumers’ investment plan and the regulatory environment in which it operates also drive its ability to impact the triple bottom line.
Investment Plan: Consumers expects to make capital investments of $25 billion over the next ten years. Over the next five years, Consumers expects to make significant expenditures on infrastructure upgrades


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and replacements and electric supply projects. While it has a large number of potential investment opportunities that would add customer value, Consumers has prioritized its spending based on the criteria of enhancing public safety, increasing reliability, maintaining affordability for its customers, and advancing its environmental stewardship. Consumers’ investment program is expected to result in annual rate-base growth of six to eight percent. This rate-base growth, together with cost-control measures, should allow Consumers to maintain affordable customer prices.
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Presented in the following illustration are planned capital expenditures of $12.2$13.2 billion that Consumers expects to make from 20202021 through 2024:2025:
chart-cecapitalexpenditures.jpgcms-20201231_g11.jpg
Of this amount, Consumers plans to spend $9.4$10.0 billion over the next five years to maintain and upgrade its gas infrastructure and electric distribution systems in order to enhance safety and reliability, improve customer satisfaction, and reduce energy waste on those systems.systems, and facilitate its clean energy transition. The gas infrastructure projects comprise $5.0$5.3 billion to sustain deliverability, and enhance pipeline integrity and safety. These projects, which involve replacement of mainssafety, and services and enhancement of transmission and storage systems, should reduce the minor quantity of methane emissions released as gas is transported.emissions. The electric distribution projects comprise $4.4$4.7 billion to strengthen circuits and substations, replace poles, and replace poles.interconnect clean energy resources. Consumers also expects to spend $2.8$2.4 billion onfor new clean generation, which includes investments in wind, solar, and hydro electric generation resources, and $0.8 billion for other electric supply projects. In response to the COVID‑19 pandemic, Consumers has rescheduled some capital investment projects, primarily new renewable generation.but has not made any changes to its long-term capital investment program at this time.
Regulation: Regulatory matters are a key aspect of Consumers’ business, particularly rate cases and regulatory proceedings before the MPSC, which permit recovery of new investments while helping to ensure that customer rates are fair and affordable. Important regulatory events and developments not already discussed are summarized below.
•
2018 Electric Rate Case: In May 2018,
•2019 Gas Rate Case: In December 2019, Consumers filed an application with the MPSC seeking an annual rate increase of $58 million, based on a 10.75 percent authorized return on equity. In October 2018, Consumers reduced its requested annual rate increase to $44 million. In January 2019, the MPSC approved a settlement agreement authorizing an annual rate decrease of $24 million, based on a 10.0 percent authorized return on equity. With the elimination of the MPSC seeking an annual rate increase of $245 million, based on a 10.5 percent authorized return on equity and a projected twelve-month period ending September 30, 2021. In May 2020, Consumers reduced its requested annual rate increase to $229 million. In September 2020, the MPSC approved a settlement agreement authorizing an annual rate increase of $144 million, based on a 9.9 percent authorized return on equity. As part of that agreement, Consumers agreed not to file a new gas rate case prior to December 2021. The MPSC also approved the continuation of a revenue decoupling mechanism, which annually reconciles Consumers’ actual weather-normalized non-fuel revenues with the revenues approved by the MPSC.


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$113•2020 Electric Rate Case: In February 2020, Consumers filed an application with the MPSC seeking an annual rate increase of $244 million, TCJA creditbased on a 10.5 percent authorized return on equity and a projected twelve-month period ending December 31, 2021. In July 2020, Consumers reduced its requested annual rate increase to customer bills,$230 million. In December 2020, the MPSC approved settlement agreementan annual rate increase of $90 million, based on a 9.9 percent authorized return on equity. This increase reflects a $36 million refund to customers of regulatory tax liabilities associated with the remeasurement of Consumers’ deferred income taxes as a result of the TCJA; excluding the impacts of this refund, the order resulted in an $89a $126 million net increase in annual rates. The settlement agreementorder also provided for deferred accounting treatment forapproved the recovery of $13 million associated with Consumers’ deferral of depreciation and property tax expense and the overall rate of return on distribution-related capital investments exceeding certain threshold amounts. Additionally, the order approved the method of recovering amounts earned under the financial compensation mechanism approved by the MPSC in Consumers’ IRP. This mechanism allows Consumers also agreed to not fileearn a new electric rate case prior toreturn on payments made under PPAs approved by the MPSC after January 2020.
•
2018 Gas Rate Case: In November 2018, Consumers filed an application with the MPSC seeking an annual rate increase of $229 million, based on a 10.75 percent authorized return on equity. In April 2019, Consumers reduced its requested annual rate increase to $204 million. In September 2019, the MPSC approved an annual rate increase of $144 million, based on a 9.9 percent authorized return on equity. This increase includes a $13 million adjustment to begin returning net regulatory tax liabilities associated with the TCJA to customers. The MPSC also approved the continuation of a revenue decoupling mechanism, which annually reconciles Consumers’ actual weather-normalized, non‑fuel revenues with the revenues approved by the MPSC.1, 2019.
•
2019 Gas Rate Case: In December 2019, Consumers filed an application with the MPSC seeking an annual rate increase of $245 million, based on a 10.5 percent authorized return on equity. The filing also seeks approval of a revenue decoupling mechanism that would annually reconcile Consumers’ actual weather-normalized non‑fuel revenues with the revenues approved by the MPSC.
•
Tax Cuts and Jobs Act: The TCJA, which changed existing federal tax law and included numerous provisions that affect businesses, was signed into law in December 2017. In October 2018, Consumers filed an application to address the December 31, 2017 remeasurement of its deferred income taxes and other base rate impacts of the TCJA on customers. In September 2019, the MPSC authorized Consumers to begin returning net regulatory tax liabilities of $0.4 billion to gas customers through rates approved in the 2018 gas rate case and $1.2 billion to electric customers through rates to be determined in Consumers’ next electric rate case. Until then, the MPSC authorized Consumers to refund $32 million to electric customers through a temporary bill credit. For details on these proceedings, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters.
Looking Forward
CMS Energy and Consumers will continue to consider the impact on the triple bottom line of people, planet, and profit in their daily operations as well as in their long-term strategic decisions. Consumers will continue to seek fair and timely regulatory treatment that will support its customer-driven investment plan, while pursuing cost-control measures that will allow it to maintain sustainable customer base rates. The Consumers Energy Way is an important means of realizing CMS Energy’s and Consumers’ purpose of achieving world class performance while delivering hometown service.


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57

Results of Operations
CMS Energy Consolidated Results of Operations
In Millions, Except Per Share Amounts
Years Ended December 31202020192018
Net Income Available to Common Stockholders$755 $680 $657 
Basic Earnings Per Average Common Share$2.65 $2.40 $2.33 
Diluted Earnings Per Average Common Share$2.64 $2.39 $2.32 
In Millions
Years Ended December 3120202019Change20192018Change
Electric utility$554 $509 $45 $509 $535 $(26)
Gas utility261 233 28 233 169 64 
Enterprises36 33 3 33 34 (1)
EnerBank58 49 9 49 38 11 
Corporate interest and other(154)(144)(10)(144)(119)(25)
Net Income Available to Common Stockholders$755 $680 $75 $680 $657 $23 
In Millions, Except Per Share Amounts  
Years Ended December 312019 2018 2017 
Net Income Available to Common Stockholders $680
 $657
 $460
Basic Earnings Per Average Common Share $2.40
 $2.33
 $1.64
Diluted Earnings Per Average Common Share $2.39
 $2.32
 $1.64
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In Millions 
Years Ended December 312019 2018 Change 2018 2017 Change 
Electric utility $509
 $535
 $(26) $535
 $455
 $80
Gas utility 233
 169
 64
 169
 173
 (4)
Enterprises 33
 34
 (1) 34
 (27) 61
EnerBank 49
 38
 11
 38
 28
 10
Corporate interest and other (144) (119) (25) (119) (169) 50
Net Income Available to Common Stockholders $680
 $657
 $23
 $657
 $460
 $197


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Presented in the following table are specific after-tax changes to net income available to common stockholders for 20192020 versus 2018:2019:
In Millions 
Year Ended December 31, 2018   $657
Reasons for the change    
Consumers electric utility and gas utility    
Electric sales $(36)  
Gas sales 12
  
Electric rate increase 56
  
Gas rate increase 66
  
Gain on sale of transmission equipment, net of voluntary gain sharing1
 13
  
Lower pipeline integrity expenses 9
  
Lower distribution and transmission expenses 6
  
Depreciation and amortization (39)  
Higher service restoration costs (28)  
Absence of 2018 income tax benefit associated with electric cost of removal2
 (26)  
Higher property tax, reflecting higher capital spending (14)  
Absence of 2018 research and development tax credits2
 (9)  
Absence of 2018 settlement of a property tax appeal related to the J.H. Campbell plant (7)  
Other 35
 $38
Enterprises    
Gain on sale of transmission equipment1
 12
  
Lower expenses from legacy obligations, net 4
  
Lower earnings due primarily to lower capacity revenue and higher operating and maintenance costs (17) (1)
EnerBank    
Higher earnings based on growth in consumer lending   11
Corporate interest and other    
Absence of 2018 loss on early extinguishment of debt 12
  
2019 tax deductions primarily attributable to asset sales 4
  
Accrual for legacy legal obligation3
 (22)  
Higher fixed charges due to higher debt (18)  
Higher administrative and other expenses (1) (25)
Year Ended December 31, 2019   $680
In Millions
Year Ended December 31, 2019$680 
Reasons for the change
Consumers electric utility and gas utility
Electric sales$16 
Gas sales(39)
Electric rate increase, including return on higher renewable capital spending19 
Gas rate increase105 
Lower distribution, transmission, generation, and compression expenses21 
Lower corporate and IT expenses20 
Lower OPEB expenses19 
Lower service restoration costs16 
Gain on sale of electric transmission assets in 2020, net of voluntary gain sharing1
See Note 3, Regulatory Matters10 
Higher depreciation and amortizationNote 22, Asset Sales and Exit Activities.(36)
Higher donations(22)
Voluntary revenue refund2
See Note 14, Income Taxes.
(21)
3Higher property tax, reflecting higher capital spending
See Note 4, Contingencies(21)
Absence of 2019 gain on sale of electric transmission assets, net of voluntary gain sharing(13)
Other(1)
$73 
Enterprises3 
EnerBank9 
Corporate interest and Commitments—CMS Energy Contingencies—Gas Index Price Reporting Litigation.other(10)
Year Ended December 31, 2020$755 
1See Note 3, Regulatory Matters and Note 22, Asset Sale and Exit Activities.
2See Note 3, Regulatory Matters.
For specific after-tax changes to net income available to common stockholders for 20182019 versus 2017,2018, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—CMS Energy Consolidated Results of Operations, in the Form 10‑K for the fiscal year ended December 31, 2018,2019, filed February 5, 20196, 2020.


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Consumers Electric Utility Results of Operations
Presented in the following table are the detailed changes to the electric utility’s net income available to common stockholders for 20192020 versus 20182019 (amounts are presented pre-tax, with the exception of income tax changes):
63
In Millions 
Year Ended December 31, 2018   $535
Reasons for the change    
Electric deliveries1 and rate increases
    
Rate increase, including the impacts of the January 2019 order $83
  
Lower sales due primarily to unfavorable weather (65)  
Effect of new leases accounting standard2
 12
  
Other revenues 6
 $36
Maintenance and other operating expenses    
Gain on sale of transmission equipment, net of voluntary gain sharing3
 17
  
Lower other distribution, transmission, and generation expenses 13
  
Litigation settlement 8
  
Higher service restoration costs from 2019 winter storms (38) —
Depreciation and amortization    
Increased plant in service, reflecting higher capital spending   (31)
General taxes    
Absence of 2018 settlement of a property tax appeal related to the J.H. Campbell plant (9)  
Higher property tax, reflecting higher capital spending (6)  
Lower other general taxes 1
 (14)
Other income, net of expenses    
Lower donations in 2019 6
  
Higher other income, net of expenses 6
 12
Interest charges    
Effect of new leases accounting standard2
 (12)  
Lower PSCR and other interest charges 8
 (4)
Income taxes    
Absence of 2018 income tax benefit associated with cost of removal4
 (26)  
Absence of 2018 research and development tax credits4
 (8)  
Lower other income taxes 9
 (25)
Year Ended December 31, 2019   $509
In Millions
Year Ended December 31, 2019$509 
Reasons for the change
Electric deliveries1 and rate increases
Deliveries
Rate increase, including return on higher renewable capital spending$26 
Higher sales due primarily to end-usefavorable weather and sales mix, offset partially by lower deliveries to commercial and industrial customers were 36.8 billion kWh in 2019 and 38.2 billion kWh in 2018.24 
Higher energy waste reduction program revenues19 
Voluntary revenue refund2
Under the provisions of (16)
ASU 2016-02, LeasesLower other revenues, fixed energy(6)
$47 
Maintenance and capacityother operating expenses
Lower service restoration costs associated with Consumers’ PPAs that are accounted for as finance leases are presented as amortization21 
Lower corporate and interest expense, rather than purchased power expense. See Note 10, Leases and Palisades Financing for more information about Consumers’ leases.IT expenses
17 
Gain on sale of transmission assets in 2020, net of voluntary gain sharing3
See Note 3, Regulatory Matters14 
Lower distribution, transmission, and generation expensesNote 22, Asset Sales and Exit Activities.13 
Higher mutual insurance distribution7 
Higher energy waste reduction program costs(19)
Absence of 2019 gain on sale of transmission assets, net of voluntary gain sharing(17)
Absence of favorable 2019 litigation settlement(8)
Retention benefits related to D.E. Karn4
See Note 14, (10)
Voluntary separation plan expenses(6)
Lower maintenance and other operating expenses13 
25 
Depreciation and amortization
Increased plant in service, reflecting higher capital spending(26)
General taxes
Higher property tax, reflecting higher capital spending(12)
Other income, net of expenses
Lower OPEB expenses13 
Higher donations(19)
Higher other income, net of expenses2 
(4)
Interest charges(4)
Income Taxes.taxes
Lower tax expense due primarily to research and development tax credits5
7 
Higher production tax credits attributable primarily to Cross Winds® Energy Park
7 
Higher electric utility pre-tax earnings(7)
Lower other income taxes12 
19 
Year Ended December 31, 2020$554 

1Deliveries to end-use customers were 35.4 billion kWh in 2020 and 36.8 billion kWh in 2019.
2See Note 3, Regulatory Matters.

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3See Note 3, Regulatory Matters and Note 22, Asset Sale and Exit Activities.
4See Note 22, Asset Sale and Exit Activities.
5See Note 14, Income Taxes.
For detailed changes to the electric utility’s net income available to common stockholders for 20182019 versus 2017,2018, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Consumers Electric Utility Results of Operations, in the Form 10-K10‑K for the fiscal year ended December 31, 2018,2019, filed February 5, 20196, 2020.
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Consumers Gas Utility Results of Operations
Presented in the following table are the detailed changes to the gas utility’s net income available to common stockholders for 20192020 versus 20182019 (amounts are presented pre-tax, with the exception of income tax changes):
In Millions 
Year Ended December 31, 2018   $169
Reasons for the change    
Gas deliveries1 and rate increases
    
Rate increase, including the impacts of the September 2019 order $83
  
Higher sales, due primarily to colder weather 16
 $99
Maintenance and other operating expenses    
Lower pipeline integrity expenses 12
  
Higher leak repair and survey expenses (4)  
Lower maintenance and other operating expenses 4
 12
Depreciation and amortization    
Increased plant in service, reflecting higher capital spending   (22)
General taxes    
Higher property tax, reflecting higher capital spending   (14)
Other income, net of expenses    
Lower donations in 2019 4
  
Higher AFUDC interest income and other income, net of expenses 7
 11
Interest charges   (4)
Income taxes    
Higher gas utility pre-tax earnings (22)  
Lower other income taxes 4
 (18)
Year Ended December 31, 2019   $233
In Millions
Year Ended December 31, 2019$233 
Reasons for the change
Gas deliveries1 and rate increases
Deliveries
Rate increase$141 
Lower sales due primarily to end-use customers were 313 bcfunfavorable weather(73)
Voluntary revenue refund2
(12)
Disallowance of incremental gas purchased during the Ray Compressor Station fire3
(7)
Lower energy waste reduction program revenues(3)
Higher other revenues20 
$66 
Maintenance and other operating expenses
Lower distribution, transmission, and compression expenses15 
Lower corporate and IT expenses10 
Lower energy waste reduction program costs3 
Voluntary separation plan expenses(4)
Lower maintenance and other operating expenses3 
27 
Depreciation and amortization
Increased plant in 2019service, reflecting higher capital spending(22)
General taxes
Higher property tax, reflecting higher capital spending(16)
Lower other general taxes2 
(14)
Other income, net of expenses
Lower OPEB expenses12 
Higher donations(11)
Lower other income, net of expenses(4)
(3)
Interest charges(19)
Income taxes
Higher gas utility pre-tax earnings(7)
Lower tax expense due primarily to research and 310 bcf in 2018.development tax credits4
1 
Higher other income taxes(1)
(7)
Year Ended December 31, 2020$261 
1Deliveries to end-use customers were 283 bcf in 2020 and 313 bcf in 2019.
2See Note 3, Regulatory Matters.
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3See Note 4, Contingencies and Commitments—Consumers Gas Utility Contingencies.
4See Note 14, Income Taxes.
For detailed changes to the gas utility’s net income available to common stockholders for 20182019 versus 2017,2018, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Consumers Gas Utility Results of Operations, in the Form 10-K10‑K for the fiscal year ended December 31, 2018,2019, filed February 5, 20196, 2020.


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Enterprises Results of Operations
Presented in the following table are the detailed after-tax changes to the enterprises segment’s net income available to common stockholders for 20192020 versus 2018:2019:
In Millions 
Year Ended December 31, 2018   $34
Reason for the change    
Gain on sale of transmission equipment1
   $12
Lower expenses from legacy obligations, net   4
Lower earnings due primarily to lower capacity revenue and higher operating and maintenance costs   (17)
Year Ended December 31, 2019   $33
In Millions
Year Ended December 31, 2019$33 
Reason for the change
Higher earnings due primarily to improved receivables management and DIG operations$11 
Income tax benefit due to restoring previously sequestered alternative minimum tax credits1
See Note 22, Asset Sales and Exit Activities.4 
Absence of 2019 gain on sale of transmission equipment(12)
Year Ended December 31, 2020$36 
1See Note 14, Income Taxes.
For detailed after-tax changes to the enterprises segment’s net income available to common stockholders for 20182019 versus 2017,2018, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Enterprises Results of Operations, in the Form 10-K10‑K for the fiscal year ended December 31, 2018,2019, filed February 5, 20196, 2020.
EnerBank Results of Operations
Presented in the following table are the detailed after-tax changes to EnerBank’s net income available to common stockholders for 20192020 versus 2018:2019:
In Millions
Year Ended December 31, 2019$49 
Reason for the change
Higher earnings due primarily to growth in consumer lending$25 
Implementation of new credit losses standard1
(16)
Year Ended December 31, 2020$58 
In Millions 
Year Ended December 31, 2018   $38
Reason for the change    
Higher earnings based on growth in consumer lending   $11
Year Ended December 31, 2019   $49
1See Note 2, New Accounting Standards.
Presented in the following table are theFor detailed after-tax changes to EnerBank’s net income available to common stockholders for 2019 versus 2018, versus 2017:see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—EnerBank Results of Operations, in the Form 10‑K for the fiscal year ended December 31, 2019, filed February 6, 2020.
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In Millions 
Year Ended December 31, 2017   $28
Reasons for the change    
Reduction of corporate income tax rate due to the impacts of the TCJA1
   $7
Deferred income tax adjustment due to the TCJA, primarily the absence of the 2017 adjustment1
   3
Year Ended December 31, 2018   $38
1
See Note 14, Income Taxes.


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Corporate Interest and Other Results of Operations
Presented in the following table are the detailed after-tax changes to corporate interest and other results for 20192020 versus 2018:2019:
In Millions 
Year Ended December 31, 2018   $(119)
Reasons for the change    
Absence of 2018 loss on early extinguishment of debt   $12
2019 tax deductions primarily attributable to asset sales   4
Accrual for legacy legal obligation1
   (22)
Higher fixed charges due to higher debt   (18)
Higher administrative and other expenses   (1)
Year Ended December 31, 2019   $(144)
In Millions
Year Ended December 31, 2019$(144)
Reasons for the change
Absence of 2019 accrual for legacy legal obligation$22 
Income tax benefit due to restoring previously sequestered alternative minimum tax credits1
See Note 4, Contingencies and Commitments—CMS Energy Contingencies—Gas Index Price Reporting Litigation.5 
Higher fixed charges due to higher debt(16)
Loss on early extinguishment of debt(12)
Absence of 2019 tax benefits recognized as a result of asset sales(4)
Other(5)
Year Ended December 31, 2020$(154)
Presented in the following table are the1See Note 14, Income Taxes.
For detailed after-tax changes to corporate interest and other resultsother’s net income available to common stockholders for 2019 versus 2018, versus 2017:see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Corporate Interest and Other Results of Operations, in the Form 10‑K for the fiscal year ended December 31, 2019, filed February 6, 2020.
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In Millions 
Year Ended December 31, 2017   $(169)
Reasons for the change    
Deferred income tax adjustment due to the TCJA, primarily the absence of the 2017 adjustment1
   $55
2017 elimination of an intercompany gain on the donation of CMS Energy stock2
   9
Lower fixed charges and administrative and other expenses   2
Lower tax benefit due to the impacts of the TCJA1
   (16)
Year Ended December 31, 2018   $(119)
1
See Note 14, Income Taxes.
2
Eliminated on CMS Energy’s consolidated statements of income.


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Cash Position, Investing, and Financing
At December 31, 2019,2020, CMS Energy had $157$185 million of consolidated cash and cash equivalents, which included $17 million of restricted cash and cash equivalents. At December 31, 2019,2020, Consumers had $28$35 million of consolidated cash and cash equivalents, which included $17$15 million of restricted cash and cash equivalents.
Operating Activities
Presented in the following table are specific components of net cash provided by operating activities for 20192020 versus 2018:2019:
In Millions 
CMS Energy, including Consumers  
Year Ended December 31, 2018 $1,703
Reasons for the change  
Higher net income $23
Non‑cash transactions1 
 (40)
Lower postretirement benefits contributions 242
Unfavorable impact of changes in core working capital,2 due primarily to lower accounts payable and lower AMT credit refunds,3 offset partially by higher customer collections and lower gas inventories
 (31)
Unfavorable impact of changes in other assets and liabilities, due primarily to refunds to customers related to the TCJA and self-implemented electric rates (107)
Year Ended December 31, 2019 $1,790
Consumers  
Year Ended December 31, 2018 $1,449
Reasons for the change  
Higher net income $38
Non‑cash transactions1 
 (77)
Lower postretirement benefits contributions 235
Unfavorable impact of changes in core working capital,2 due primarily to lower accounts payable, offset partially by higher customer collections and lower gas inventories
 (16)
Unfavorable impact of changes in other assets and liabilities, due primarily to refunds to customers related to the TCJA and self-implemented electric rates (28)
Year Ended December 31, 2019 $1,601
In Millions
CMS Energy, including Consumers
Year Ended December 31, 2019$1,790 
Reasons for the change
Higher net income70 
Non‑cash transactions1
Non135 ‑cash transactions comprise depreciation and amortization, changes in deferred income taxes and investment tax credits, bad debt expense, and other non‑cash operating activities and reconciling adjustments.
Higher contributions to postretirement benefit plans, primarily to pension plans(702)
Favorable impact of changes in core working capital,2 due primarily to extended payment terms for vendors in 2020 and higher vendor payments in 2019, offset partially by lower customer receipts due to lower electric and gas deliveries
Core working capital comprises accounts receivable, notes receivable, accrued revenue, inventories, accounts payable,50 
Unfavorable impact of changes in other assets and accrued rate refunds.liabilities, due primarily to higher property tax payments, a payment to settle litigation, and higher energy waste reduction spending in excess of collections, offset partially by the absence of 2019 refunds to customers related to the TCJA and self-implemented electric rates(67)
Year Ended December 31, 2020$1,276 
Consumers
Year Ended December 31, 2019$1,601 
Reasons for the change
Higher net income73 
3Non‑cash transactions1
194 
Higher contributions to postretirement benefit plans, primarily to pension plans(683)
Favorable impact of changes in core working capital,2 due primarily to extended payment terms for vendors in 2020 and higher vendor payments in 2019, offset partially by lower customer receipts due to lower electric and gas deliveries
40 
Unfavorable impact of changes in other assets and liabilities, due primarily to higher property tax payments and higher energy waste reduction spending in excess of collections, offset partially by lower income taxes payments to CMS Energy received alternative minimum tax (AMT) creditand the absence of 2019 refunds of $68 million in 2019to customers related to the TCJA and $125 million in 2018.self-implemented electric rates(7)
Year Ended December 31, 2020$1,218 
1Non‑cash transactions comprise depreciation and amortization, changes in deferred income taxes and investment tax credits, bad debt expense, and other non‑cash operating activities and reconciling adjustments.
2Core working capital comprises accounts receivable, notes receivable, accrued revenue, inventories, accounts payable, and accrued rate refunds.
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For specific components of net cash provided by operating activities for 2019 versus 2018, versus 2017, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Cash Position, Investing, and Financing—Financing—Operating Activities, in the Form 10-K10‑K for the fiscal year ended December 31, 2018,2019, filed February 5, 20196, 2020.


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Investing Activities
Presented in the following table are specific components of net cash used in investing activities for 20192020 versus 2018:2019:
In Millions 
CMS Energy, including Consumers  
Year Ended December 31, 2018 $(2,606)
Reasons for the change  
Higher capital expenditures at Consumers, offset partially by the absence of the 2018 purchase of a wind generation project $(30)
Changes in EnerBank notes receivable, reflecting growth in consumer lending (94)
Higher purchases of notes receivable by EnerBank (118)
Absence of 2018 proceeds from DB SERP investments1
 (146)
Proceeds from sale of EnerBank notes receivable 67
Proceeds from sale of transmission equipment in 20192
 97
Other investing activities, primarily lower costs to retire property 14
Year Ended December 31, 2019 $(2,816)
Consumers  
Year Ended December 31, 2018 $(1,971)
Reasons for the change  
Higher capital expenditures $(263)
Proceeds from sale of transmission equipment in 20192
 77
Other investing activities, primarily lower costs to retire property 20
Year Ended December 31, 2019 $(2,137)
In Millions
CMS Energy, including Consumers
Year Ended December 31, 2019$(2,816)
Reasons for the change
Higher capital expenditures(213)
Changes in EnerBank notes receivable, reflecting growth in consumer lending(256)
Lower purchases of notes receivable by EnerBank326 
Higher proceeds from sale of EnerBank notes receivable in 2020130 
Lower proceeds from sale of transmission equipment in 20201
See Note 7, Financial Instruments.(39)
Other investing activities1 
Year Ended December 31, 2020$(2,867)
Consumers
Year Ended December 31, 2019$(2,137)
Reasons for the change
Higher capital expenditures(85)
DB SERP investment in note receivable – related party(5)
2Lower proceeds from sale of transmission equipment in 20201
See Note 22, Asset Sales and Exit Activities(19)
Year Ended December 31, 2020$(2,246)
1See Note 22, Asset Sale and Exit Activities
For specific components of net cash used in investing activities for 2019 versus 2018, versus 2017, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Cash Position, Investing, and Financing—Financing—Investing Activities, in the Form 10-K10‑K for the fiscal year ended December 31, 2018,2019, filed February 5, 20196, 2020.


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Financing Activities
Presented in the following table are specific components of net cash provided by financing activities for 20192020 versus 2018:2019:
In Millions 
CMS Energy, including Consumers  
Year Ended December 31, 2018 $874
Reasons for the change  
Lower debt issuances $(616)
Lower debt retirements 585
Increases in EnerBank certificates of deposit, reflecting higher borrowings 118
Lower repayments under Consumers’ commercial paper program 66
Lower issuances of common stock under the continuous equity offering program (29)
Higher payments of dividends on common and preferred stock (29)
Lower debt prepayment costs 28
Other financing activities, primarily lower debt issuance costs and higher customer advances for construction 11
Year Ended December 31, 2019 $1,008
Consumers  
Year Ended December 31, 2018 $513
Reasons for the change  
Lower debt issuances $(1,113)
Lower debt retirements 652
Lower repayments under Consumers’ commercial paper program 66
Higher stockholder contribution from CMS Energy 425
Higher payments of dividends on common and preferred stock (61)
Lower debt prepayment costs 12
Other financing activities, primarily lower debt issuance costs and higher customer advances for construction 14
Year Ended December 31, 2019 $508
In Millions
CMS Energy, including Consumers
Year Ended December 31, 2019$1,008 
Reasons for the change
Higher debt issuances1,028 
Higher debt retirements(725)
Lower borrowings of certificates of deposit at EnerBank(215)
Higher repayments under Consumers’ commercial paper program(83)
Higher issuances of common stock, primarily the settlement of equity forward sale contracts241 
Higher payments of dividends on common stock(31)
Higher debt prepayment costs(51)
Proceeds from the sale of membership interest in VIE to tax equity investor417 
Contribution from noncontrolling interest31 
Other financing activities(1)
Year Ended December 31, 2020$1,619 
Consumers
Year Ended December 31, 2019$508 
Reasons for the change
Higher debt issuances961 
Higher debt retirements(545)
Higher repayments under Consumers’ commercial paper program(83)
Borrowings from CMS Energy307 
Lower stockholder contribution from CMS Energy(25)
Higher payments of dividends on common stock(45)
Higher debt prepayment costs(35)
Other financing activities, primarily higher debt issuance costs(8)
Year Ended December 31, 2020$1,035 
For specific components of net cash provided by (used in) financing activities for 2019 versus 2018, versus 2017, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Cash Position, Investing, and Financing—Financing—Financing Activities, in the Form 10-K10‑K for the fiscal year ended December 31, 2018,2019, filed February 5, 20196, 2020.


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Capital Resources and Liquidity
CMS Energy uses dividends and tax-sharing payments from its subsidiaries and external financing and capital transactions to invest in its utility and non‑utility businesses, retire debt, pay dividends, and fund its other obligations. The ability of CMS Energy’s subsidiaries, including Consumers, to pay dividends to CMS Energy depends upon each subsidiary’s revenues, earnings, cash needs, and other factors. In addition, Consumers’ ability to pay dividends is restricted by certain terms included in its debt covenants and articles of incorporation and potentially by FERC requirements and provisions under the Federal Power Act and the Natural Gas Act. For additional details on Consumers’ dividend restrictions, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Financings and Capitalization—Dividend Restrictions. For the year ended December 31, 2019,2020, Consumers paid $592$637 million in dividends on its common stock to CMS Energy.
As a result of a provision in the TCJA, CMS Energy is required to recover all alternative minimum tax credits over four years through offsets of regular taxConsumers uses cash flows generated from operations and through cash refunds. CMS Energy expects to be able to offset regular tax primarily through the use of federal net operating loss carryforwards and, accordingly, receive alternative minimum tax credit refunds through 2021. Another provision in the TCJA excludes rate-regulated utilitiesexternal financing transactions, as well as stockholder contributions from 100 percent cost expensing of certain property. This provision will cause Consumers to make higher tax-sharing payments to CMS Energy, which in turn might permit CMS Energy, to maintain lower levels offund capital expenditures, retire debt, in order to invest in its businesses, pay dividends, and fund its generalother obligations. Consumers expectsalso uses these sources of funding to contribute to its employee benefit plans.
CMS Energy and Consumers expect to have sufficient funding sources availableliquidity to issue credits to customers for all impactsfund their commitments despite potential material uncertainties that may impact their cash management and financing strategies as a result of the TCJA.COVID‑19 pandemic. CMS Energy and Consumers rely on the capital markets to fund their robust capital plan and those markets have faced significant strain. CMS Energy and Consumers have mitigated the potential impact of the pandemic on their liquidity by completing financing transactions and reducing the need for additional external funding. For more information on CMS Energy’s and Consumers’ financing transactions, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Financings and Capitalization.
Barring any sustained market dislocations or disruptions, CMS Energy and Consumers expect to continue to have ready access to the financial and capital markets and will continue to explore possibilities to take advantage of market opportunities as they arise with respect to future funding needs. If access to these markets were to diminish or otherwise become restricted, CMS Energy and Consumers would implement contingency plans to address debt maturities, which could include reduced capital spending. The COVID‑19 pandemic is a continually evolving situation and CMS Energy and Consumers cannot predict the ultimate impact it will have on their debt covenants, business, results of operations, financial condition, capital investment program, liquidity, and cash flows.
CMS Energy will make a change in method of tax accounting in its 2020 tax return to take advantage of IRS tax guidance that allows certain costs to maintain, replace, or improve electric assets to be deducted as repairs for tax purposes. Under this guidance, the costs can be deducted immediately rather than capitalized and depreciated over a 20-year period. This change will allow CMS Energy to claim accelerated one-time federal tax deductions of approximately $975 million upon initial adoption, with favorable ongoing annual deductions thereafter, placing CMS Energy in a net operating loss carryforward position until 2023.
In 2018,2020, CMS Energy entered into an equity offering program under which it may sell from time to time, shares of CMS Energyits common stock having an aggregate sales price of up to $250 million. Under this program, CMS Energy may sell its common stock$500 million in privately negotiated transactions, in “at the market” offerings, through forward sales transactions, or otherwise.
CMS Energy has entered into forward sales contracts having an aggregate sales price of $250 million. These contractstransactions under this program, which allow CMS Energy to either physically settle the contracts by issuing shares of its common stock at the then-applicable forward sale price specified by the agreement or net settle the contracts through the delivery or receipt of cash or
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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.
For more information on thethese forward sale contracts, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Financings and Capitalization—Issuance of Common Stock.
Consumers uses cash flows generated from operations and external financing transactions, as well as stockholder contributions from CMS Energy, to fund capital expenditures, retire debt, pay dividends, contribute to its employee benefit plans, and fund its other obligations. Accelerated pension funding in prior years and several initiatives to reduce costs have helped improve cash flows from operating activities.
Access to the financial and capital markets depends on CMS Energy’s and Consumers’ credit ratings and on market conditions. As evidenced by past financing transactions, CMS Energy and Consumers have had ready access to these markets. Barring major market dislocations or disruptions, CMS Energy and Consumers expect to continue to have ready access to the financial and capital markets. If access to these markets were to diminish or otherwise become restricted, CMS Energy and Consumers would implement contingency plans to address debt maturities, which could include reduced capital spending.
At December 31, 2019,2020, CMS Energy had $544$532 million of its revolving credit facility available and Consumers had $1.1 billion available under its revolving credit facilities. CMS Energy and Consumers use these credit facilities for general working capital purposes and to issue letters of credit. An additional source of liquidity is Consumers’ commercial paper program, which allows Consumers to issue, in one or


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more placements, up to $500 million in the aggregate in commercial paper notes with maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities. While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At December 31, 2019,2020, there were $90 millionno commercial paper notes outstanding under this program. For additional details on CMS Energy’s and Consumers’ secured revolving credit facilities and commercial paper program, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Financings and Capitalization.
Certain of CMS Energy’s and Consumers’ credit agreements debt indentures, and other facilities contain covenants that require CMS Energy and Consumers to maintain certain financial ratios, as defined therein. At December 31, 2019,2020, no default had occurred with respect to any financial covenants contained in CMS Energy’s and Consumers’ credit agreements, debt indentures, or other facilities.agreements. CMS Energy and Consumers were each in compliance with these covenants as of December 31, 2019,2020, as presented in the following table:
Credit Agreement Indenture, or FacilityLimit Actual 
CMS Energy, parent only
Debt to EBITDA¹<6.25 to 1.04.6 to 1.0
Consumers
Debt to Capital²<0.65 to 1.00.48 to 1.0
Debt to Capital1
Applies
< 0.70 to CMS Energy’s $550 million revolving credit agreement.1.0
0.58 to 1.0
Consumers
Debt to Capital2
Applies
< 0.65 to Consumers’ $850 million and $250 million revolving credit agreements and its $30 million and $35 million reimbursement agreements.1.0
0.49 to 1.0
1Applies to CMS Energy’s revolving credit agreement and term loan credit agreement. In April 2020, amendments to these agreements changed the required financial covenant from a leverage ratio to a capitalization ratio.
2Applies to Consumers’ revolving credit agreements and letter of credit agreement.
Components of CMS Energy’s and Consumers’ cash management plan include controlling operating expenses and capital expenditures and evaluating market conditions for financing and refinancing opportunities. CMS Energy’s and Consumers’ present level of cash and expected cash flows from operating activities, together with access to sources of liquidity, are anticipated to be sufficient to fund the companies’ contractual obligations for 20202021 and beyond.

CMS Energy is also required both by law and by contract to provide financial support, including infusing additional capital, to ensure that EnerBank satisfies mandated capital requirements and has sufficient liquidity to operate. With its self-funding plan, EnerBank has exceeded these requirements historically and exceeded them as of December 31, 2020. In addition, EnerBank has access to contingent funding sources, including the Discount Window and a $50 million uncommitted federal funds line of credit. Each month, EnerBank pledges a subset of its eligible loans to the Federal Reserve to ensure a seamless

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borrowing capability should the need arise. At December 31, 2020, there were no outstanding borrowings under EnerBank’s contingent funding sources.
Contractual Obligations: Presented in the following table are CMS Energy’s and Consumers’ contractual obligations. The table excludes all amounts classified as current liabilities on CMS Energy’s and Consumers’ consolidated balance sheets, other than the current portion of long-term debt, leases, and other financing.
In Millions
Payments Due
December 31, 2020TotalLess Than One YearOne to Three YearsThree to Five YearsMore Than Five Years
CMS Energy, including Consumers
Long-term debt$15,272 $1,486 $1,748 $1,493 $10,545 
Interest payments on long-term debt12,563 499 962 880 10,222 
Finance leases and other financing183 36 40 30 77 
Operating leases52 10 6 2 34 
AROs1,971 43 62 50 1,816 
Deferred investment tax credit115 5 10 10 90 
Environmental liabilities118 7 40 19 52 
Long-term payables37 6 23 3 5 
Purchase obligations
Total PPAs8,898 1,057 1,522 1,516 4,803 
Other1
3,179 1,391 1,136 370 282 
Total contractual obligations$42,388 $4,540 $5,549 $4,373 $27,926 
Consumers
Long-term debt$8,197 $364 $682 $363 $6,788 
Interest payments on long-term debt6,677 281 559 522 5,315 
Finance leases and other financing183 36 40 30 77 
Operating leases43 8 6 2 27 
AROs1,908 43 62 50 1,753 
Deferred investment tax credit115 5 10 10 90 
Environmental liabilities61 3 32 11 15 
Purchase obligations
PPAs
MCV PPA2,815 349 698 705 1,063 
Palisades PPA517 398 119 — — 
Related-party PPAs2
318 58 116 97 47 
Other PPAs5,248 252 589 714 3,693 
Total PPAs$8,898 $1,057 $1,522 $1,516 $4,803 
Other1
2,605 1,333 984 284 4 
Total contractual obligations$28,687 $3,130 $3,897 $2,788 $18,872 
1Long-term contracts for the purchase of commodities and related services, and construction and service agreements. The commodities and related services include natural gas and coal and associated transportation.
2Long-term PPAs from certain affiliates of CMS Enterprises.
In Millions 
 Payments Due
December 31, 2019Total Less Than One Year One to Three Years Three to Five Years More Than Five Years 
CMS Energy, including Consumers          
Long-term debt $13,188
 $1,111
 $1,892
 $1,477
 $8,708
Interest payments on long-term debt 10,863
 480
 897
 777
 8,709
Finance leases and other financing 220
 37
 59
 34
 90
Operating leases 67
 11
 16
 5
 35
AROs 1,652
 75
 50
 53
 1,474
Deferred investment tax credit 120
 5
 10
 10
 95
Environmental liabilities 131
 17
 36
 21
 57
Long-term payables 34
 3
 22
 3
 6
Purchase obligations          
Total PPAs 9,336
 1,030
 1,785
 1,213
 5,308
Other¹ 3,244
 1,685
 971
 409
 179
Total contractual obligations $38,855
 $4,454
 $5,738
 $4,002
 $24,661
Consumers          
Long-term debt $7,322
 $202
 $680
 $686
 $5,754
Interest payments on long-term debt 5,919
 276
 538
 482
 4,623
Finance leases and other financing 220
 37
 59
 34
 90
Operating leases 56
 9
 13
 5
 29
AROs 1,638
 75
 50
 53
 1,460
Deferred investment tax credit 120
 5
 10
 10
 95
Environmental liabilities 73
 12
 28
 13
 20
Purchase obligations          
PPAs          
MCV PPA 3,295
 313
 559
 426
 1,997
Palisades PPA 899
 388
 511
 —
 —
Related-party PPAs² 472
 71
 146
 149
 106
Other PPAs 4,670
 258
 569
 638
 3,205
Total PPAs 9,336
 1,030
 1,785
 1,213
 5,308
Other¹ 2,865
 1,638
 890
 336
 1
Total contractual obligations $27,549
 $3,284
 $4,053
 $2,832
 $17,380
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1
Long-term contracts for the purchase of commodities and related services, and construction and service agreements. The commodities and related services include natural gas and coal and associated transportation.
2
Long-term PPAs from certain affiliates of CMS Enterprises.
CMS Energy and Consumers also have recognized non‑current liabilities for which the timing of payments cannot be reasonably estimated. These items, which are excluded from the table above, include regulatory liabilities, deferred income taxes, workers’ compensation liabilities, accrued liabilities under renewable energy programs, and other liabilities. Retirement benefits are also excluded from the table


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above. For details related to benefit payments, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 12, Retirement Benefits.
Off-Balance-Sheet Arrangements: CMS Energy, Consumers, and certain of their subsidiaries enter into various arrangements in the normal course of business to facilitate commercial transactions with third parties. These arrangements include indemnities, surety bonds, letters of credit, and financial and performance guarantees. Additionally, CMS Energy has entered into forward sales contracts to sell its common stock in order to invest in its utility and non-utility businesses; as of December 31, 2020, these contracts have an aggregate sales price of $250$58 million, and mature in 2020.maturing through 2022. For additional details on the companies’ indemnity and guarantee arrangements, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments—Guarantees. For additional details on letters of credit and CMS Energy’s forward sales contracts, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 5, Financings and Capitalization.
Capital Expenditures: Over the next five years, Consumers expect to make substantial capital investments. Consumers may revise its forecasts of capital expenditures periodically due to a number of factors, including environmental regulations, business opportunities, market volatility, economic trends, and the ability to access capital. Presented in the following table are Consumers’ estimated capital expenditures, including lease commitments, for 20202021 through 2024:2025:
In Billions
20212022202320242025Total
Consumers
Electric utility operations$1.4 $1.8 $1.6 $1.5 $1.6 $7.9 
Gas utility operations1.1 1.2 1.1 1.0 0.9 5.3 
Total Consumers$2.5 $3.0 $2.7 $2.5 $2.5 $13.2 
In Billions 
 2020 2021 2022 2023 2024 Total 
Consumers            
Electric utility operations $1.3
 $1.6
 $1.4
 $1.4
 $1.5
 $7.2
Gas utility operations 0.9
 1.1
 0.9
 1.1
 1.0
 5.0
Total Consumers $2.2
 $2.7
 $2.3
 $2.5
 $2.5
 $12.2
Outlook
Several business trends and uncertainties may affect CMS Energy’s and Consumers’ financial condition and results of operations. These trends and uncertainties could have a material impact on CMS Energy’s and Consumers’ consolidated income, cash flows, or financial position. For additional details regarding these and other uncertainties, see Forward-Looking Statements and Information; Item 1A. Risk Factors; Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters; and Note 4, Contingencies and Commitments.
Consumers Electric Utility Outlook and Uncertainties
Clean Energy Plan: While Consumers continues to experience modest growth in demand for electricity due to Michigan’s growing economy and increased use of air conditioning, consumer electronics, and other electric devices, it expectsIn 2019, the MPSC approved the IRP that increase in demand to be offset by the effects of energy efficiency and conservation.
In June 2018, Consumers filed an IRP with the MPSC detailingin 2018, which details its Clean Energy Plan. In March 2019, Consumers and a broad coalition of key stakeholders, including business customers, environmental groups, the MPSC Staff, and the Michigan Attorney General, filed an agreement settling the IRP with the MPSC and the MPSC approved it in June 2019.


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Through its Clean Energy Plan, Consumers expects to reduce carbon emissions of its owned generation by more than 90 percent from its 2005 levels by 2040 and eliminate the use of coal to generate electricity by 2040. The Clean Energy Plan provides the foundation for Consumers’ goal to achieve net-zero carbon emissions from its electric business by 2040. Under this net-zero goal, Consumers plans to eliminate the impact of carbon emissions created by the electricity it generates or purchases for customers. Consumers is required to file a new IRP by June 2021.
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Specifically, the Clean Energy Plan provides for:
•the retirement of the D.E. Karn 1 & 2 coal-fueled generating units, totaling 503460 MW, in 2023
•the continued assessment in future IRP filings concerning thepotential retirement of the J.H. Campbell 1 & 2 coal-fueled generating units, totaling 609540 MW, in 20252031 or earlier
Under the Clean Energy Plan, Consumers will replace the capacity to be retired with:
•increased demand response programs
•increased energy efficiency
•increased renewable energy generation
•conservation voltage reduction
•increased pumped storage
Consumers will competitively bid new capacity and at least 50 percent of the new capacity will be built and owned by third parties; the remainder will be owned and operated by Consumers.
In support of its Clean Energy Plan, Consumers issued a requestrequests for proposals in September 2019 and July 2020, each to acquire up to 300 MW of new capacity from projects to be operational in Michigan’s Lower Peninsula by May 2022.2023. Specifically, Consumers solicited offers to enter into PPAs with or purchase solar generation projects ranging in size from 20 MW to 150 MW and to enter into PPAs with PURPA qualifying facilities up to 20 MW. Any contracts entered into as a result of the request for proposals would be subject to MPSC approval.
As approved bya result of the MPSC, the IRP allows2019 request for proposals, in December 2020, Consumers entered into a 25-year PPA under which it will purchase 140 MW of renewable capacity, energy, and RECs from a solar generating facility to earn a financial incentive on PPAs approved by the MPSC afterbe constructed in Calhoun County, Michigan. The facility is expected to be operational in 2022. Also, in January 1, 2019. Additionally, the IRP allows for recovery of significant increases in demand response costs. The MPSC separately approved2021, Consumers entered into an associated financial incentive for exceeding certain demand response targets. Consumers is required to file a new IRP by June 2021.
PURPA: PURPA requires Consumersagreement to purchase power from qualifying cogenerationa solar generating facility under development in Michigan, with capacity of up to 150 MW. Consumers expects to take full ownership and small power production facilities at a price approved bybegin commercial operation of the project in 2022. Both of these agreements are subject to MPSC that is meant to represent Consumers’ “avoided cost” of generating power or purchasing power from another source. In 2017, the MPSC issued an order establishing an avoided-cost methodology for determining the price that Consumers must pay to purchase power under PURPA. Among other things, the MPSC’s order changed the basis of Consumers’ avoided cost from the cost of coal-fueled generating units to that of natural gas-fueled generating units.
In order to address various complaints raised concerning the 2017 order, Consumers and various PURPA developers filed a settlement agreement with the MPSC in August 2019. Under the settlement agreement, which the MPSC approved in September 2019, Consumers will enter into contracts to purchase 584 MW of power from qualifying solar generation projects by September 2023. Of this amount, 170 MW will be purchased at the full avoided-cost rates set in the 2017 order. The remaining 414 MW will be purchased at a capacity payment equal to the MISO planning resource auction price and a designated energy price previously approved by the MPSC.
In the approved IRP settlement agreement, Consumers agreed to a new method of calculating avoided cost going forward, based on a competitive bidding process that will enable Consumers to purchase energy from new generation at competitive prices and mitigate the risk of forced purchases of unneeded or uneconomical renewable generation.
In September 2019, FERC issued a notice of proposed rulemaking that could result in modifications to the present federal regulations implementing PURPA. Among other things, the proposal would change the rules for measuring the size of qualifying facilities and determining whether certain PURPA projects have


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access to wholesale markets. The proposal would also provide states with more flexibility to set the prices paid to PURPA projects. Consumers does not anticipate the proposed rulemaking will affect the PURPA projects with which it has agreements. Consumers cannot predict the outcome of this proposed rulemaking.approval.
Renewable Energy Plan: The 2016 Energy Law raised the renewable energy standard to 15 percent in 2021, with an interim target of 12.5 percent in 2019. Consumers met the interim target for 2019 and demonstrated its compliance in the 2019 renewable energy cost reconciliation that the MPSC approved in February 2021. Consumers is required to submit RECs, which represent proof that the associated electricity was generated from a renewable energy resource, in an amount equal to at least the required percentage of Consumers’ electric sales volume each year. Under its renewable energy plan, Consumers expects to meet its renewable energy requirement each year with a combination of newly generated RECs and previously generated RECs carried over from prior years. Consumers met the interim target of 12.5 percent for 2019 and will demonstrate its compliance by filing the 2019 renewable energy cost reconciliation with the MPSC in June 2020.
In conjunction with itsUnder Consumers’ renewable energy plan, a third phase of Consumers’ Cross Winds® Energy Park, with nameplate capacity of 76 MW, began operations in December 2019. This project qualifies for certain federal production tax credits, generating cost savings that will be passed on to customers.
In February 2019, the MPSC issued an order ruling on amendments Consumers had requested to its renewable energy plan, andhas approved the acquisition of up to 525 MW of new wind generation projects. Under the renewable energy plan,projects and authorized Consumers is authorized to earn a 10.7 percent return on equity on any projects approved by the MPSC. Also in February 2019,Specifically, the MPSC has approved an agreement under which Consumers purchasedthe following:
•purchase and construction of a 150-MW wind generation project in Gratiot County, Michigan; the project became operational in December 2020
•purchase of a wind generation project under development, with capacity of up to 150166 MW, in Gratiot County, Michigan. Consumers began on-site construction of this project during the fourth quarter of 2019 and expects that it will be complete and operational in 2020.
In June 2019, Consumers entered into an agreement to purchase a wind generation project under development in Hillsdale, Michigan, with capacity of up to 166 MW. Under the agreement, which the MPSC unconditionally approved in December 2019,Michigan; Consumers expects to take full ownership and begin commercial operation of the project in 2020. Additionally,early 2021
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In December 2020, Consumers entered into an agreement to purchase a wind generation project under development, with capacity of up to 201 MW, in September 2019,Gratiot County, Michigan. Consumers expects to take full ownership and begin commercial operation of the project in 2022. The agreement is subject to MPSC approval.
The MPSC also approved the execution of a 20‑year agreement20-year PPA under which Consumers will purchase 100 MW of renewable capacity, energy, and RECs from a 149‑MW149-MW solar generating facility to be constructed in Calhoun County, Michigan. TheMichigan; the facility is expected to be operational in 2021. These agreements resulted from a request for proposals that Consumers issued in June 2018 to acquire up to 400 MW of wind generation projects and up to 100 MW of solar generation projects in Michigan.2022.
Electric Customer Deliveries and Revenue: Consumers’ electric customer deliveries are seasonal and largely dependent on Michigan’s economy. The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment. In addition, Consumers’ electric rates, which follow a seasonal rate design, are higher in the summer months than in the remaining months of the year. Beginning in June 2020, electric residential customers will transition to
As a result of the COVID-19 pandemic, Consumers has delayed implementation of a summer peak time-of-use rate thatfor electric residential customers, originally planned to begin in June 2020. The summer peak time-of-use rate will allow themcustomers to take advantage of lower-cost energy during off-peak times during the summer months. Thus, customersCustomers could reduce their electric bills by shifting their consumption from on-peakon‑peak to off-peakoff‑peak times. The MPSC approved delaying implementation of the summer peak time-of-use rate to 2021, recognizing that more customers may be at home during the pandemic and may not have the same opportunities to manage peak power consumption.

In response to the COVID‑19 pandemic, Michigan’s Governor issued various executive orders requiring all non-essential businesses to close temporarily and Michigan residents to stay home during the period from March 23, 2020 to June 8, 2020. Subsequent executive orders gradually eased restrictions. In October 2020, the Michigan Supreme Court issued an opinion that limits the governor’s authority to issue executive orders relating to the COVID-19 pandemic. Subsequently, the Michigan Department of Health and Human Services issued emergency orders maintaining and then increasing restrictions on indoor gatherings. Most recent orders have resulted in stepped-up enforcement of remote work in lieu of in-person work when possible and restrictions on certain entertainment venues and indoor dining at restaurants. Presently, most businesses are now open at limited capacity and with safety measures in place.
During the period from April 1, 2020 through December 31, 2020, a period covering the majority of the pandemic to date, weather-normalized electric deliveries were approximately five percent lower than deliveries during the same period in 2019, due mainly to a decline in deliveries to commercial and industrial customers of approximately 13 percent. This decline, however, was offset partially by an increase of approximately seven percent in deliveries to residential customers. Consumers cannot predict the long-term impact of the COVID-19 pandemic.
In response to the pandemic, Consumers initially suspended shut-offs of service for non-payment and extended payment protection plans for low-income and senior customers. Consumers slowly began resuming shut-offs of service for non-payment in late July 2020 for commercial and industrial customers and in October 2020 for residential customers. Consumers has experienced and anticipates it will continue to experience increased uncollectible accounts in the near term, but cannot predict the long-term impact of the pandemic on Michigan’s economy or its customers.

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Table of Contents

Over the next five years, Consumers expects weather-normalized electric deliveries over the next five years to decrease slightly.remain stable relative to 2020. This outlook reflects the effects of energy waste reduction programs and appliance efficiency standards offset largely by modest growth in electric demand. Actual delivery levels will depend on:
•energy conservation measures and results of energy waste reduction programs
•weather fluctuations
•Michigan’s economic conditions, including utilization, expansion, or contraction of manufacturing facilities, population trends, and housing activity
Electric ROA: Michigan law allows electric customers in Consumers’ service territory to buy electric generation service from alternative electric suppliers in an aggregate amount capped at ten percent of Consumers’ sales, with certain exceptions. At December 31, 2019,2020, electric deliveries under the ROA program were at the ten‑percent limit. Of Consumers’ 1.81.9 million electric customers, 285 customers,fewer than 300, or 0.02 percent, purchased electric generation service under the ROA program.
The 2016 Energy Law established a path to ensure that forward capacity is secured for all electric customers in Michigan, including customers served by alternative electric suppliers under ROA. The new law also authorized the MPSC to ensure that alternative electric suppliers have procured enough capacity to cover their anticipated capacity requirements for the four-year forward period. In 2017, the MPSC issued an order establishing a state reliability mechanism for Consumers. Under this mechanism, beginning June 1, 2018, if an alternative electric supplier does not demonstrate that it has procured its capacity requirements for the four-year forward period, its customers will pay a set charge to the utility for capacity that is not provided by the alternative electric supplier. All alternative electric suppliers have demonstrated that they have procured their capacity requirements through the MISO planning year beginning June 1, 2022.2023.
In June 2018,During 2017, the MPSC issued an order requiringorders finding that it has statutory authority to determine and implement a local clearing requirement, which requires all electric suppliers to demonstrate that a portion of the capacity procured to serve customers during peak demand times is located in the MISO footprint in Michigan’s Lower Peninsula. In July 2018, the Michigan Court of Appeals issued a decision that the MPSC does not have statutory authority to implement such a requirement for individual alternative electric suppliers. Consumers believesIn April 2020, the 2016 Energy Law does give such authorization to the MPSC. The MPSC and Consumers have filed applications for leave to appealMichigan Supreme Court issued a unanimous opinion reversing the Court of Appeals’ decision and determined that the 2016 Energy Law authorizes the MPSC to implement a local clearing requirement on individual alternative electric suppliers. The Michigan Supreme Court remanded the case to the Court of Appeals to consider a procedural challenge previously undecided by the Court of Appeals; this challenge concerns the process that the MPSC used in 2017 to consider a local clearing requirement and does not affect the substance of the MPSC’s authority to implement a local clearing requirement for future planning periods. In April 2020, ABATE filed a motion for rehearing of the Michigan Supreme Court’s decision; the Michigan Supreme Court denied ABATE’s motion in May 2020. In June 2020, the Michigan Court of Appeals issued a letter resubmitting the case for its consideration of the Michigan Supreme Court’s remand of the procedural issue. In December 2020, the Michigan Court of Appeals issued a decision in response to the Michigan Supreme Court. In June 2019,Court’s procedural remand upholding the MPSC’s procedure for determining capacity obligations of electric providers under the 2016 Energy Law. The Michigan Court of Appeals also held that the 2016 Energy Law’s provision for the MPSC to implement a local clearing requirement does not constitute an unlawful delegation of the Michigan Supreme Court issued orders directingLegislature’s authority.
In September 2020, ABATE and another intervenor filed a complaint against the filing of supplemental briefs and the scheduling of oral argumentsMPSC in the case,U.S. District Court for the Eastern District of Michigan challenging the constitutionality of a local clearing requirement. The complaint requests the federal court to issue a permanent injunction prohibiting the MPSC from implementing a local clearing requirement on individual electric providers. In
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December 2020, Consumers filed a motion to intervene and will ultimately decide whether to consider and rule ondefend the appeals. Oral arguments occurredlocal clearing requirement in November 2019, and the Michigan Supreme Court will issue an order on the application for leave to appeal.that federal litigation; this motion was granted in January 2021.
Electric Rate Matters: Rate matters are critical to Consumers’ electric utility business. For additional details on rate matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters.Matters and Note 4, Contingencies and Commitments.
Depreciation Rate Case: In July 2020, Consumers filed a depreciation case related to Ludington, requesting to increase depreciation expense, and its recovery of that expense, by $17 million annually. In February 2021, the MPSC approved a settlement agreement that decreases depreciation expense by $9 million annually based on December 31, 2019 balances. The new depreciation rates will be reflected in rates determined in Consumers’ next-filed electric rate case.
PSCR Plan: Consumers submitted its 20202021 PSCR plan to the MPSC in September 20192020 and, in accordance with its proposed plan, self-implemented the 20202021 PSCR charge beginning in January 2020.2021. In January 2021, Consumers filed an amendment to its plan with the MPSC and will self-implement a new 2021 PSCR charge beginning in May 2021.
Electric Environmental Outlook: Consumers’ operations are subject to various state and federal environmental laws and regulations. Consumers estimates that it will incur capital expenditures of $275$260 million from 20202021 through 20242025 to continue to comply with RCRA, the Clean Water Act, the Clean Air Act, and numerous state and federal environmental regulations. Consumers expects to recover these costs in customer rates, but cannot guarantee this result. Consumers’ primary environmental compliance focus includes, but is not limited to, the following matters.


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Air Quality: Multiple air quality regulations apply, or may apply, to Consumers.
CSAPR, which became effective in 2015, requires Michigan and many other states to improve air quality by reducing power plant emissions that, according to EPA computer models, contribute to ground-level ozone and fine particle pollution in other downwind states. In 2016, the EPA finalized new ozone season standards for CSAPR, which became effective in 2017. AnyIn October 2020, in response to a court-ordered remand due to litigation, or remand to the EPA proposed a revised CSAPR rule to reflect updated emission reductions from electric generating units in 12 states, including Michigan. The EPA intends to finalize the rule by March 2021, and has made provisions for program implementation by May 2021, with continued emission reductions through 2024. Consumers is not expected to impact Consumers’evaluating its emission compliance strategy as Consumers expects its emissionsfor existing units based on the proposed number of allowances allocated to be within the CSAPR allowance allocations.Michigan for 2021 through 2024.
In 2012, the EPA published emission standards for electric generating units, known as MATS, based on Section 112 of the Clean Air Act. Under MATS, all of Consumers’ existing coal-fueled electric generating units were required to add additional controls for hazardous air pollutants. Consumers met the extended deadline of April 2016 for five coal-fueled units and two oil/gas-fueled units it continues to operate and retired its seven remaining coal-fueled units. MATS is presently being litigated. In addition, in December 2018,May 2020, the EPA proposedfinalized changes to the supporting analysis used to justifyenact MATS, but did not proposemake any changes to the MATS regulations. AnyThese changes resulting from litigation or rulemaking are expected to be minor and shoulddo not impact Consumers’ MATS compliance strategy. Ifstrategy because, if the MATS regulations were repealed, Consumers would then be required to comply with the Michigan Mercury Rule, which has similar requirements to MATS. In addition, Consumers must comply with emission limits in its settlement agreement with the EPA entered into in 2014 concerning opacity and NSR,renewable operating permits, which hashave similar emission requirements to MATS.
In 2015, the EPA lowered the NAAQS for ozone. The new2015 ozone NAAQS will makemade it more difficult to construct or modify power plants and other emission sources in areas of the country that have not met the new2015 ozone standard. In April 2018, the EPA designated certain areas of Michigan as not meeting the new standard with an August 2018 effective date. ozone standard. None of Consumers’ fossil-fuel-fired generating units are located in these areas. SomeAdditionally,
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the State of Michigan has convened industry workgroups to seek implementation and control strategy ideas for statewide compliance of the 2015 ozone standard. In August 2020, the EPA proposed to retain the 2015 NAAQS for ozone without revision, and finalized this regulatory decision in areas impacted by the rule, but Consumers expects only minor permitting impacts if those units are modified in the future.December 2020. Consumers does not expect that any litigation involving NAAQS for ozone will have a material adverse impact on its generating assets.
Consumers’ strategy to comply with air quality regulations, including CSAPR, NAAQS, and MATS, as well as its legal obligations, involved the installation and operation of emission control equipment at some facilities and the suspension of operations at others; however, Consumers continues to evaluate these rules in conjunction with other EPA and EGLE rulemakings, litigation, executive orders, treaties, and congressional action. This evaluation could result in:
•a change in Consumers’ fuel mix
•changes in the types of generating units Consumers may purchase or build in the future
•changes in how certain units are used
•the retirement, mothballing, or repowering with an alternative fuel of some of Consumers’ generating units
•changes in Consumers’ environmental compliance costs
Greenhouse Gases: There have been numerous legislative and regulatory initiatives at the state, regional, national, and international levels that involve the potential regulation of greenhouse gases. Consumers continues to monitor and comment on these initiatives and to follow litigation involving greenhouse gases.
In 2015, the EPA finalized new rules pursuant to Section 111(b) of the Clean Air Act to limit carbon dioxide emissions from new electric generating units, as well as modified or reconstructed electric


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generating units. New coal-fueled units would not be able to meet this limit without installing carbon dioxide control equipment using such methods as carbon capture and sequestration.
In December 2018, the EPA proposed a revised Section 111(b) regulation to replace the 2015 standard rule limiting carbon dioxide emissions from new electric generating units, citing limited availability and high costs of carbon capture and sequestration equipment as reasons to change the 2015 rule. The revised Section 111(b) regulation requireswould require new coal-fueled generating units to meet a highly efficient steam cycle performance standard. If finalized, Consumers does not expect this proposal to change its existing environmental strategy.
In June 2019, the EPA finalized the Affordable Clean Energy rule. The rule requires individual states to evaluate coal‑fueled power plants for heat‑rate improvements that could increase overall plant efficiency. The evaluations to be performed by the State of Michigan under the final rule may require Consumers to make heat-rate improvements at its remaining coal-fueled unitsJ.H. Campbell plant beginning in the mid‑2020s. ThisHowever, the D.C. Circuit Court of Appeals vacated and remanded this rule is presently being litigated.to the EPA in January 2021. Consumers cannot evaluate the potential impact of the ruleremand until the State of Michigan completes its evaluations.EPA acts and any additional appeals are extinguished.
In 2015, a group of 195 countries, including the U.S., finalized the Paris Agreement, which governs carbon dioxide reduction measures beginning in 2020. AlthoughWhile the U.S. has begun the process of withdrawingwithdrew from the Paris Agreement, it has stated a desiretaken the necessary steps to renegotiate a new agreementrejoin the Paris Agreement in the future.2021. At this time, Consumers does not expect any adverse changes to its environmental strategy as a result of these events.
In September 2020, Michigan’s Governor signed an executive order creating the Michigan Healthy Climate Plan, which outlines goals for Michigan to achieve economy-wide net-zero greenhouse gas emissions and to be carbon neutral by 2050. The executive order aims for a 28-percent reduction below 2005 levels of greenhouse gas emissions by 2025. Consumers has already surpassed the 28-percent reduction milestone for its owned electric generation and previously announced, in February 2020, a goal
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of achieving net-zero carbon emissions from its electric business by 2040. The order directs EGLE to develop and oversee an action plan for achieving these goals. In addition, the Governor established the Council on Climate Solutions, an advisory group of key stakeholders to be appointed by the Governor that will assist EGLE in implementing the plan. These goals are aspirational in nature and any changes in law or regulation to achieve these goals would need to be approved by Michigan Legislature or the relevant regulatory agency. The MPSC has requested comments from utilities and other stakeholders on how the Governor’s goal should be incorporated into future IRP filings. Consumers does not expect any adverse changes to its environmental strategy as a result of these events.
While Consumers cannot predict the outcome of changes in U.S. policy or of other legislative or regulatory initiatives involving the potential regulation of greenhouse gases, it intends to continue to move forward with its Clean Energy Plan, its present net-zero carbon reduction goal, and its emphasis on supply diversity. Consumers will continue to monitor regulatory and legislative activity and related litigation regarding greenhouse gas emissions standards that may affect electric generating units.
SevereIncreased frequency of severe weather events, andincluding those due to climate change, associated with increasing levels of greenhouse gases could affectmaterially impact Consumers’ facilities, and energy sales, and could have a material impact on its future results of operations. Consumers is unable to predict these events or their financial impact; however, Consumers plans for adverse weatherevaluates the potential physical impacts of climate change on its operations, including increased storm activity, increased rainfall, and takeshigher lake and river levels. Consumers is taking steps to reduce its potential impact.mitigate these risks as appropriate.
Litigation, international treaties, executive orders, federal laws and regulations (including regulations by the EPA), and state laws and regulations, if enacted or ratified, could ultimately require Consumers to replace equipment, install additional emission control equipment, purchase emission allowances or credits, curtail operations, arrange for alternative sources of supply, mothball or retire facilities that generate certain emissions, pursue energy efficiency or demand response measures more swiftly, or take other steps to manage or lower the emission of greenhouse gases. Although associated capital or operating costs relating to greenhouse gas regulation or legislation could be material and cost recovery cannot be assured, Consumers expects to recover these costs and capital expenditures in rates consistent with the recovery of other reasonable costs of complying with environmental laws and regulations.
CCRs: In 2015, the EPA published a final rule regulating CCRs under RCRA. The final rule adopts minimum standards for beneficially reusing and disposing of non‑hazardous CCRs. The rule establishes new minimum requirements for site location, groundwater monitoring, flood protection, storm water design, fugitive dust control, and public disclosure of information, including any groundwater protection standard exceedances. The rule also sets out conditions under which CCR units would be forced to cease receiving CCR and non‑CCR wastewater and initiate closure based on the inability to achieve minimum safety standards, meet a location standard, or meet minimum groundwater standards. Consumers has aligned with EGLE on closure plans for each of its unlined ash ponds to ensure coordination between federal and state requirements. The unlined ash ponds have ceased operation and, where applicable, have been replaced with


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double-lined ash ponds or concrete tanks. Significant closure work has been completed at the remaining ash ponds.
Due to litigation, many aspects of the 2015 CCR rule have been remanded to the EPA, which has resulted in various new rulemakings. These new rulemakings are now in litigation. Continued litigation will add uncertainty around requirements for compliance and state permit programs.
Separately, Congress passed legislation in 2016 allowing participating states to develop permitting programs for CCRs under RCRA. In December 2018, the Michigan Legislature adopted a permitting program, which requires the EPA’s authorization. This program should reduce costly, duplicative oversight over CCRs and provide local oversight to CCR issues unique to Michigan. In April 2020, EGLE submitted the state CCRa regulatory package for Michigan’s permit program application to Michigan’s Attorney General in June 2019the EPA for review and signature. The Attorney General’s office is engaged in a detailed review of the program and application with EGLE.its review. Federal rulemaking challenges may delay EPA approval of the Michigan permitting program.
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Consumers has aligned with EGLE on closure plans for all of its coal ash disposal sites, including those subject to the EPA’s 2015 CCR rule, and adjusted its recorded ARO accordingly. Consumers has historically been authorized to recover in electric rates costs related to coal ash disposal sites.
Water: Multiple water-related regulations apply, or may apply, to Consumers.
The EPA regulates cooling water intake systems of existing electric generating plants under Section 316(b) of the Clean Water Act and the corresponding rules that were revised in 2014. The rules are aimed at reducingseek to reduce alleged harmful impacts on aquatic organisms, such as fish. In April 2018, Consumers submitted to EGLE for review and approval all required studies and recommended plans to comply with Section 316(b), but has not yet received final approval.
In 2015, the EPA released its final effluent limitation guidelines for steam electric generating plants. These guidelines, which are presently being litigated, set stringent new requirements for the discharge from electric generating units into surface waters. The EPA published a final rule in October 2020, with an effective date of December 2020, revising the 2015 guidelines related to the discharge of certain wastewater streams. In 2017, the EPA announced that it will undertake a rulemaking to replace specific portionsstreams from electric generating units. The rule also allows for extension of the rule and proposed delayingcompliance deadline from the compliance start dates for two years, but maintainedend of 2023 to the compliance end dates. Additional rulemaking began in November 2019 and will continue in 2020.of 2025, upon approval by EGLE through the NPDES permitting process. Consumers does not expect any adverse changes to its environmental strategy as a result of anythese revisions to the rule.
In recent years, the EPA and the U.S. Army Corps of Engineers have proposed rules redefining “Waters of the United States,” which defines the scope of federal jurisdiction under the Clean Water Act, and other changes to the Clean Water Act regulations. For example, the EPA recently finalized a rule repealing the 2015 definition of “Waters of the United States” and, in January 2020, released a rule with its new definition. These rules are presently being, or are likely to be, litigated.
A finalThe new definition would changenarrows the scope of waterfederal jurisdiction and wetlands regulations underreduces the Clean Water Act. The EPA has delegatedfrequency of dual jurisdiction in states with authority to manageregulate the same waters; Michigan wetlands program to EGLE for a large portion of Consumers’ service territory, but dual jurisdiction exists between the EPA and the U.S. Army Corps of Engineers in some locations in Michigan. As a result, regardless of the ultimate outcome of the EPA’s rules, Consumers expects to continue to operate under Michigan’s wetlands regulations, and under the applicable state and federal water jurisdictional regulations. Thus,is one such state. Consumers does not expect any material adverse changes to its environmental strategy as a result of these events, but under an expanded federalthe new definition, could experience permitting delays for infrastructure projects where dual jurisdiction exists.


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which is presently being litigated in multiple jurisdictions.
Many of Consumers’ facilities maintain NPDES permits, which are renewed every five years and are vital to the facilities’ operations. Failure of EGLE to renew any NPDES permit, a successful appeal against a permit, a change in the interpretation or scope of NPDES permitting, or onerous terms contained in a permit could have a significant detrimental effect on the operations of a facility.
Other Matters: Other electric environmental matters could have a material impact on Consumers’ outlook. For additional details on other electric environmental matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments—Consumers Electric Utility Contingencies—Electric Environmental Matters.
Retention Incentive Program: In October 2019, Consumers announced a retention incentive program to ensure necessary staffing at the D.E. Karn generating complex through the anticipated retirement of the coal-fueled electric generating units. Based on the number of employees that have chosen to participate, the aggregate cost of the program through 2023 is estimated to be $35 million.$35 million. Consumers expects to recognize $15$8 million of retention benefit costs in 2021; this expense related to retention and severance benefitswill be deferred as a regulatory asset. In its order in 2020. Consumers will seek recovery ofConsumers’ 2020 electric rate case, the MPSC approved deferred accounting treatment for these costs from customers.costs. For additional details on this program, see Note 22, Asset SalesSale and Exit Activities.
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Consumers Gas Utility Outlook and Uncertainties
Gas Deliveries: Consumers’ gas customer deliveries are seasonal. The peak demand for natural gas typically occurs in the winter due to colder temperatures and the resulting use of natural gas as heating fuel.
The impact of the COVID-19 pandemic on weather-normalized gas deliveries during 2020 was not material. Consumers has experienced and anticipates it will continue to experience increased uncollectible accounts in the near term, but cannot predict the long-term impact of the pandemic on Michigan’s economy or its customers.
Over the next five years, Consumers expects weather-normalized gas deliveries over the next five years to remain stable relative to 2019.2020. This outlook reflects modest growth in gas demand offset by the predicted effects of energy efficiency and conservation. Actual delivery levels from year to year may vary from this expectation as a result of:
•weather fluctuations
weather fluctuations
•use by power producers
•availability and development of renewable energy sources
•gas price changes
•Michigan economic conditions, including population trends and housing activity
•the price of competing energy sources or fuels
•energy efficiency and conservation impacts
Gas Rate Matters: Rate matters are critical to Consumers’ gas utility business. For additional details on rate matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters.


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Gas Rate Case: In December 2019, Consumers filed an application with the MPSC seeking an annual rate increase of $245 million, based on a 10.5 percent authorized return on equityMatters and a projected twelve-month period ending September 30, 2021. The filing requests authority to recover new infrastructure investmentNote 4, Contingencies and related costs that will allow Consumers to improve system safety and reliability. Presented in the following table are the components of the requested increase in revenue:Commitments.
In Millions 
Projected Twelve-Month Period Ending September 30 2021
Components of the requested rate increase  
Investment in rate base $126
Operating and maintenance costs 91
Cost of capital 26
Sales 2
Total $245
The filing also seeks approval of a revenue decoupling mechanism that would annually reconcile Consumers’ actual weather-normalized non‑fuel revenues with the revenues approved by the MPSC.
GCR Plan: Consumers submitted its 2020-20212021-2022 GCR plan to the MPSC in December 20192020 and, in accordance with its proposed plan, expects to self-implement the 2020-20212021-2022 GCR charge beginning in April 2020.2021.
Gas Pipeline and Storage Integrity and Safety: In October 2019, PHMSA published a final rule that expands federal safety standards for gas transmission pipelines. To comply with the rule, Consumers will incur increased capital costs to install and remediate pipelines as well as increased operating and maintenance costs to expand inspections, maintenance, and monitoring of its existing pipelines. The requirements in the regulation taketook effect July 1, 2020, with various implementation phases over numerous years.
In 2016,February 2020, PHMSA publishedfinalized an interim final rule thatit had published in 2016; this rule established minimum federal safety standards for underground natural gas storage facilities. To comply with the interim rule, Consumers incurred increased capital and operating and maintenance costs to expand inspections, maintenance, and monitoring of its underground gas storage facilities. PHMSA expects to finalize additional requirements in early 2020.
Although associated capital or operating and maintenance costs relating to these regulations could be material and cost recovery cannot be assured, Consumers expects to recover such costs and capital expenditures in rates consistent with the recovery of other reasonable costs of complying with laws and regulations. Consumers will continue to monitor gas safety regulations and is implementingcontinue implementation of the American Petroleum Institute’s Recommended Practice 1173, Pipeline Safety Management Systems. This program ensuresminimizes gas system asset- and performance-related risks by ensuring that there are policies, procedures, work instructions, forms, and records in place to streamline adoption and deployment of any existing or future regulations.
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Gas Environmental Outlook: Consumers expects to incur response activity costs at a number of sites, including 23 former MGP sites. For additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments—Consumers Gas Utility Contingencies—Gas Environmental Matters.
Greenhouse Gases: Consumers is making voluntary efforts to reduce its gas utility’s methane emissions. In October 2019, Consumers released its Methane Reduction Plan, which set a goal of net-zero methane emissions from its natural gas delivery system by 2030. Under its Methane Reduction Plan, Consumers plans to reduce methane emissions from its system by about 80 percent by accelerating the replacement of aging pipe, rehabilitating or retiring


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outdated infrastructure, and adopting new technologies and practices. The remaining emissions will be eliminatedoffset by purchasing and/or producing renewable natural gas.
In September 2020, Michigan’s Governor signed an executive order creating the Michigan Healthy Climate Plan, which outlines goals for Michigan to achieve economy-wide net-zero greenhouse gas emissions and to be carbon neutral by 2050. The executive order aims for a 28-percent reduction below 2005 levels of greenhouse gas emissions by 2025. These new goals could have an impact on Consumers’ gas business over the long term. For additional details on the executive order, see Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook.
There is also increasing interest at the federal, state, and local levels involving potential regulation of greenhouse gases or its sources, which include methane emissions and carbon dioxide from Consumers’ gas utility.sources. Such regulation, if adopted, may involve requirements to reduce methane emissions from Consumers’ gas utility operations and carbon dioxide emissions from natural gas customer use. No such measures apply to Consumers at this time. Consumers continues to monitor these initiatives and comment as appropriate. Consumers cannot predict the impact of any potential future legislation or regulation on its gas utility.
Consumers Electric Utility and Gas Utility Outlook and Uncertainties
Energy Waste Reduction Plan: The 2016 Energy Law authorized incentives for demand response programs and expanded existing incentives for energy efficiency programs, referring to the combined initiatives as energy waste reduction programs. The 2016 Energy Law:
•extended the requirement to achieve annual reductions of 1.0 percent in customers’ electricity use through 2021 and 0.75 percent in customers’ natural gas use indefinitely
•removed limits on investments under the program and provided for a higher return on those investments; together, these provisions effectively doubled the financial incentives Consumers may earn for exceeding the statutory targets
•
established a goal of 35 percent combined renewable energy and energy waste reduction by 2025; Consumers has achieved 22 percent of the combined renewable energy and energy waste reduction goal through 2019established a goal of 35 percent combined renewable energy and energy waste reduction by 2025; Consumers has achieved 25 percent combined renewable energy and energy waste reduction through 2020
Additionally, the MPSC has approved the recovery of demand response costs and an associated financial incentive based on demand response target performance.
Under its energy waste reduction plan, Consumers provides its customers with incentives to reduce usage by offering energy audits, rebates and discounts on purchases of highly efficient appliances, and other incentives and programs. The COVID‑19 pandemic may impact Consumers’ ability to execute energy efficiency programs effectively and, accordingly, could affect Consumers’ ability to exceed its statutory savings targets and earn the maximum energy waste reduction incentive for 2021. Consumers cannot predict the ultimate financial impact of the pandemic on its 2021 energy waste reduction incentive.
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Enterprises Outlook and Uncertainties
CMS Energy’s primary focus with respect to its enterprises businesses is to maximize the value of generating assets, its share of which represents 1,2341,480 MW of capacity, and to pursue opportunities for the development of renewable generation projects.
In July 2020, CMS Enterprises purchased an ownership interest in Aviator Wind, a 525-MW wind generation project in Coke County, Texas. The project was completed and became operational in September 2020. Of the project’s 525-MW nameplate capacity, 420 MW has been committed under long-term PPAs. For additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 21, Variable Interest Entities.
The enterprises segment’s assets may be affected by environmental laws and regulations. The new2015 ozone NAAQS will makemade it more difficult to construct or modify power plants and other emission sources in areas of the country that have not met the new2015 ozone standard. In April 2018, the EPA designated certain areas of Michigan as not meeting the new standard with an August 2018 effective date. ozone standard. The enterprises segment’s DIG plant located in Dearborn, Michigan is in one such area and, as a result, would be subject to additional permitting restrictions in the event of any future modifications. For additional details regarding the new ozone NAAQS, see Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook.
Trends, uncertainties, and other matters related to the enterprises segment that could have a material impact on CMS Energy’s consolidated income, cash flows, or financial position include:
•investment in and financial benefits received from renewable energy and energy storage projects
•changes in energy and capacity prices
•severe weather events and climate change associated with increasing levels of greenhouse gases


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changes in commodity prices and interest rates on certain derivative contracts that do not qualify for hedge accounting and must be marked to market through earnings
•changes in various environmental laws, regulations, principles, or practices, or in their interpretation
the outcome of certain legal proceedings, including gas price reporting litigation
•indemnity and environmental remediation obligations at Bay Harbor, including an inability to renew an NPDES permit in 2020
•obligations related to a tax claim from the government of Equatorial Guinea
•representations, warranties, and indemnities provided by CMS Energy in connection with previous sales of assets
For additional details regarding the enterprises segment’s uncertainties, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments.
EnerBank Outlook and Uncertainties
EnerBank is a Utah state-chartered, FDIC-insured industrial bank providing primarily unsecured, consumerfixed-rate installment loans largely for financingthroughout the U.S. to finance home improvements. The carrying value of EnerBank’s loan portfolio was $2.5$2.9 billion at December 31, 2019.2020. The 12-month rolling average net default rate on loans held by EnerBank was 1.21.1 percent at December 31, 2019. EnerBank expects lending growth of up to ten percent annually over the next five years.
EnerBank’s loan portfolio was funded primarily by certificates of deposit of $2.4 billion. CMS Energy is required both by law and by contract to provide financial support, including infusing additional capital, to ensure that EnerBank satisfies mandated capital requirements and has sufficient liquidity to operate. With its self-funding plan, EnerBank has exceeded these requirements historically and exceeded them as of December 31, 2019.2020. For additional details regarding EnerBank’s loan portfolio, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 8, Notes Receivable.
EnerBank’s loan portfolio was funded primarily by certificates of deposit of $2.8 billion at December 31, 2020. With its loan portfolio funded by certificates of deposit, EnerBank has not had to rely
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on access to the financial and capital markets in order to fund loan growth during the COVID-19 pandemic. As a result, EnerBank has experienced market share gains as new customers have transitioned from less financially stable competitors. Accordingly, EnerBank has experienced increased lending growth in recent months and expects this trend to continue during 2021. Over the next five years, EnerBank expects lending growth of approximately seven percent annually. For additional details regarding EnerBank’s capital and liquidity, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources and Liquidity
In response to the COVID-19 pandemic, and consistent with FDIC guidance, EnerBank offered new payment accommodations for current qualifying customers. EnerBank cannot predict the longer-term impacts of the pandemic, but could experience slower lending growth, higher loan write-offs, and increased loan modifications.
Other Outlook and Uncertainties
Employee Separation Program: In December 2019, CMS Energy and Consumers announced a voluntary separation program for non-union employees. UnderFor the program, employees elected to request separation, and management decided which requests to accept. In Januaryyear ended December 31, 2020, management communicated its decisions to affected employees, who will have 45 days to decide whether to separate. CMS Energy and Consumers estimate that they will recognizerecorded an after-tax charge of up to $10$9 million in 2020 related to the program.program, under which 140 employees accepted and were approved for early separation. As a result of the program, however, CMS Energy and Consumers expect to benefit from future cost savings, as employee staffing levels will be better matched to workload demand, which reflects the companies’ ongoing workforce productivity improvements.
Union Contracts: The UWUA represents Consumers’ operating, maintenance, construction, and customer contact center employees. The USW represents Zeeland plant employees. The UWUA and USW agreements expired and new agreements were ratified in 2020. The new agreements ratified in 2020 provide the following:
•three-percent pay increases to operating, maintenance, and construction employees and the same annual increase through 2024
•three-and-a-half-percent pay increases to customer contact center employees
•three-percent pay increases to Zeeland Plant employees and the same annual increase through 2024
Litigation: CMS Energy, Consumers, and certain of their subsidiaries are named as parties in various litigation matters, as well as in administrative proceedings before various courts and governmental agencies, arising in the ordinary course of business. For additional details regarding these and other legal matters, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Regulatory Matters and Note 4, Contingencies and Commitments.


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Critical Accounting Policies and Estimates
The following information is important to understand CMS Energy’s and Consumers’ results of operations and financial condition. For additional accounting policies, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 1, Significant Accounting Policies.
In the preparation of CMS Energy’s and Consumers’ consolidated financial statements, estimates and assumptions are used that may affect reported amounts and disclosures. CMS Energy and Consumers use accounting estimates for asset valuations, unbilled revenue, depreciation, amortization, financial and derivative instruments, employee benefits, stock-based compensation, the effects of regulation, indemnities, contingencies, and contingencies.AROs. Actual results may differ from estimated results due to changes in the regulatory environment, regulatory decisions, lawsuits, competition, and other factors. CMS Energy and Consumers consider all relevant factors in making these assessments.
Accounting for the Effects of Industry Regulation: Because Consumers has regulated operations, it uses regulatory accounting to recognize the effects of the regulators’ decisions on its financial statements. Consumers continually assesses whether future recovery of its regulatory assets is probable by considering communications and experience with its regulators and changes in the regulatory environment. If Consumers determined that recovery of a regulatory asset were not probable, Consumers would be required to write off the asset and immediately recognize the expense in earnings.
Contingencies: CMS Energy and Consumers make judgments regarding the future outcome of various matters that give rise to contingent liabilities. For such matters, they record liabilities when they are considered probable and reasonably estimable, based on all available information. In particular, CMS Energy and Consumers are participating in various environmental remediation projects for which they have recorded liabilities. The recorded amounts represent estimates that may take into account such considerations as the number of sites, the anticipated scope, cost, and timing of remediation work, the available technology, applicable regulations, and the requirements of governmental authorities. For remediation projects in which the timing of estimated expenditures is considered reliably determinable, CMS Energy and Consumers record the liability at its net present value, using a discount rate equal to the interest rate on monetary assets that are essentially risk-free and have maturities comparable to that of the environmental liability. The amount recorded for any contingency may differ from actual costs incurred when the contingency is resolved. For additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4, Contingencies and Commitments.
Derivative Instruments: CMS Energy and Consumers account for certain contracts as derivative instruments. If a contract is a derivative and does not qualify for the normal purchases and sales exception, it is recorded on the consolidated balance sheets at its fair value. At CMS Energy, if the derivative is accounted for as a cash flow hedge, unrealized gains and losses from changes in the fair value of the derivative are recognized in AOCI and subsequently recognized in earnings when the hedged transactions impact earnings. If the derivative is accounted for as a fair value hedge, changes in the fair value of the derivative and changes in the fair value of the hedged item due to the hedged risk are recognized in earnings. For the FTRs at Consumers, changes in fair value are deferred as regulatory assets or liabilities.
The criteria used to determine if an instrument qualifies for derivative accounting or for an exception from derivative accounting are complex and often require judgment in application. Changes in business strategies or market conditions, as well as a requirement to apply different interpretations of the derivative accounting literature, could result in changes in accounting for a single contract or groups of contracts,
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which could have a material impact on CMS Energy’s and Consumers’ financial statements. For


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additional details on CMS Energy’s and Consumers’ derivatives and how the fair values of derivatives are determined, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 6, Fair Value Measurements.
Income Taxes: The amount of income taxes paid by CMS Energy is subject to ongoing audits by federal, state, and foreign tax authorities, which can result in proposed assessments. An estimate of the potential outcome of any uncertain tax issue is highly judgmental. CMS Energy believes adequate reserves have been provided for these exposures; however, future results may include favorable or unfavorable adjustments to the estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments expire. Additionally, CMS Energy’s judgment as to the ability to recover its deferred tax assets may change. CMS Energy believes the valuation allowances related to its deferred tax assets are adequate, but future results may include favorable or unfavorable adjustments. As a result, CMS Energy’s effective tax rate may fluctuate significantly over time. For additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 14, Income Taxes.
Pension and OPEB: CMS Energy and Consumers provide retirement pension benefits to certain employees under non‑contributory DB Pension Plans, and they provide postretirement health and life benefits to qualifying retired employees under an OPEB Plan.
CMS Energy and Consumers record liabilities for pension and OPEB on their consolidated balance sheets at the present value of the future obligations, net of any plan assets. The calculation of the liabilities and associated expenses requires the expertise of actuaries, and requires many assumptions, including:
•life expectancies
•discount rates
•expected long-term rate of return on plan assets
•rate of compensation increases
•expected health care costs
A change in these assumptions could change significantly CMS Energy’s and Consumers’ recorded liabilities and associated expenses.
Presented in the following table are estimates of costs (credits) and cash contributions through 20222023 for the DB Pension Plans and OPEB Plan. Actual future costs and contributions will depend on future investment performance, discount rates, and various factors related to the participants of the DB Pension
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Plans and OPEB Plan. CMS Energy and Consumers will, at a minimum, contribute to the plans as needed to comply with federal funding requirements.
In Millions
DB Pension PlansOPEB Plan
Cost (Credit)ContributionCost (Credit)Contribution
CMS Energy, including Consumers
2021$17 $— $(113)$— 
20227 — (113)— 
2023(8)— (107)— 
Consumers1
2021$19 $— $(105)$— 
202210 — (105)— 
2023(5)— (99)— 
In Millions 
 DB Pension Plans OPEB Plan
 Cost Contribution¹  Credit Contribution 
CMS Energy, including Consumers         
2020 $29
 $531
  $(92) $—
2021 13
 —
  (93) —
2022 5
 —
  (94) —
Consumers2
         
2020 $30
 $518
  $(86) $—
2021 14
 —
  (87) —
2022 7
 —
  (88) —


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1Consumers’ pension and OPEB costs are recoverable through its general ratemaking process.
Contribution occurred in January 2020.
2
Consumers’ pension and OPEB costs are recoverable through its general ratemaking process.
Lowering the expected long-term rate of return on the assets of the DB Pension Plans by 25 basis points would increase estimated pension cost for 20202021 by $6$7 million for both CMS Energy and Consumers. Lowering the PBO discount rates by 25 basis points would increase estimated pension cost for 20202021 by $6$5 million for both CMS Energy and Consumers.
Pension and OPEB plan assets are accounted for and disclosed at fair value. Fair value measurements incorporate assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Development of these assumptions may require judgment.
For additional details on postretirement benefits, including the fair value measurements for the assets of the DB Pension Plans and OPEB Plan, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 12, Retirement Benefits.
Unbilled Revenues: Consumers’ customers are billed monthly in cycles having billing dates that do not generally coincide with the end of a calendar month. This results in customers having received electricity or natural gas that they have not been billed for as of the month-end. Consumers estimates its unbilled revenues by applying an average billed rate to total unbilled deliveries for each customer class. For additional information on unbilled revenues, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 16, Revenue.
New Accounting Standards
For details regardingThere are no new accounting standards issued but not yet effective see Item 8. Financial Statements and Supplementary Data—Notesthat are expected to the Consolidated Financial Statements—Note 2, New Accounting Standards.have a material impact on CMS Energy’s or Consumers’ consolidated financial statements.
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk
CMS Energy and Consumers are exposed to market risks including, but not limited to, changes in interest rates, commodity prices, and investment security prices. They may enter into various risk management contracts to mitigate exposure to these risks, including swaps, options, futures, and forward contracts. CMS Energy and Consumers enter into these contracts using established policies and procedures, under
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the direction of an executive oversight committee consisting of certain officers and a risk committee consisting of those and other officers and business managers.
The following risk sensitivities illustrate the potential loss in fair value, cash flows, or future earnings from financial instruments, assuming a hypothetical adverse change in market rates or prices of ten percent. Potential losses could exceed the amounts shown in the sensitivity analyses if changes in market rates or prices were to exceed ten percent.
Interest-Rate Risk
Long-Term Debt: CMS Energy and Consumers are exposed to interest-rate risk resulting from issuing fixed-rate and variable-rate debt instruments. CMS Energy and Consumers use a combination of these instruments, and may also enter into interest-rate swap agreements, in order to manage this risk and to achieve a reasonable cost of capital.


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Presented in the following table is a sensitivity analysis of interest-rate risk on CMS Energy’s and Consumers’ debt instruments, which includes the effects of interest-rate swaps (assuming an adverse change in market interest rates of ten percent):
In MillionsIn Millions In Millions
December 312019 2018 December 3120202019
Fixed-rate financing—potential loss in fair value    Fixed-rate financing—potential loss in fair value
CMS Energy, including Consumers $558
 $465
CMS Energy, including Consumers$634 $558 
Consumers 355
 330
Consumers372 355 
The fair value losses in the above table could be realized only if CMS Energy and Consumers transferred all of their fixed-rate financing to other creditors. The annual earnings exposure related to variable-rate financing was immaterial for both CMS Energy and Consumers at December 31, 20192020 and 2018,2019, assuming an adverse change in market interest rates of ten percent.
Notes Receivable: CMS Energy is exposed to interest-rate risk resulting from EnerBank’s fixed-rate installment loans. EnerBank provides primarily unsecured, consumerfixed-rate installment loans largely for financingthroughout the U.S. to finance home improvements.
Presented in the following table is a sensitivity analysis of interest-rate risk on EnerBank’s notes receivable, which includes the effects of interest-rate swaps (assuming an adverse change in market interest rates of ten percent):
In MillionsIn Millions In Millions
December 312019 2018 December 3120202019
Notes receivable—potential loss in fair value $61
 $46
Notes receivable—potential loss in fair value$77 $61 
The fair value losses for CMS Energy in the above table could be realized only if EnerBank’s loans were sold to other parties. The annual earnings exposure related to variable-rate interest receipts at EnerBank was immaterial at December 31, 20192020 and 2018.2019. For additional details on financial instruments, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 7, Financial Instruments.


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84

Item 8.    Financial Statements and Supplementary Data
Index to Financial Statements
8692
8692
8793
8894
9096
9298
94100
94100
95101
96102
98104
100106
101107
1:
Significant Accounting Policies
101107
2:
New Accounting Standards
103110
3:
Regulatory Matters
105111
4:
Contingencies and Commitments
111117
5:
Financings and Capitalization
119124
6:
Fair Value Measurements
126131
7:
Financial Instruments
127134
8:
Notes Receivable
130135
9:
Plant, Property, and Equipment
132138
10:
Leases and Palisades Financing
136142
11:
Asset Retirement Obligations
141147
12:
Retirement Benefits
143149
13:
Stock-Based Compensation
153159
14:
Income Taxes
157163
15:
Earnings Per Share—CMS Energy
162167
16:
Revenue
163168
17:
Other Income and Other Expense
166172
18:
Cash and Cash Equivalents
166172
19:
Reportable Segments
167173
20:
Related-Party Transactions—Consumers
171177
21:
Variable Interest Entities
172178
22:
Asset SalesSale and Exit Activities
173180
23:
Quarterly Financial and Common Stock Information (Unaudited)
174181
176182
CMS Energy
176182
Consumers
180186


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85

CMS Energy Corporation
Consolidated Statements of Income
In Millions, Except Per Share AmountsIn Millions, Except Per Share Amounts In Millions, Except Per Share Amounts
Years Ended December 312019 2018 2017 Years Ended December 31202020192018
Operating Revenue $6,845
 $6,873
 $6,583
Operating Revenue$6,680 $6,845 $6,873 
      
Operating Expenses      Operating Expenses
Fuel for electric generation 493
 528
 505
Fuel for electric generation375 493 528 
Purchased and interchange power 1,496
 1,613
 1,503
Purchased and interchange power1,492 1,496 1,613 
Purchased power – related parties 75
 81
 86
Purchased power – related parties64 75 81 
Cost of gas sold 769
 836
 750
Cost of gas sold577 769 836 
Maintenance and other operating expenses 1,448
 1,417
 1,236
Maintenance and other operating expenses1,403 1,448 1,417 
Depreciation and amortization 992
 933
 881
Depreciation and amortization1,048 992 933 
General taxes 333
 303
 284
General taxes359 333 303 
Total operating expenses 5,606
 5,711
 5,245
Total operating expenses5,318 

5,606 

5,711 
      
Operating Income 1,239
 1,162
 1,338
Operating Income1,362 

1,239 

1,162 
      
Other Income (Expense)      Other Income (Expense)
Interest income 7
 11
 12
Interest income4 7 11 
Interest income – related partiesInterest income – related parties7 0 0 
Allowance for equity funds used during construction 10
 6
 5
Allowance for equity funds used during construction6 10 6 
Income from equity method investees 10
 9
 15
Income from equity method investees5 10 9 
Nonoperating retirement benefits, net 91
 90
 24
Nonoperating retirement benefits, net118 91 90 
Other income 4
 2
 6
Other income6 4 2 
Other expense (13) (48) (76)Other expense(62)(13)(48)
Total other income (expense) 109
 70
 (14)
Total other incomeTotal other income84 

109 

70 
      
Interest Charges      Interest Charges
Interest on long-term debt 439
 412
 406
Interest on long-term debt483 439 412 
Interest expense – related parties 9
 —
 —
Interest expense – related parties12 9 0 
Other interest expense 75
 49
 34
Other interest expense68 75 49 
Allowance for borrowed funds used during construction (4) (3) (2)Allowance for borrowed funds used during construction(2)(4)(3)
Total interest charges 519
 458
 438
Total interest charges561 

519 

458 
      
Income Before Income Taxes 829
 774
 886
Income Before Income Taxes885 829 774 
Income Tax Expense 147
 115
 424
Income Tax Expense133 147 115 
      
Net Income 682
 659
 462
Net Income752 682 659 
Income Attributable to Noncontrolling Interests 2
 2
 2
Income (Loss) Attributable to Noncontrolling InterestsIncome (Loss) Attributable to Noncontrolling Interests(3)2 2 
      
Net Income Available to Common Stockholders $680
 $657
 $460
Net Income Available to Common Stockholders$755 $680 $657 
      
Basic Earnings Per Average Common Share $2.40
 $2.33
 $1.64
Basic Earnings Per Average Common Share$2.65 $2.40 $2.33 
Diluted Earnings Per Average Common Share $2.39
 $2.32
 $1.64
Diluted Earnings Per Average Common Share2.64 2.39 2.32 
The accompanying notes are an integral part of these statements.


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CMS Energy Corporation
Consolidated Statements of Comprehensive Income
In MillionsIn Millions In Millions
Years Ended December 312019 2018 2017 Years Ended December 31202020192018
Net Income $682
 $659
 $462
Net Income$752 $682 $659 
      
Retirement Benefits Liability      Retirement Benefits Liability
Net loss arising during the period, net of tax of $(3), $(1), and $(4) (7) (4) (5)
Prior service credit adjustment, net of tax of $-, $-, and $3 —
 (1) 4
Net loss arising during the period, net of tax of $(4), $(3), and $(1)Net loss arising during the period, net of tax of $(4), $(3), and $(1)(15)(7)(4)
Settlement arising during the period, net of tax of $0 for all periodsSettlement arising during the period, net of tax of $0 for all periods1 0 0 
Prior service credit adjustment, net of tax of $0 for all periodsPrior service credit adjustment, net of tax of $0 for all periods(1)0 (1)
Amortization of net actuarial loss, net of tax of $1 for all periods 3
 4
 2
Amortization of net actuarial loss, net of tax of $1 for all periods5 3 4 
Amortization of prior service credit, net of tax of $-, $(1), and $- (2) (1) (1)
Amortization of prior service credit, net of tax of $0, $0, and $(1)Amortization of prior service credit, net of tax of $0, $0, and $(1)(1)(2)(1)
      
Derivatives      Derivatives
Unrealized loss on derivative instruments, net of tax of $(1), $-, and $- (3) (2) —
Reclassification adjustments included in net income, net of tax of $- for all periods 1
 —
 —
Unrealized loss on derivative instruments, net of tax of $(2), $(1), and $0Unrealized loss on derivative instruments, net of tax of $(2), $(1), and $0(4)(3)(2)
Reclassification adjustments included in net income, net of tax of $0 for all periodsReclassification adjustments included in net income, net of tax of $0 for all periods2 1 0 
      
Other Comprehensive Loss (8) (4) —
Other Comprehensive Loss(13)(8)(4)
      
Comprehensive Income 674
 655
 462
Comprehensive Income739 674 655 
      
Comprehensive Income Attributable to Noncontrolling Interests 2
 2
 2
Comprehensive Income (Loss) Attributable to Noncontrolling InterestsComprehensive Income (Loss) Attributable to Noncontrolling Interests(3)2 2 
      
Comprehensive Income Attributable to CMS Energy $672
 $653
 $460
Comprehensive Income Attributable to CMS Energy$742 $672 $653 
The accompanying notes are an integral part of these statements.


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CMS Energy Corporation
Consolidated Statements of Cash Flows
In Millions
Years Ended December 31202020192018
Cash Flows from Operating Activities
Net income$752 $682 $659 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization1,048 992 933 
Deferred income taxes and investment tax credits170 150 182 
Bad debt expense90 67 54 
Other non‑cash operating activities and reconciling adjustments(22)(58)22 
Postretirement benefits contributions(712)(10)(252)
Cash provided by (used in) changes in assets and liabilities
Accounts and notes receivable and accrued revenue(12)45 15 
Inventories28 44 14 
Accounts payable and accrued rate refunds54 (69)22 
Other current and non‑current assets and liabilities(120)(53)54 
Net cash provided by operating activities1,276 

1,790 

1,703 
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under finance lease)(2,317)(2,104)(2,074)
Increase in EnerBank notes receivable(657)(401)(307)
Purchase of notes receivable by EnerBank(17)(343)(225)
Proceeds from DB SERP investments0 0 146 
Proceeds from sale of EnerBank notes receivable197 67 0 
Proceeds from sale of transmission equipment58 97 0 
Cost to retire property and other investing activities(131)(132)(146)
Net cash used in investing activities(2,867)

(2,816)

(2,606)
Cash Flows from Financing Activities
Proceeds from issuance of debt3,179 2,151 2,767 
Retirement of debt(2,010)(1,285)(1,870)
Increase in EnerBank certificates of deposit416 631 513 
Decrease in notes payable(90)(7)(73)
Issuance of common stock, net of issuance costs253 12 41 
Payment of dividends on common and preferred stock(467)(436)(407)
Debt prepayment costs(59)(8)(36)
Proceeds from the sale of membership interest in VIE to tax equity investor417 0 0 
Contribution from noncontrolling interest31 0 0 
Other financing costs(51)(50)(61)
Net cash provided by financing activities1,619 

1,008 

874 
Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts28 (18)(29)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period157 175 204 
Cash and Cash Equivalents, Including Restricted Amounts, End of Period$185 

$157 

$175 
94
In Millions 
Years Ended December 312019 2018 2017 
Cash Flows from Operating Activities      
Net income $682
 $659
 $462
Adjustments to reconcile net income to net cash provided by operating activities      
Depreciation and amortization 992
 933
 881
Deferred income taxes and investment tax credits 150
 182
 417
Bad debt expense 67
 54
 49
Other non‑cash operating activities and reconciling adjustments (58) 22
 82
Postretirement benefits contributions (10) (252) (12)
Cash provided by (used in) changes in assets and liabilities      
Accounts and notes receivable and accrued revenue 45
 15
 (66)
Inventories 44
 14
 (46)
Accounts payable and accrued rate refunds (69) 22
 49
Other current and non‑current assets and liabilities
 (53) 54
 (111)
Net cash provided by operating activities 1,790
 1,703
 1,705
       
Cash Flows from Investing Activities      
Capital expenditures (excludes assets placed under finance lease) (2,104) (2,074) (1,665)
Increase in EnerBank notes receivable (401) (307) (138)
Purchase of notes receivable by EnerBank (343) (225) —
Proceeds from DB SERP investments —
 146
 —
Proceeds from sale of EnerBank notes receivable 67
 —
 50
Proceeds from sale of transmission equipment 97
 —
 —
Cost to retire property and other investing activities (132) (146) (115)
Net cash used in investing activities (2,816) (2,606) (1,868)
       
Cash Flows from Financing Activities      
Proceeds from issuance of debt 2,151
 2,767
 1,633
Retirement of debt (1,285) (1,870) (980)
Increase in EnerBank certificates of deposit 631
 513
 47
Decrease in notes payable (7) (73) (228)
Issuance of common stock 12
 41
 83
Payment of dividends on common and preferred stock (436) (407) (377)
Debt prepayment costs (8) (36) (22)
Other financing costs (50) (61) (46)
Net cash provided by financing activities 1,008
 874
 110
       
Net Decrease in Cash and Cash Equivalents, Including Restricted Amounts (18) (29) (53)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period 175
 204
 257
       
Cash and Cash Equivalents, Including Restricted Amounts, End of Period $157
 $175
 $204


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In MillionsIn Millions In Millions
Years Ended December 312019 2018 2017 Years Ended December 31202020192018
Other cash flow activities and non‑cash investing and financing activities
Other Cash Flow Activities and Non‑cash Investing and Financing ActivitiesOther Cash Flow Activities and Non‑cash Investing and Financing Activities
      
Cash transactions      Cash transactions
Interest paid (net of amounts capitalized) $498
 $458
 $418
Interest paid (net of amounts capitalized)$549 $498 $458 
Income taxes paid (refunds received), net (58) (123) 5
Income taxes paid (refunds received), net(58)(58)(123)
      
Non‑cash transactions
      
Non‑cash transactionsNon‑cash transactions
Capital expenditures not paid 170
 158
 172
Capital expenditures not paid141 170 158 
Other assets placed under finance lease —
 —
 3
The accompanying notes are an integral part of these statements.


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CMS Energy Corporation
Consolidated Balance Sheets
ASSETS
In Millions
December 3120202019
Current Assets
Cash and cash equivalents$168 $140 
Restricted cash and cash equivalents17 17 
Accounts receivable and accrued revenue, less allowance of $29 in 2020 and $20 in 2019863 886 
Notes receivable, less allowance of $32 in 2020 and $33 in 2019275 242 
Accounts receivable – related parties19 17 
Inventories at average cost
Gas in underground storage353 399 
Materials and supplies155 140 
Generating plant fuel stock68 66 
Deferred property taxes332 305 
Regulatory assets42 33 
Prepayments and other current assets112 86 
Total current assets2,404 

2,331 
Plant, Property, and Equipment
Plant, property, and equipment, gross27,907 25,390 
Less accumulated depreciation and amortization7,953 7,360 
Plant, property, and equipment, net19,954 

18,030 
Construction work in progress1,085 896 
Total plant, property, and equipment21,039 

18,926 
Other Non‑current Assets
Regulatory assets2,653 2,489 
Accounts and notes receivable, less allowance of $91 in 2020 and $0 in 20192,631 2,281 
Investments70 71 
Other869 739 
Total other non‑current assets6,223 

5,580 
Total Assets$29,666 

$26,837 
ASSETS
In Millions 
December 312019 2018 
Current Assets    
Cash and cash equivalents $140
 $153
Restricted cash and cash equivalents 17
 21
Accounts receivable and accrued revenue, less allowances of $20 in both periods 886
 964
Notes receivable, less allowances of $33 in 2019 and $24 in 2018 223
 233
Notes receivable held for sale 19
 —
Accounts receivable – related parties 17
 14
Accrued gas revenue —
 16
Inventories at average cost    
Gas in underground storage 399
 450
Materials and supplies 140
 143
Generating plant fuel stock 66
 57
Deferred property taxes 305
 279
Regulatory assets 33
 37
Prepayments and other current assets 86
 101
Total current assets 2,331
 2,468
     
Plant, Property, and Equipment    
Plant, property, and equipment, gross 25,390
 24,400
Less accumulated depreciation and amortization 7,360
 7,037
Plant, property, and equipment, net 18,030
 17,363
Construction work in progress 896
 763
Total plant, property, and equipment 18,926
 18,126
     
Other Non‑current Assets
    
Regulatory assets 2,489
 1,743
Accounts and notes receivable 2,281
 1,645
Investments 71
 69
Other 739
 478
Total other non‑current assets
 5,580
 3,935
     
Total Assets $26,837
 $24,529


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LIABILITIES AND EQUITYLIABILITIES AND EQUITYLIABILITIES AND EQUITY
In MillionsIn Millions In Millions
December 312019 2018 December 3120202019
Current Liabilities    Current Liabilities
Current portion of long-term debt, finance leases, and other financing $1,130
 $996
Current portion of long-term debt, finance leases, and other financing$1,506 $1,130 
Notes payable 90
 97
Notes payable0 90 
Accounts payable 622
 723
Accounts payable671 622 
Accounts payable – related parties 13
 10
Accounts payable – related parties7 13 
Accrued rate refunds 35
 4
Accrued rate refunds20 35 
Accrued interest 104
 94
Accrued interest106 104 
Accrued taxes 437
 398
Accrued taxes457 437 
Regulatory liabilities 87
 155
Regulatory liabilities151 87 
Other current liabilities 186
 147
Other current liabilities156 186 
Total current liabilities 2,704
 2,624
Total current liabilities3,074 

2,704 
    
Non‑current Liabilities
    
Non‑current LiabilitiesNon‑current Liabilities
Long-term debt 11,951
 10,615
Long-term debt13,634 11,951 
Non-current portion of finance leases and other financing 76
 69
Non-current portion of finance leases and other financing56 76 
Regulatory liabilities 3,742
 3,681
Regulatory liabilities3,744 3,742 
Postretirement benefits 674
 436
Postretirement benefits152 674 
Asset retirement obligations 477
 432
Asset retirement obligations553 477 
Deferred investment tax credit 120
 99
Deferred investment tax credit115 120 
Deferred income taxes 1,655
 1,487
Deferred income taxes1,863 1,655 
Other non‑current liabilities
 383
 294
Total non‑current liabilities
 19,078
 17,113
Other non‑current liabilitiesOther non‑current liabilities398 383 
Total non‑current liabilitiesTotal non‑current liabilities20,515 

19,078 
    
Commitments and Contingencies (Notes 3 and 4)
 


 


Commitments and Contingencies (Notes 3 and 4)
00
    
Equity    Equity
Common stockholders’ equity    Common stockholders’ equity
Common stock, authorized 350.0 shares; outstanding 283.9 shares in 2019 and 283.4 shares in 2018 3
 3
Common stock, authorized 350.0 shares; outstanding 288.9 shares in 2020 and 283.9 shares in 2019Common stock, authorized 350.0 shares; outstanding 288.9 shares in 2020 and 283.9 shares in 20193 3 
Other paid-in capital 5,113
 5,088
Other paid-in capital5,365 5,113 
Accumulated other comprehensive loss (73) (65)Accumulated other comprehensive loss(86)(73)
Accumulated deficit (25) (271)
Retained earnings (accumulated deficit)Retained earnings (accumulated deficit)214 (25)
Total common stockholders’ equity 5,018
 4,755
Total common stockholders’ equity5,496 5,018 
Noncontrolling interests 37
 37
Noncontrolling interests581 37 
Total equity 5,055
 4,792
Total equity6,077 

5,055 
    
Total Liabilities and Equity $26,837
 $24,529
Total Liabilities and Equity$29,666 

$26,837 
The accompanying notes are an integral part of these statements.


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CMS Energy Corporation
Consolidated Statements of Changes in Equity

In Millions, Except Number of Shares in Thousands and Per Share Amounts 
 Number of Shares      
Years Ended December 312019
2018
2017
2019 2018 2017 
Total Equity at Beginning of Period $4,792
 $4,478
 $4,290
       
Common Stock      
At beginning and end of period 3
 3
 3
          
Other Paid-in Capital         
At beginning of period283,374
281,647
279,206
 5,088
 5,019
 4,916
Common stock issued710
1,554
2,492
 35
 59
 102
Common stock repurchased(181)(224)(317) (10) (10) (14)
Common stock reissued8
423
360
 —
 20
 15
Common stock reacquired(47)(26)(94) —
 —
 —
At end of period283,864
283,374
281,647
 5,113
 5,088
 5,019
       
Accumulated Other Comprehensive Loss      
At beginning of period (65) (50) (50)
Retirement benefits liability      
At beginning of period (63) (50) (50)
Cumulative effect of change in accounting principle —
 (11) —
Net loss arising during the period (7) (4) (5)
Prior service credit adjustment —
 (1) 4
Amortization of net actuarial loss 3
 4
 2
Amortization of prior service credit (2) (1) (1)
At end of period (69) (63) (50)
Derivative instruments      
At beginning of period (2) —
 —
Unrealized loss on derivative instruments (3) (2) —
Reclassification adjustments included in net income 1
 —
 —
At end of period (4) (2) —
At end of period (73) (65) (50)


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In Millions, Except Number of Shares in Thousands and Per Share Amounts 
 Number of Shares      
Years Ended December 312019
2018
2017
2019 2018 2017 
       
Accumulated Deficit      
At beginning of period (271) (531) (616)
Cumulative effect of change in accounting principle —
 8
 —
Net income attributable to CMS Energy 680
 657
 460
Dividends declared on common stock (434) (405) (375)
At end of period (25) (271) (531)
       
Noncontrolling Interests      
At beginning of period 37
 37
 37
Income attributable to noncontrolling interests 2
 2
 2
Distributions and other changes in noncontrolling interests (2) (2) (2)
At end of period 37
 37
 37
       
Total Equity at End of Period $5,055
 $4,792
 $4,478
  

    
Dividends declared per common share $1.53
 $1.43
 $1.33
The accompanying notes are an integral part of these statements.


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Consumers Energy Company
Consolidated Statements of Income
In Millions 
Years Ended December 312019 2018 2017 
Operating Revenue $6,376
 $6,464
 $6,222
       
Operating Expenses      
Fuel for electric generation 375
 407
 398
Purchased and interchange power 1,470
 1,587
 1,491
Purchased power – related parties 75
 83
 90
Cost of gas sold 754
 819
 730
Maintenance and other operating expenses 1,275
 1,287
 1,113
Depreciation and amortization 975
 921
 872
General taxes 322
 295
 276
Total operating expenses 5,246
 5,399
 4,970
       
Operating Income 1,130
 1,065
 1,252
       
Other Income (Expense)      
Interest income 5
 8
 9
Interest and dividend income – related parties 5
 2
 1
Allowance for equity funds used during construction 10
 6
 5
Nonoperating retirement benefits, net 85
 83
 21
Other income 3
 2
 17
Other expense (13) (30) (58)
Total other income (expense) 95
 71
 (5)
       
Interest Charges      
Interest on long-term debt 277
 276
 263
Interest expense – related parties 9
 —
 —
Other interest expense 15
 16
 15
Allowance for borrowed funds used during construction (4) (3) (2)
Total interest charges 297
 289
 276
       
Income Before Income Taxes 928
 847
 971
Income Tax Expense 185
 142
 339
       
Net Income 743
 705
 632
Preferred Stock Dividends 2
 2
 2
       
Net Income Available to Common Stockholder $741
 $703
 $630
The accompanying notes are an integral part of these statements.


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Consumers Energy Company
Consolidated Statements of Comprehensive Income
In Millions 
Years Ended December 312019 2018 2017 
Net Income $743
 $705
 $632
       
Retirement Benefits Liability      
Net gain (loss) arising during the period, net of tax of $(3), $2, and $(1) (8) 6
 (4)
Amortization of net actuarial loss, net of tax of $- for all periods 1
 2
 1
       
Investments      
Unrealized gain (loss) on investments, net of tax of $-, $-, and $1 —
 (1) 3
Reclassification adjustments included in net income, net of tax of $-, $-, and $(6) —
 1
 (9)
       
Other Comprehensive Income (Loss) (7) 8
 (9)
       
Comprehensive Income $736
 $713
 $623
The accompanying notes are an integral part of these statements.


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Consumers Energy Company
Consolidated Statements of Cash Flows
In Millions 
Years Ended December 312019 2018 2017 
Cash Flows from Operating Activities      
Net income $743
 $705
 $632
Adjustments to reconcile net income to net cash provided by operating activities      
Depreciation and amortization 975
 921
 872
Deferred income taxes and investment tax credits 37
 123
 163
Bad debt expense 29
 29
 29
Other non‑cash operating activities and reconciling adjustments
 (32) 13
 59
Postretirement benefits contributions (7) (242) (8)
Cash provided by (used in) changes in assets and liabilities      
Accounts and notes receivable and accrued revenue 8
 (26) (63)
Inventories 40
 15
 (45)
Accounts payable and accrued rate refunds (63) 12
 43
Other current and non-current assets and liabilities
 (129) (101) 33
Net cash provided by operating activities 1,601
 1,449
 1,715
       
Cash Flows from Investing Activities      
Capital expenditures (excludes assets placed under finance lease) (2,085) (1,822) (1,632)
Proceeds from DB SERP investments —
 106
 —
DB SERP investment in note receivable – related party —
 (106) —
Proceeds from sale of transmission equipment 77
 —
 —
Cost to retire property and other investing activities (129) (149) (119)
Net cash used in investing activities (2,137) (1,971) (1,751)
       
Cash Flows from Financing Activities      
Proceeds from issuance of debt 993
 2,106
 834
Retirement of debt (541) (1,193) (555)
Decrease in notes payable (7) (73) (228)
Stockholder contribution 675
 250
 450
Payment of dividends on common and preferred stock (594) (533) (524)
Debt prepayment costs (8) (20) (4)
Other financing costs (10) (24) (24)
Net cash provided by (used in) financing activities 508
 513
 (51)
       
Net Decrease in Cash and Cash Equivalents, Including Restricted Amounts (28) (9) (87)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period 56
 65
 152
       
Cash and Cash Equivalents, Including Restricted Amounts, End of Period $28
 $56
 $65


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In Millions 
Years Ended December 312019 2018 2017 
Other cash flow activities and non‑cash investing and financing activities
       
Cash transactions      
Interest paid (net of amounts capitalized) $279
 $287
 $266
Income taxes paid (refunds received), net 132
 156
 (1)
       
Non‑cash transactions
      
Capital expenditures not paid 160
 143
 160
Other assets placed under finance lease —
 —
 3
The accompanying notes are an integral part of these statements.


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Consumers Energy Company
Consolidated Balance Sheets
ASSETS
In Millions 
December 312019 2018 
Current Assets    
Cash and cash equivalents $11
 $39
Restricted cash and cash equivalents 17
 17
Accounts receivable and accrued revenue, less allowances of $20 in both periods 827
 855
Accounts and notes receivable – related parties 9
 15
Accrued gas revenue —
 16
Inventories at average cost    
Gas in underground storage 399
 450
Materials and supplies 135
 137
Generating plant fuel stock 63
 52
Deferred property taxes 305
 279
Regulatory assets 33
 37
Prepayments and other current assets 73
 83
Total current assets 1,872
 1,980
     
Plant, Property, and Equipment    
Plant, property, and equipment, gross 24,963
 23,963
Less accumulated depreciation and amortization 7,272
 6,958
Plant, property, and equipment, net 17,691
 17,005
Construction work in progress 879
 756
Total plant, property, and equipment 18,570
 17,761
     
Other Non-current Assets
    
Regulatory assets 2,489
 1,743
Accounts receivable 29
 27
Accounts and notes receivable – related parties 102
 104
Other 637
 410
Total other non-current assets
 3,257
 2,284
     
Total Assets $23,699
 $22,025


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LIABILITIES AND EQUITY
In Millions 
December 312019 2018 
Current Liabilities    
Current portion of long-term debt, finance leases, and other financing $221
 $48
Notes payable 90
 97
Accounts payable 593
 685
Accounts payable – related parties 20
 14
Accrued rate refunds 35
 4
Accrued interest 67
 59
Accrued taxes 481
 436
Regulatory liabilities 87
 155
Other current liabilities 118
 120
Total current liabilities 1,712
 1,618
     
Non-current Liabilities
    
Long-term debt 7,048
 6,779
Non-current portion of finance leases and other financing
 76
 69
Regulatory liabilities 3,742
 3,681
Postretirement benefits 622
 392
Asset retirement obligations 474
 428
Deferred investment tax credit 120
 99
Deferred income taxes 1,864
 1,809
Other non-current liabilities
 304
 230
Total non-current liabilities
 14,250
 13,487
     
Commitments and Contingencies (Notes 3 and 4)
 


 


     
Equity    
Common stockholder’s equity    
Common stock, authorized 125.0 shares; outstanding 84.1 shares in both periods 841
 841
Other paid-in capital 5,374
 4,699
Accumulated other comprehensive loss (28) (21)
Retained earnings 1,513
 1,364
Total common stockholder’s equity 7,700
 6,883
Cumulative preferred stock, $4.50 series 37
 37
Total equity 7,737
 6,920
     
Total Liabilities and Equity $23,699
 $22,025
The accompanying notes are an integral part of these statements.


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Consumers Energy Company
Consolidated Statements of Changes in Equity

In Millions, Except Number of Shares in Thousands and Per Share AmountsIn Millions, Except Number of Shares in Thousands and Per Share Amounts
Number of Shares
In Millions 
Years Ended December 312019 2018 2017 Years Ended December 31202020192018202020192018
Total Equity at Beginning of Period $6,920
 $6,488
 $5,939
Total Equity at Beginning of Period$5,055 $4,792 $4,478 
      
Common Stock      Common Stock
At beginning and end of period 841
 841
 841
At beginning and end of period3 3 3 
      
Other Paid-in Capital      Other Paid-in Capital
At beginning of period 4,699
 4,449
 3,999
At beginning of period283,864 283,374 281,647 5,113 5,088 5,019 
Stockholder contribution 675
 250
 450
Common stock issuedCommon stock issued5,609 710 1,554 265 35 59 
Common stock repurchasedCommon stock repurchased(216)(181)(224)(13)(10)(10)
Common stock reissuedCommon stock reissued12 8 423 1 0 20 
Common stock reacquiredCommon stock reacquired(329)(47)(26)(1)0 0 
At end of period 5,374
 4,699
 4,449
At end of period288,940 283,864 283,374 5,365 5,113 5,088 
      
Accumulated Other Comprehensive Loss      Accumulated Other Comprehensive Loss
At beginning of period (21) (12) (3)At beginning of period(73)(65)(50)
Retirement benefits liability      Retirement benefits liability
At beginning of period (21) (24) (21)At beginning of period(69)(63)(50)
Cumulative effect of change in accounting principle —
 (5) —
Cumulative effect of change in accounting principle0 0 (11)
Net gain (loss) arising during the period (8) 6
 (4)
Net loss arising during the periodNet loss arising during the period(15)(7)(4)
Settlement arising during the periodSettlement arising during the period1 0 0 
Prior service credit adjustmentPrior service credit adjustment(1)0 (1)
Amortization of net actuarial loss 1
 2
 1
Amortization of net actuarial loss5 3 4 
Amortization of prior service creditAmortization of prior service credit(1)(2)(1)
At end of period (28) (21) (24)At end of period(80)(69)(63)
Investments      
Derivative instrumentsDerivative instruments

At beginning of period —
 12
 18
At beginning of period

(4)(2)0 
Cumulative effect of change in accounting principle —
 (12) —
Unrealized gain (loss) on investments —
 (1) 3
Unrealized loss on derivative instrumentsUnrealized loss on derivative instruments

(4)(3)(2)
Reclassification adjustments included in net income —
 1
 (9)Reclassification adjustments included in net income2 1 0 
At end of period —
 —
 12
At end of period

(6)(4)(2)
At end of period (28) (21) (12)At end of period(86)(73)(65)
      
Retained Earnings      
At beginning of period 1,364
 1,173
 1,065
Cumulative effect of change in accounting principle —
 19
 —
Net income 743
 705
 632
Dividends declared on common stock (592) (531) (522)
Dividends declared on preferred stock (2) (2) (2)
At end of period 1,513
 1,364
 1,173
      
Cumulative Preferred Stock      
At beginning and end of period 37
 37
 37
      
Total Equity at End of Period $7,737
 $6,920
 $6,488
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In Millions, Except Number of Shares in Thousands and Per Share Amounts
Number of Shares
Years Ended December 31202020192018202020192018
Retained Earnings (Accumulated Deficit)
At beginning of period(25)(271)(531)
Cumulative effect of change in accounting principle(51)0 8 
Net income attributable to CMS Energy755 680 657 
Dividends declared on common stock(465)(434)(405)
At end of period214 (25)(271)
Noncontrolling Interests
At beginning of period37 37 37 
Impact of purchase and consolidation of VIE101 0 0 
Sale of membership interest in VIE to tax equity investor417 0 0 
Contribution from noncontrolling interest31 0 0 
Income (loss) attributable to noncontrolling interests(3)2 2 
Distributions and other changes in noncontrolling interests(2)(2)(2)
At end of period581 37 37 
Total Equity at End of Period$6,077 $5,055 $4,792 
Dividends declared per common share$1.63 $1.53 $1.43 
The accompanying notes are an integral part of these statements.


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Consumers Energy Company
Consolidated Statements of Income
In Millions
Years Ended December 31202020192018
Operating Revenue$6,189 $6,376 $6,464 
Operating Expenses
Fuel for electric generation286 375 407 
Purchased and interchange power1,454 1,470 1,587 
Purchased power – related parties64 75 83 
Cost of gas sold568 754 819 
Maintenance and other operating expenses1,224 1,275 1,287 
Depreciation and amortization1,023 975 921 
General taxes349 322 295 
Total operating expenses4,968 

5,246 

5,399 
Operating Income1,221 

1,130 

1,065 
Other Income (Expense)
Interest income3 5 8 
Interest and dividend income – related parties5 5 2 
Allowance for equity funds used during construction6 10 6 
Nonoperating retirement benefits, net112 85 83 
Other income5 3 2 
Other expense(43)(13)(30)
Total other income88 

95 

71 
Interest Charges
Interest on long-term debt299 277 276 
Interest expense – related parties12 9 0 
Other interest expense11 15 16 
Allowance for borrowed funds used during construction(2)(4)(3)
Total interest charges320 

297 

289 
Income Before Income Taxes989 928 847 
Income Tax Expense173 185 142 
Net Income816 

743 

705 
Preferred Stock Dividends2 2 2 
Net Income Available to Common Stockholder$814 $741 $703 
The accompanying notes are an integral part of these statements.
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Consumers Energy Company
Consolidated Statements of Comprehensive Income
In Millions
Years Ended December 31202020192018
Net Income$816 $743 $705 
Retirement Benefits Liability  
Net gain (loss) arising during the period, net of tax of $(3), $(3), and $2(9)(8)6 
Amortization of net actuarial loss, net of tax of $1, $0, and $01 1 2 
Investments
Unrealized loss on investments, net of tax of $0 for all periods0 0 (1)
Reclassification adjustments included in net income, net of tax of $0 for all periods0 0 1 
Other Comprehensive Income (Loss)(8)(7)8 
Comprehensive Income$808 $736 $713 
The accompanying notes are an integral part of these statements.
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Consumers Energy Company
Consolidated Statements of Cash Flows
In Millions
Years Ended December 31202020192018
Cash Flows from Operating Activities
Net income$816 $743 $705 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization1,023 975 921 
Deferred income taxes and investment tax credits177 37 123 
Bad debt expense33 29 29 
Other non‑cash operating activities and reconciling adjustments(30)(32)13 
Postretirement benefits contributions(690)(7)(242)
Cash provided by (used in) changes in assets and liabilities
Accounts and notes receivable and accrued revenue(46)8 (26)
Inventories26 40 15 
Accounts payable and accrued rate refunds45 (63)12 
Other current and non-current assets and liabilities(136)(129)(101)
Net cash provided by operating activities1,218 

1,601 

1,449 
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under finance lease)(2,170)(2,085)(1,822)
Proceeds from DB SERP investments0 0 106 
DB SERP investment in note receivable – related party(5)0 (106)
Proceeds from sale of transmission equipment58 77 0 
Cost to retire property and other investing activities(129)(129)(149)
Net cash used in investing activities(2,246)

(2,137)

(1,971)
Cash Flows from Financing Activities
Proceeds from issuance of debt1,954 993 2,106 
Retirement of debt(1,086)(541)(1,193)
Decrease in notes payable(90)(7)(73)
Increase in notes payable – related parties307 0 0 
Stockholder contribution650 675 250 
Payment of dividends on common and preferred stock(639)(594)(533)
Debt prepayment costs(43)(8)(20)
Other financing costs(18)(10)(24)
Net cash provided by financing activities1,035 

508 

513 
Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts7 (28)(9)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period28 56 65 
Cash and Cash Equivalents, Including Restricted Amounts, End of Period$35 

$28 

$56 
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In Millions
Years Ended December 31202020192018
Other Cash Flow Activities and Non‑cash Investing and Financing Activities
Cash transactions
Interest paid (net of amounts capitalized)$305 $279 $287 
Income taxes paid51 132 156 
Non‑cash transactions
Capital expenditures not paid130 160 143 
The accompanying notes are an integral part of these statements.
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Consumers Energy Company
Consolidated Balance Sheets
ASSETS
In Millions
December 3120202019
Current Assets  
Cash and cash equivalents$20 $11 
Restricted cash and cash equivalents15 17 
Accounts receivable and accrued revenue, less allowance of $29 in 2020 and $20 in 2019828 827 
Accounts and notes receivable – related parties18 9 
Inventories at average cost
Gas in underground storage353 399 
Materials and supplies149 135 
Generating plant fuel stock67 63 
Deferred property taxes332 305 
Regulatory assets42 33 
Prepayments and other current assets68 73 
Total current assets1,892 

1,872 
Plant, Property, and Equipment  
Plant, property, and equipment, gross26,757 24,963 
Less accumulated depreciation and amortization7,844 7,272 
Plant, property, and equipment, net18,913 

17,691 
Construction work in progress1,058 879 
Total plant, property, and equipment19,971 

18,570 
Other Non-current Assets  
Regulatory assets2,653 2,489 
Accounts receivable25 29 
Accounts and notes receivable – related parties105 102 
Other753 637 
Total other non-current assets3,536 

3,257 
Total Assets$25,399 

$23,699 
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LIABILITIES AND EQUITY
In Millions
December 3120202019
Current Liabilities
Current portion of long-term debt, finance leases, and other financing$384 $221 
Notes payable0 90 
Notes payable – related parties307 0 
Accounts payable636 593 
Accounts payable – related parties7 20 
Accrued rate refunds20 35 
Accrued interest72 67 
Accrued taxes458 481 
Regulatory liabilities151 87 
Other current liabilities104 118 
Total current liabilities2,139 

1,712 
Non-current Liabilities
Long-term debt7,742 7,048 
Non-current portion of finance leases and other financing56 76 
Regulatory liabilities3,744 3,742 
Postretirement benefits112 622 
Asset retirement obligations530 474 
Deferred investment tax credit115 120 
Deferred income taxes2,094 1,864 
Other non-current liabilities311 304 
Total non-current liabilities14,704 

14,250 
Commitments and Contingencies (Notes 3 and 4)
00
Equity
Common stockholder’s equity
Common stock, authorized 125.0 shares; outstanding 84.1 shares in both periods841 841 
Other paid-in capital6,024 5,374 
Accumulated other comprehensive loss(36)(28)
Retained earnings1,690 1,513 
Total common stockholder’s equity8,519 

7,700 
Cumulative preferred stock, $4.50 series37 37 
Total equity8,556 

7,737 
Total Liabilities and Equity$25,399 

$23,699 
The accompanying notes are an integral part of these statements.
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Consumers Energy Company
Consolidated Statements of Changes in Equity
In Millions
Years Ended December 31202020192018
Total Equity at Beginning of Period$7,737 $6,920 $6,488 
Common Stock
At beginning and end of period841 841 841 
Other Paid-in Capital
At beginning of period5,374 4,699 4,449 
Stockholder contribution650 675 250 
At end of period6,024 5,374 4,699 
Accumulated Other Comprehensive Loss
At beginning of period(28)(21)(12)
Retirement benefits liability
At beginning of period(28)(21)(24)
Cumulative effect of change in accounting principle0 0 (5)
Net gain (loss) arising during the period(9)(8)6 
Amortization of net actuarial loss1 1 2 
At end of period(36)(28)(21)
Investments
At beginning of period0 0 12 
Cumulative effect of change in accounting principle0 0 (12)
Unrealized loss on investments0 0 (1)
Reclassification adjustments included in net income0 0 1 
At end of period0 0 0 
At end of period(36)(28)(21)
Retained Earnings
At beginning of period1,513 1,364 1,173 
Cumulative effect of change in accounting principle0 0 19 
Net income816 743 705 
Dividends declared on common stock(637)(592)(531)
Dividends declared on preferred stock(2)(2)(2)
At end of period1,690 1,513 1,364 
Cumulative Preferred Stock
At beginning and end of period37 37 37 
Total Equity at End of Period$8,556 $7,737 $6,920 
The accompanying notes are an integral part of these statements.
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CMS Energy Corporation
Consumers Energy Company
Notes to the Consolidated Financial Statements
1:Significant Accounting Policies
1:    Significant Accounting Policies
Principles of Consolidation: CMS Energy and Consumers prepare their consolidated financial statements in conformity with GAAP. CMS Energy’s consolidated financial statements comprise CMS Energy, Consumers, CMS Enterprises, EnerBank, and all other entities in which CMS Energy has a controlling financial interest or is the primary beneficiary. Consumers’ consolidated financial statements comprise Consumers and all other entities in which it has a controlling financial interest or is the primary beneficiary. CMS Energy uses the equity method of accounting for investments in companies and partnerships that are not consolidated, where they have significant influence over operations and financial policies but are not the primary beneficiary. CMS Energy and Consumers eliminate intercompany transactions and balances.
Use of Estimates: CMS Energy and Consumers are required to make estimates using assumptions that may affect reported amounts and disclosures. Actual results could differ from those estimates.
Contingencies: CMS Energy and Consumers record estimated liabilities for contingencies on their consolidated financial statements when it is probable that a liability has been incurred and when the amount of loss can be reasonably estimated. For environmental remediation projects in which the timing of estimated expenditures is considered reliably determinable, CMS Energy and Consumers record the liability at its net present value, using a discount rate equal to the interest rate on monetary assets that are essentially risk-free and have maturities comparable to that of the environmental liability. CMS Energy and Consumers expense legal fees as incurred; fees incurred but not yet billed are accrued based on estimates of work performed.
Debt Issuance Costs, Discounts, Premiums, and Refinancing Costs: Upon the issuance of long-term debt, CMS Energy and Consumers defer issuance costs, discounts, and premiums and amortize those amounts over the terms of the associated debt. Debt issuance costs are presented as a direct deduction from the carrying amount of long-term debt on the balance sheet. Upon the refinancing of long-term debt, Consumers, as a regulated entity, defers any remaining unamortized issuance costs, discounts, and premiums associated with the refinanced debt and amortizes those amounts over the term of the newly issued debt. For the non‑regulated portions of CMS Energy’s business, any remaining unamortized issuance costs, discounts, and premiums associated with extinguished debt are charged to earnings.
Derivative Instruments: In order to support ongoing operations, CMS Energy and Consumers enter into contracts for the future purchase and sale of various commodities, such as electricity, natural gas, and coal. These forward contracts are generally long-term in nature and result in physical delivery of the commodity at a contracted price. Most of these contracts are not subject to derivative accounting for one or more of the following reasons:
•they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas)
•they qualify for the normal purchases and sales exception
•they cannot be net settled due in part to the absence of an active market for the commodity


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Consumers also uses FTRs to manage price risk related to electricity transmission congestion. An FTR is a financial instrument that entitles its holder to receive compensation or requires its holder to remit payment for congestion-related transmission charges. Consumers accounts for FTRs as derivatives.
Additionally, CMS Energy uses interest rate swaps to manage its interest rate risk on certain long-term debt and notes receivable transactions.
CMS Energy and Consumers record derivative contracts that do not qualify for the normal purchases and sales exception at fair value on their consolidated balance sheets. At CMS Energy, if the derivative is accounted for as a cash flow hedge, unrealized gains and losses from changes in the fair value of the derivative are recognized in AOCI and subsequently recognized in earnings when the hedged transactions impact earnings. If the derivative is accounted for as a fair value hedge, changes in the fair value of the derivative and changes in the fair value of the hedged item due to the hedged risk are recognized in earnings. For the FTRs at Consumers, changes in fair value are deferred as regulatory assets or liabilities. For details regarding CMS Energy’s and Consumers’ derivative instruments recorded at fair value, see Note 6, Fair Value Measurements.
EPS: CMS Energy calculates basic and diluted EPS using the weighted-average number of shares of common stock and dilutive potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted EPS, includes the effects of nonvested stock awards and forward equity sales. CMS Energy computes the effect on potential common stock using the treasury stock method. Diluted EPS excludes the impact of antidilutive securities, which are those securities resulting in an increase in EPS or a decrease in loss per share. For EPS computations, see Note 15, Earnings Per Share—CMS Energy.
Impairment of Long-Lived Assets and Equity Method Investments: CMS Energy and Consumers perform tests of impairment if certain triggering events occur or if there has been a decline in value that may be other than temporary.
CMS Energy and Consumers evaluate long-lived assets held in use for impairment by calculating the undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. If the undiscounted future cash flows are less than the carrying amount, CMS Energy and Consumers recognize an impairment loss equal to the amount by which the carrying amount exceeds the fair value. CMS Energy and Consumers estimate the fair value of the asset using quoted market prices, market prices of similar assets, or discounted future cash flow analyses.
CMS Energy also assesses equity method investments for impairment whenever there has been a decline in value that is other than temporary. This assessment requires CMS Energy to determine the fair value of the equity method investment. CMS Energy determines fair value using valuation methodologies, including discounted cash flows, and assesses the ability of the investee to sustain an earnings capacity that justifies the carrying amount of the investment. CMS Energy records an impairment if the fair value is less than the carrying amount and the decline in value is considered to be other than temporary.
Investment Tax Credits: Consumers amortizes its investment tax credits over the life of the related property in accordance with regulatory treatment. CMS Energy’s non‑regulated businesses use the deferral method of accounting for investment tax credits. Under the deferral method, the book basis of the associated assets is reduced by the amount of the credit, resulting in lower depreciation expense over the life of the assets. Furthermore, the tax basis of the assets is reduced by 50 percent of the related credit, resulting in a net deferred tax asset. CMS Energy recognizes the tax benefit of this basis difference as a reduction to income tax expense in the year in which the plant reaches commercial operation.


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Inventory: CMS Energy and Consumers use the weighted-average cost method for valuing working gas, recoverable base gas in underground storage facilities, and materials and supplies inventory. CMS Energy and Consumers also use this method for valuing coal inventory, and they classify these amounts as generating plant fuel stock on their consolidated balance sheets.
CMS Energy and Consumers account for RECs and emission allowances as inventory and use the weighted-average cost method to remove amounts from inventory. RECs and emission allowances are used to satisfy compliance obligations related to the generation of power. CMS Energy and Consumers classify these amounts within other assets on their consolidated balance sheets.
CMS Energy and Consumers evaluate inventory for impairment as required to ensure that its carrying value does not exceed the lower of cost or net realizable value.
MISO Transactions: MISO requires the submission of hourly day-ahead and real-time bids and offers for energy at locations across the MISO region. CMS Energy and Consumers account for MISO transactions on a net hourly basis in each of the real-time and day-ahead markets, netted across all MISO energy market locations. CMS Energy and Consumers record net hourly purchases in purchased and interchange power and net hourly sales in operating revenue on their consolidated statements of income. They record net billing adjustments upon receipt of settlement statements, record accruals for future net purchases and sales adjustments based on historical experience, and reconcile accruals to actual expenses and sales upon receipt of settlement statements.
Property Taxes: Property taxes are based on the taxable value of Consumers’ real and personal property assessed by local taxing authorities. Consumers records property tax expense over the fiscal year of the taxing authority for which the taxes are levied. The deferred property tax balance represents the amount of Consumers’ accrued property tax that will be recognized over future governmental fiscal periods.
Renewable Energy Grant: In 2013, Consumers received a renewable energy cash grant for Lake Winds® Energy Park under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009. Upon receipt of the grant, Consumers recorded a regulatory liability, which Consumers is amortizing over the life of Lake Winds® Energy Park. Consumers presents the amortization as a reduction to maintenance and other operating expenses on its consolidated statements of income. Consumers recorded the deferred income taxes related to the grant as a reduction of the book basis of Lake Winds® Energy Park.
Other: For additional accounting policies, see:
•Note 8, Notes Receivable
•Note 9, Plant, Property, and Equipment
•Note 11, Asset Retirement Obligations
•Note 12, Retirement Benefits
•Note 14, Income Taxes
•Note 15, Earnings Per Share—CMS Energy
•Note 16, Revenue
•Note 18, Cash and Cash Equivalents
•Note 21, Variable Interest Entities
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2:New Accounting Standards
2:    New Accounting Standards
Implementation of New Accounting Standards
ASU 2016‑02, Leases: This standard, which was effective on January 1, 2019 for CMS Energy and Consumers, establishes a new accounting model for leases. The standard requires lessees to recognize


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lease assets and liabilities on the balance sheet for all leases with a term of more than one year, including operating leases, which were not recorded on the balance sheet under previous standards. The new guidance also amends the definition of a lease to require that a lessee have the right to control the use of a specified asset, and not simply control or take the output of the asset. On the statement of income, operating leases are generally accounted for under a straight-line expense model, while finance leases, which were previously referred to as capital leases, are generally accounted for under a financing model. Consistent with the previous lease guidance, however, the standard allows rate-regulated utilities to recognize expense consistent with the timing of recovery in rates.
CMS Energy and Consumers elected to use certain practical expedients permitted by the standard, under which they were not required to perform lease assessments or reassessments for agreements existing on the effective date. They also elected a transition method under which they initially applied the standard on January 1, 2019, without adjusting amounts presented for prior periods. Under the standard, CMS Energy and Consumers recognized additional lease assets and liabilities on their consolidated balance sheets as of January 1, 2019 for their operating leases. In addition, in accordance with the standard, they have provided additional disclosures about their leases in Note 10, Leases and Palisades Financing. The standard did not have any impact on CMS Energy’s and Consumers’ consolidated net income or cash flows, and there was no cumulative-effect adjustment recorded to beginning retained earnings.
New Accounting Standards Not Yet Effective
ASU 2016‑2016‑13, Measurement of Credit Losses on Financial Instruments: This standard, which was effective on January 1, 2020 for CMS Energy and Consumers, provides new guidance for measuring and recognizing credit losses on financial instruments. The standard applies to financial assets that are not measured at fair value through net income as well as to certain off-balance sheetoff‑balance-sheet credit exposures. Entities willCMS Energy and Consumers were required to apply the standard using a modified retrospective approach, withunder which the initial impacts of the standard are recorded through a cumulative‑effectcumulative-effect adjustment recorded to beginning retained earnings on the effective date.
The standard will requirerequired an increase to the allowance for loan losses at EnerBank. At December 31, 2019,Prior to the standard, the allowance reflected expected credit losses over a 12‑month period, but the new standard will requireguidance requires the allowance to reflect expected credit losses over the entire life of the loans. EnerBank expects to recordAs a result, CMS Energy recorded a $65 million increase to its expected credit loss reserves on January 1, 2020, with the offsetting adjustment recorded to retained earnings, net of taxes.taxes of $14 million. The standard will also requirerequires an increase in the initial provision for loan losses recognized in net income for new loans originated in 2020 and beyond. The adoption of this standard resulted in a $21 million reduction to CMS Energy’s income before income taxes for the year ended December 31, 2020. For further information on EnerBank’s loans and the related allowance for loan losses see Note 8, Notes Receivable. At Consumers, the new guidance will applystandard applies to the allowance for uncollectible accounts; however,accounts, but did not result in any significant changes to the allowance methodology and did not have a material impact on Consumers’ consolidated financial statements.
ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting: This standard, which was effective as of March 12, 2020 for CMS Energy and Consumers, does not expect material impacts fromprovides optional guidance intended to ease the standard.potential burden in accounting for the expected discontinuation of LIBOR as a reference rate in the financial markets. The guidance can be applied to modifications made to certain contracts to replace LIBOR with a new reference rate. The guidance, if elected, will permit entities to treat such modifications as the continuation of the original contract, without any required accounting reassessments or remeasurements. The guidance will also facilitate the continuation of hedge accounting for derivatives that may have to be modified to incorporate a new rate. The guidance is effective through December 31, 2022. CMS Energy and Consumers presently have various contracts that reference LIBOR and they are assessing how this standard may be applied to specific contract modifications.


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3:    Regulatory Matters
3:Regulatory Matters
Regulatory matters are critical to Consumers. The Michigan Attorney General, ABATE, the MPSC Staff, and certain other parties typically participate in MPSC proceedings concerning Consumers, such as Consumers’ rate cases and PSCR and GCR processes. These parties often challenge various aspects of those proceedings, including the prudence of Consumers’ policies and practices, and seek cost disallowances and other relief. The parties also have appealed significant MPSC orders. Depending upon the specific issues, the outcomes of rate cases and proceedings, including judicial proceedings challenging MPSC orders or other actions, could negatively affect CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. Consumers cannot predict the outcome of these proceedings.
There are multiple appeals pending that involve various issues concerning cost recovery from customers, the adequacy of the record of evidence supporting the recovery of Smart Energy investments, and other matters. Consumers is unable to predict the outcome of these appeals.
Regulatory Assets and Liabilities
Consumers is subject to the actions of the MPSC and FERC and therefore prepares its consolidated financial statements in accordance with the provisions of regulatory accounting. A utility must apply regulatory accounting when its rates are designed to recover specific costs of providing regulated services. Under regulatory accounting, Consumers records regulatory assets or liabilities for certain transactions that would have been treated as expense or revenue by non‑regulated businesses.


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Presented in the following table are the regulatory assets and liabilities on Consumers’ consolidated balance sheets:
In Millions
December 31End of Recovery or Refund Period20202019
Regulatory assets
Current
Energy waste reduction plan incentive1
2021$34 $33 
Deferred capital spending2
20216 0 
Other20212 0 
Total current regulatory assets$42 $33 
Non-current
Postretirement benefits3
various$1,231 $1,130 
Costs of coal-fueled electric generating units to be retired2
various678 667 
Securitized costs2
2029221 247 
ARO4
various216 191 
MGP sites4
various120 130 
Unamortized loss on reacquired debt4
various108 70 
Energy waste reduction plan incentive1
202242 34 
Energy waste reduction plan4
various16 10 
Demand response program4
various10 1 
COVID-19 costs accounting deferral4
various4 0 
Othervarious7 9 
Total non-current regulatory assets$2,653 $2,489 
Total regulatory assets$2,695 $2,522 
Regulatory liabilities
Current
Income taxes, net2021$105 $65 
Reserve for customer refunds202128 2 
Voluntary transmission asset sale gain share202114 17 
Other20214 3 
Total current regulatory liabilities$151 $87 
Non-current
Cost of removalvarious$2,245 $2,126 
Income taxes, netvarious1,419 1,510 
Renewable energy grant204349 52 
AROvarious11 26 
Renewable energy plan20289 17 
Othervarious11 11 
Total non-current regulatory liabilities$3,744 $3,742 
Total regulatory liabilities$3,895 $3,829 
1These regulatory assets have arisen from an alternative revenue program and are not associated with incurred costs or capital investments. Therefore, the MPSC has provided for recovery without a return.
2The MPSC has historically authorized and Consumers expects the MPSC to authorize a specific return on these regulatory assets.
In Millions 
December 31
End of Recovery
or Refund Period
2019 2018 
Regulatory assets      
Current      
Energy waste reduction plan incentive1
 2020 $33
 $32
Other 2019 —
 5
Total current regulatory assets   $33
 $37
Non-current      
Postretirement benefits2
 various $1,130
 $1,028
Costs of coal-fueled electric generating units to be retired3
 various 667
 —
Securitized costs3
 2029 247
 273
ARO4
 various 191
 175
MGP sites4
 various 130
 133
Unamortized loss on reacquired debt4
 various 70
 68
Energy waste reduction plan incentive1
 2021 34
 34
Energy waste reduction plan4
 various 10
 26
Deferred capital spending4
 various 3
 —
Gas storage inventory adjustments4
 various 3
 4
Other various 4
 2
Total non-current regulatory assets
   $2,489
 $1,743
Total regulatory assets   $2,522
 $1,780
Regulatory liabilities      
Current      
Income taxes, net 2020 $65
 $18
Gain to be shared with customers 2020 17
 —
Reserve for customer refunds 2019 2
 36
TCJA reserve for refund 2019 —
 98
Other 2020 3
 3
Total current regulatory liabilities   $87
 $155
Non-current      
Cost of removal various $2,126
 $1,966
Income taxes, net various 1,510
 1,537
Renewable energy grant 2043 52
 54
ARO various 26
 38
Renewable energy plan 2028 17
 42
TCJA reserve for refund various —
 35
Other various 11
 9
Total non-current regulatory liabilities   $3,742
 $3,681
Total regulatory liabilities   $3,829
 $3,836
1
These regulatory assets have arisen from an alternative revenue program and are not associated with incurred costs or capital investments. Therefore, the MPSC has provided for recovery without a return.
2
This regulatory asset is included in rate base, thereby providing a return.


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3
The MPSC has historically authorized and Consumers expects the MPSC to authorize a specific return on these regulatory assets.
4
These regulatory assets represent incurred costs for which the MPSC has provided, or Consumers expects, recovery without a return on investment.
3This regulatory asset is included in rate base, thereby providing a return.
4These regulatory assets represent incurred costs for which the MPSC has provided, or Consumers expects, recovery without a return on investment.
Regulatory Assets
Energy Waste Reduction Plan Incentive: The energy waste reduction incentive mechanism provides a financial incentive if the energy savings of Consumers’ customers exceed annual targets established by the MPSC. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizing revenue related to the incentive as soon as energy savings exceed the annual targets established by the MPSC.
In December 2019,November 2020, the MPSC approved a settlement agreement authorizing Consumers to collect $34 million during 20202021 as an incentive for exceeding its statutory savings targets in 2018.2019. Consumers recognized incentive revenue under this program of $34 million in 2018.2019.
Consumers also exceeded its statutory savings targets in 2019,2020, achieved certain other goals, and will request the MPSC’s approval to collect $34$42 million, the maximum performance incentive, in the energy waste reduction reconciliation to be filed in 2020.2021. Consumers recognized incentive revenue under this program of $34$42 million in 2019.2020.
Deferred Capital Spending: In January 2019, the MPSC approved a settlement agreement in Consumers’ 2018 electric rate case, which provided deferred accounting treatment for distribution-related capital investments exceeding certain threshold amounts. Thus, for actual capital spending above the threshold amounts detailed in the settlement agreement, Consumers has deferred as a regulatory asset the associated depreciation and property tax expense as well as the debt component of the overall rate of return on such spending.
Postretirement Benefits: As part of the ratemaking process, the MPSC allows Consumers to recover the costs of postretirement benefits. Accordingly, Consumers defers the net impact of actuarial losses and gains, as well as prior service costs and credits, and settlements associated with postretirement benefits as a regulatory asset or liability. The asset or liability will decrease as the deferred items are amortized and recognized as components of net periodic benefit cost. For details about settlements and the amortization periods, see Note 12, Retirement Benefits.
Costs of Coal-fueled Electric Generating Units to be Retired: In June 2019, the MPSC approved the settlement agreement reached in Consumers’ IRP, under which Consumers plans to retire the D.E. Karn 1 & 2 coal-fueled electric generating units in 2023. Under Michigan law, electric utilities have been permitted to use highly rated, low-cost securitization bonds to finance the recovery of qualified costs. Consumers will file for securitization financing by May 2023, requesting the MPSC’s approval to securitize the remaining book value of the 2 coal-fueled electric generating units upon their retirement.
In 2019, Consumers removed from total plant, property, and equipment an amount representing the projected remaining book value of the 2 coal-fueled electric generating units upon their retirement, and recorded it as a regulatory asset. Until securitization, the book value of the generating units will remain in rate base and receive full regulatory returns in general rate cases.
In December 2020, the MPSC issued a securitization financing order authorizing Consumers to issue securitization bonds in order to finance the recovery of the remaining book value of the 2 coal-fueled electric generating units upon their retirement. An intervenor has appealed the order, contending that it should not have to pay the securitization surcharge.
Securitized Costs: In 2013, the MPSC issued a securitization financing order authorizing Consumers to issue securitization bonds in order to finance the recovery of the remaining book value of 7 smaller
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coal-fueled electric generating units that Consumers retired in 2016 and 3 smaller natural gas-fueled electric generating units that Consumers retired in 2015. Upon receipt of the MPSC’s order, Consumers removed the book value of the 10 units from plant, property, and equipment and recorded this amount as a regulatory asset. Consumers is amortizing the regulatory asset over the life of the related securitization bonds, which it issued through a subsidiary in 2014. For additional details regarding the securitization bonds, see Note 5, Financings and Capitalization.
ARO: The recovery of the underlying asset investments and related removal and monitoring costs of recorded AROs is approved by the MPSC in depreciation rate cases. Consumers records a regulatory asset and a regulatory liability for timing differences between the recognition of AROs for financial reporting purposes and the recovery of these costs from customers. The recovery period approximates the useful life of the assets to be removed.


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MGP Sites: Consumers is incurring environmental remediation and other response activity costs at 23 former MGP facilities. The MPSC allows Consumers to recover from its natural gas customers over a ten-year period the costs incurred to remediate the MGP sites.
Unamortized Loss on Reacquired Debt: Under regulatory accounting, any unamortized discount, premium, or expense related to debt redeemed with the proceeds of new debt is capitalized and amortized over the life of the new debt.
Energy Waste Reduction Plan: The MPSC allows Consumers to collect surcharges from customers to fund its energy waste reduction plan. The amount of spending incurred in excess of surcharges collected is recorded as a regulatory asset and amortized as surcharges are collected from customers over the plan period. The amount of surcharges collected in excess of spending incurred is recorded as a regulatory liability and amortized as costs are incurred.
Deferred Capital Spending:Demand Response Program: In January 2019,the IRP and in general electric rate cases, the MPSC has approved the recovery of demand response costs. Consumers annually files a settlement agreementreconciliation with the MPSC to review actual demand response costs against amounts approved. The method of recovery of demand response costs will be determined in Consumers’ 2018 electrica future rate case, which provided deferred accounting treatment for distribution-related capital investments exceeding certain threshold amounts. Thus, for actual capital spending abovecase.
COVID‑19 Costs Accounting Deferral: In April 2020, the threshold amounts detailedMPSC issued an order authorizing Consumers to defer uncollectible accounts expense incurred beginning March 24, 2020 that are in the settlement agreement, Consumers has deferred as a regulatory asset the associated depreciation and property tax expense as well as the debt componentexcess of the overall rate of return on such spending.amount used to set existing rates.
Gas Storage Inventory Adjustments: Consumers incurs inventory expenses related to the loss of gas from its natural gas storage fields. The MPSC allows Consumers to recover these costs from its natural gas customers over a five-year period.
Regulatory Liabilities
Income Taxes, Net: Consumers records regulatory assets and liabilities to reflect the difference between deferred income taxes recognized for financial reporting purposes and amounts previously reflected in Consumers’ rates. This net balance will decrease over the remaining life of the related temporary differences and flow through current income tax benefit.expense. The majority of the net regulatory liability recorded related to income taxes is associated with plant assets that are subject to normalization, which is governed by the Internal Revenue Code, and will be returned to customers over the remaining book life of the related plant assets, the average of which is 44 years for gas plant assets and 27 years for electric plant assets. For additional details on deferred income taxes, see the Consumers Electric Utility and Gas Utility—Tax Cuts and Jobs Act section below and Note 14, Income Taxes.
Reserve for Customer Refunds: In December 2020, the MPSC issued an order authorizing Consumers to refund $28 million voluntarily to utility customers. Consumers is required to submit another filing by the end of February 2021 proposing an appropriate method for making this refund.
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Voluntary Transmission Asset Sale Gain Share: In October 2020, Consumers completed a sale of the electric utility’s remaining transmission equipment to be SharedMETC. In December 2020, Consumers filed an application with Customers:the MPSC requesting approval to share voluntarily half of the gain from the sale with electric utility customers; this application was approved by the MPSC in February 2021. Consumers will share the gain through an offset to additional spending in 2021 or through a bill credit to electric utility customers in 2022. As a result, Consumers deferred $14 million of the gain in December 2020.
In September 2019, Consumers completed a sale of a portion of its electric utility’s substation transmission equipment to METC. In December 2019, Consumers filed an application with the MPSC requesting approval to share voluntarily with electric utility customers half of the gain recognized onfrom the sale with customers; this application was approved by the MPSC in April 2020. As a saleresult, Consumers deferred $17 million of a portion of its substation transmission equipment to METC. Consumers proposed the gain sharing take place through an offset to additional spending in 2020 or through a bill credit toDecember 2019 and shared that gain with customers in 2021.
Reserve for Customer Refunds: At December 31, 2018, Consumers had recorded a provision for revenue subject to refund associated with electric rates it self-implemented in 2017. In August 2019, the MPSC approved Consumers’ reconciliation of total revenues collected from rates it self-implemented to those that would have been collected under the final rates approved in June 2018 and Consumers refunded the resulting amount in September 2019. The 2016 Energy Law eliminated utilities’ self-implementation of rates under general rate cases, but provided for more timely processing of general rate cases.
TCJA Reserve for Refund: In early 2018, the MPSC ordered Consumers to file various proceedings to determine the reduction in its electric and gas revenue requirements as a result of the TCJA. For further information on the various TCJA proceedings, see the Consumers Electric Utility and Gas Utility—Tax Cuts and Jobs Act section below.


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2020.
Cost of Removal: The MPSC allows Consumers to collect amounts from customers to fund future asset removal activities. This regulatory liability is reduced as costs of removal are incurred. The refund period of this regulatory liability approximates the useful life of the assets to be removed.
Renewable Energy Grant: In 2013, Consumers received a $69 million renewable energy grant for Lake Winds® Energy Park, which began operations in 2012. This grant reduces Consumers’ cost of complying with Michigan’s renewable portfolio standard and, accordingly, reduces the overall renewable energy surcharge to be collected from customers. The regulatory liability recorded for the grant will be amortized over the life of Lake Winds® Energy Park.
Renewable Energy Plan: Consumers has collected surcharges to fund its renewable energy plan. Amounts not yet spent under the plan are recorded as a regulatory liability, which is amortized as incremental costs are incurred to operate and depreciate Consumers’ renewable generation facilities and to purchase RECs under renewable energy purchase agreements. Incremental costs represent costs incurred in excess of amounts recovered through the PSCR process.
Consumers Electric Utility and Gas Utility
Tax Cuts and Jobs Act: The TCJA, which changed existing federal tax law and included numerous provisions that affect businesses, was signed into law in December 2017.
In early 2018, the MPSC ordered Consumers to file various proceedings to determine the reduction in its electric and gas revenue requirements as a result of the reduction in the corporate income tax rate, and to implement bill credits to reflect that reduction until customer rates could be adjusted through Consumers’ general rate cases. Consumers filed, and the MPSC approved, such proceedings throughout 2018, resulting in credits to customer bills during 2018 to reflect reductions in Consumers’ electric and gas revenue requirements.
Consumers filed additional proceedings to address amounts collected from customers during 2018 prior to the implementation of bill credits. In late 2018, the MPSC approved the refund of $31 million to gas customers over six months beginning in December 2018 and the refund of $70 million to electric customers over six months beginning in January 2019.
In October 2018, Consumers filed an application to address the December 31, 2017 remeasurement of its deferred income taxes and other base rate impacts of the TCJA on customers. In September 2019, the MPSC authorized Consumers to begin returning net regulatory tax liabilities of $0.4 billion to gas customers through rates approved in the 2018 gas rate case and $1.2 billion to electric customers through rates to be determined in Consumers’ next electric rate case. Until then, the MPSC authorized Consumers to refund $32 million to electric customers through a temporary bill credit. Consumers’ total $1.6 billion of net regulatory tax liabilities comprises:
•
A regulatory tax liability of $1.7 billion associated with plant assets that are subject to normalization, which is governed by the Internal Revenue Code; this regulatory tax liability will be returned over the remaining book life of the related plant assets, the average of which is 44 years for gas plant assets and 27 years for electric plant assets.
•
A regulatory tax asset of $0.3 billion associated with plant assets that are not subject to normalization; this regulatory tax asset will be collected over 44 years from gas customers and over 27 years from electric customers.
•
A regulatory tax liability of $0.2 billion, which is primarily related to employee benefits; this regulatory tax liability will be refunded to customers over ten years.


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In January 2018, Consumers began to reduce the regulatory liability subject to normalization by crediting income tax expense. Consumers fully reserved for the eventual refund of these excess deferred taxes that it credited to income tax expense in a separate non‑current regulatory liability established by reducing revenue. As a result of an order received in September 2019, Consumers began refunding these excess deferred taxes to customers and will no longer reserve for their refund. At the date of the order, this reserve for refund of these excess deferred taxes totaled $62 million. For additional details on the remeasurement, see Note 14, Income Taxes.
Consumers Electric Utility
20182020 Electric Rate Case: In May 2018,February 2020, Consumers filed an application with the MPSC seeking an annual rate increase of $58$244 million, based on a 10.7510.5 percent authorized return on equity.equity and a projected twelve-month period ending December 31, 2021. In October 2018,July 2020, Consumers reduced its requested annual rate increase to $44$230 million. In January 2019,December 2020, the MPSC approved a settlement agreement authorizing an annual rate decreaseincrease of $24$90 million, based on a 10.09.9 percent authorized return on equity. WithThis increase reflects a $36 million refund to customers of regulatory tax liabilities associated with the eliminationremeasurement of Consumers’ deferred income taxes as a result of the $113 million TCJA credit to customer bills,TCJA; excluding the approved settlement agreementimpacts of this refund, the order resulted in an $89a $126 million net increase in annual rates.
The settlement agreementorder also provided for deferred accounting treatment forapproved the recovery of $13 million associated with Consumers’ deferral of depreciation and property tax expense and the overall rate of return on distribution-related capital investments exceeding certain threshold amounts.
Additionally, the order approved the method of recovering amounts earned under the financial compensation mechanism approved by the MPSC in Consumers’ IRP. This mechanism allows Consumers to earn a return equal to Consumer’s weighted-average cost of capital on payments made under PPAs approved by the MPSC after January 1, 2019. The order authorizes Consumers to recover $3 million, beginning in January 2021, for incentives earned and to be earned on PPA payments during 2019 through 2021. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizing revenue related to the mechanism as payments are made on MPSC-approved PPAs. Consumers recognized revenue under this mechanism of $1 million in 2020.
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Consumers is also agreedauthorized in the order to not filereplace the current net metering tariff with a new electric rate case priordistributed generation tariff, pursuant to January 2020.the 2016 Energy Law. The new distributed generation tariff is consistent with other distributed generation tariffs already approved by the MPSC and will reduce the subsidies paid by non-distributed generation customers under the current net metering program.
Consumers Gas Utility
20182019 Gas Rate Case: In November 2018,December 2019, Consumers filed an application with the MPSC seeking an annual rate increase of $229$245 million, based on a 10.7510.5 percent authorized return on equity.equity and a projected twelve-month period ending September 30, 2021. In April 2019,May 2020, Consumers reduced its requested annual rate increase to $204$229 million. In September 2019,2020, the MPSC approved a settlement agreement authorizing an annual rate increase of $144 million, based on a 9.909.9 percent authorized return on equity. This increase includesequity, effective October 1, 2020. As part of that agreement, Consumers agreed not to file a $13 million adjustmentnew gas rate case prior to begin returning net regulatory tax liabilities associated with the TCJA to customers.December 2021. The MPSC also approved the continuation of a revenue decoupling mechanism, which annually reconciles Consumers’ actual weather-normalized non‑fuelnon-fuel revenues with the revenues approved by the MPSC. This reconciliation would start in October 2021 and continue until the MPSC resets rates in a subsequent rate case.
Additionally, the MPSC authorized Consumers to accelerate:
•the refund of a regulatory liability associated with the unprotected, non‑property-related excess deferred income taxes resulting from the TCJA; Consumers was previously authorized to refund this through 2029
•the flow-through of certain income tax benefits associated primarily with the cost of removal of gas plant assets placed in service before 1993; Consumers was previously authorized to refund this through 2025
Under the settlement agreement approved by the MPSC, these benefits, which total $84 million, will now be passed through to customers by September 2022. For additional details, see Note 14, Income Taxes.
Power Supply Cost Recovery and Gas Cost Recovery
The PSCR and GCR ratemaking processes are designed to allow Consumers to recover all of its power supply and purchased natural gas costs if incurred under reasonable and prudent policies and practices. The MPSC reviews these costs, policies, and practices in annual plan and reconciliation proceedings. Consumers adjusts its PSCR and GCR billing charges monthly in order to minimize the underrecovery or overrecovery amount in the annual reconciliations. Underrecoveries represent probable future revenues that will be recovered from customers; overrecoveries represent previously collected revenues that will be refunded to customers.


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Presented in the following table are the assets and liabilities for PSCR and GCR underrecoveries and overrecoveries reflected on Consumers’ consolidated balance sheets:
In Millions
December 3120202019
Liabilities
PSCR overrecoveries$5 $33 
GCR overrecoveries15 2 
Accrued rate refunds$20 $35 
In Millions 
December 312019 2018 
Assets    
GCR underrecoveries $—
 $16
Accrued gas revenue $—
 $16
Liabilities    
PSCR overrecoveries $33
 $4
GCR overrecoveries 2
 —
Accrued rate refunds $35
 $4
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PSCR Plans and Reconciliations: In October 2019,2020, the MPSC issued an order in Consumers’ 20172018 PSCR reconciliation, authorizing recovery of $1.9$2.0 billion of power costs and authorizing Consumers to reflect in its 20182019 PSCR reconciliation the overrecoveryunderrecovery of $32$28 million.
In November 2019,April 2020, the MPSC issued an order in Consumers’ 20182019 PSCR plan authorizing the 20182019 PSCR charge that Consumers self-implemented beginning in January 2018.2019. In March 2019,2020, Consumers filed its 20182019 PSCR reconciliation, requesting full recovery of $2.0$1.9 billion of power costs and authorization to reflect in its 20192020 PSCR reconciliation the underrecoveryoverrecovery of $31 million.$21 million.
Consumers submitted its 20192020 PSCR plan to the MPSC in September 20182019 and, in accordance with its proposed plan, self-implemented the 20192020 PSCR charge beginning in January 2019.2020.
GCR Plans and Reconciliations: In September 2019,2020, the MPSC issued an order in Consumers’ 2017-20182018-2019 GCR reconciliation, authorizing full recovery of $0.6 billion of gas costs and authorizing Consumers to reflect in its 2018-20192019-2020 GCR reconciliation the overrecoveryunderrecovery of $1$11 million. The MPSC disallowed the recovery of $7 million in incremental gas purchases related to the Ray Compressor Station fire. For additional details, see Note 4, Contingencies and Commitments—Consumers Gas Utility Contingencies.
In June 2019,2020, Consumers filed its 2018-20192019-2020 GCR reconciliation, requesting full recovery of $0.6$0.5 billion of gas costs and authorization to reflect in its 2019-20202020-2021 GCR reconciliation the underrecovery of $18$1 million.
In JanuarySeptember 2020, the MPSC issued an orderapproved a settlement agreement in Consumers’ 2019-20202020-2021 GCR plan authorizing the 2019-20202020-2021 GCR charge that Consumers self-implemented beginning in April 2019.2020.
4:Contingencies and Commitments
4:    Contingencies and Commitments
CMS Energy and Consumers are involved in various matters that give rise to contingent liabilities. Depending on the specific issues, the resolution of these contingencies could negatively affect CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. In their disclosures of these matters, CMS Energy and Consumers provide an estimate of the possible loss or range of loss when such an estimate can be made. Disclosures that state that CMS Energy or Consumers cannot predict the outcome of a matter indicate that they are unable to estimate a possible loss or range of loss for the matter.
CMS Energy Contingencies
Gas Index Price Reporting Litigation: CMS Energy, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company, were named as defendants in 4 class action lawsuits filed in Kansas, Missouri, and Wisconsin and 1 individual lawsuit arisingfiled in Kansas; these lawsuits arose as a result of alleged inaccurate natural gas price reporting to


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publications that report trade information. Allegations includeincluded price-fixing conspiracies, restraint of trade, and artificial inflation of natural gas retail prices in Kansas, Missouri, and Wisconsin.prices. In 2016, CMS Energy entities reached a settlement with the plaintiffs in the Kansas and Missouri class action cases for an amount that was not material to CMS Energy. In 2017, the federal district court approved the settlement. The following provides more detail on the remaining cases in which CMS Energy or its affiliates were named as parties:
In 2006, a class action complaint, Arandell Corp., et al. v. XCEL Energy Inc., et al., was filed in Wisconsin state court on behalf of Wisconsin commercial entities that purchased natural gas between January 2000 and October 2002. The defendants, including CMS Energy, CMS ERM, and Cantera Gas Company, are alleged to have violated Wisconsin’s antitrust statute. The plaintiffs are seeking full consideration damages, treble damages, costs, interest, and attorneys’ fees.
In 2009, a class action complaint, Newpage Wisconsin System v. CMS ERM, et al., was filed in circuit court in Wood County, Wisconsin, against CMS Energy, CMS ERM, Cantera Gas Company, and others. The plaintiff is seeking full consideration damages, treble damages, costs, interest, and attorneys’ fees.
In 2005, J.P. Morgan Trust Company, N.A., in its capacity as trustee of the FLI Liquidating Trust, filed an action in Kansas state court against CMS Energy, CMS MST, CMS Field Services, and others. The complaint alleges various claims under the Kansas Restraint of Trade Act. The plaintiff is seeking statutory full consideration damages for its purchases of natural gas in 2000 and 2001, costs, and attorneys’ fees.
After removal to federal court, all of the cases were transferred to a single federal district court pursuant to the multidistrict litigation process. In 2010 and 2011, all claims against CMS Energy defendants were dismissed by the district court based on FERC preemption.
In 2013, the U.S. Court of Appeals for the Ninth Circuit reversed the district court decision. The appellate court found that FERC preemption does not apply under the facts of these cases. The appellate court affirmed the district court’s denial of leave to amend to add federal antitrust claims. The matter was appealed to the U.S. Supreme Court, which in 2015 upheld the Ninth Circuit’s decision. The cases were remanded back to the federal district court.
In 2016, the federal district court granted the defendants’ motion for summary judgment in the individual lawsuit filed in Kansas based on a release in a prior settlement involving similar allegations; the order of summary judgment was subsequently appealed. In March 2018, the U.S. Court of Appeals for the Ninth Circuit reversed the lower court’s ruling and remanded the case back to the federal district court.
In 2017, the federal district court denied plaintiffs’ motion for class certification in the two pending class action cases in Wisconsin. The plaintiffs appealed that decision to the U.S. Court of Appeals for the Ninth Circuit and in August 2018, the Ninth Circuit Court of Appeals reversed and remanded the matter back to the federal district court for further consideration.
In January 2019, the judge in the multidistrict litigation granted motions filed by plaintiffs for Suggestion of Remand of the actions back to the respective transferor courts in Wisconsin and Kansas for further handling. In the Kansas action, the Judicial Panel on Multidistrict Litigation ordered the remand and the case has been transferred. In the Wisconsin actions, oppositions to the remand were filed, but the Judicial Panel on Multidistrict Litigation granted the remand in June 2019.


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CMS Energy and the plaintiffs in each of the remaining Kansas individual lawsuit and the Wisconsin actionsclass action lawsuit engaged in settlement discussions and CMS Energy has recorded a $30 million liability at December 31, 2019 as athe probable estimate to settle thesethe two cases. CMS Energy can give no assurancesThe parties executed a settlement
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agreement in the Kansas case in February 2020, and that it can reach a final settlement with the plaintiffs in these two cases, of the actual amount CMS Energy would have to pay in any settlement, or, incase is now complete. In the Wisconsin case, a settlement agreement was approved in August 2020 and that the Wisconsin court would approve any such settlement. If settlement does not occur and the outcome after appealscase is unfavorable to CMS Energy, these cases could negatively affect CMS Energy’s liquidity, financial condition, and results of operations.now complete.
Bay Harbor: CMS Land retained environmental remediation obligations for the collection and treatment of leachate at Bay Harbor after selling its interests in the development in 2002. Leachate is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site. In 2012, CMS Land and EGLE finalized an agreement that established the final remedies and the future water quality criteria at the site. CMS Land completed all construction necessary to implement the remedies required by the agreement and will continue to maintain and operate a system to discharge treated leachate into Little Traverse Bay under an NPDES permit, issued in 2010 and renewed in 2016. The renewed NPDES permit iswhich 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 December 31, 2019,2020, CMS Energy had a recorded liability of $46$45 million for its remaining obligations for environmental remediation. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.34 percent and an inflation rate of 1 percent on annual operating and maintenance costs. The undiscounted amount of the remaining obligation is $58$57 million. CMS Energy expects to pay the following amounts for long-term leachate disposal and operating and maintenance costs in each of the next five years:
In Millions 
 2020 2021 2022 2023 2024 
CMS Energy          
Long-term leachate disposal and operating and maintenance costs $5
 $4
 $4
 $4
 $4

In Millions
20212022202320242025
CMS Energy
Long-term leachate disposal and operating and maintenance costs$4 $4 $4 $4 $4 
CMS Energy’s estimate of response activity costs and the timing of expenditures could change if there are changes in circumstances or assumptions used in calculating the liability. Although a liability for its present estimate of remaining response activity costs has been recorded, CMS Energy cannot predict the ultimate financial impact or outcome of this matter.
Equatorial Guinea Tax Claim: In 2002, CMS Energy sold its oil, gas, and methanol investments in Equatorial Guinea. The government of Equatorial Guinea claims that, in connection with the sale, CMS Energy owes $152 million in taxes, plus substantial penalties and interest that could be up to or exceed the amount of the taxes claimed. In 2015, the matter was proceeding to formal arbitration; however, since then, the government of Equatorial Guinea has stopped communicating. CMS Energy has concluded that the government’s tax claim is without merit and will continue to contest the claim, but cannot predict the financial impact or outcome of the matter. An unfavorable outcome could have a material adverse effect on CMS Energy’s liquidity, financial condition, and results of operations.
Consumers Electric Utility Contingencies
Electric Environmental Matters: Consumers’ operations are subject to environmental laws and regulations. Historically, Consumers has generally been able to recover, in customer rates, the costs to operate its facilities in compliance with these laws and regulations.


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Cleanup and Solid Waste: Consumers expects to incur remediation and other response activity costs at a number of sites under the NREPA. Consumers believes that these costs should be recoverable in rates, but cannot guarantee that outcome. Consumers estimates that its liability for NREPA sites for which it can estimate a range of loss will be between $3$2 million and $4 million. At December 31, 2019,2020, Consumers had a recorded liability of $3$2 million, the minimum amount in the range of its estimated probable NREPA liability, as no amount in the range was considered a better estimate than any other amount.
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Consumers is a potentially responsible party at a number of contaminated sites administered under CERCLA. CERCLA liability is joint and several. In 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party for cleanup of PCBs at the Kalamazoo River CERCLA site. The notification claimed that the EPA has reason to believe that Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site. In 2011, Consumers received a follow-up letter from the EPA requesting that Consumers agree to participate in a removal action plan along with several other companies for an area of lower Portage Creek, which is connected to the Kalamazoo River. All parties, including Consumers, that were asked to participate in the removal action plan declined to accept liability. Until further information is received from the EPA, Consumers is unable to estimate a range of potential liability for cleanup of the river.
Based on its experience, Consumers estimates that its share of the total liability for known CERCLA sites will be between $3 million and $8 million. Various factors, including the number and creditworthiness of potentially responsible parties involved with each site, affect Consumers’ share of the total liability. At December 31, 2019,2020, Consumers had a recorded liability of $3 million for its share of the total liability at these sites, the minimum amount in the range of its estimated probable CERCLA liability, as no amount in the range was considered a better estimate than any other amount.
The timing of payments related to Consumers’ remediation and other response activities at its CERCLA and NREPA sites is uncertain. Consumers periodically reviews these cost estimates. A change in the underlying assumptions, such as an increase in the number of sites, different remediation techniques, the nature and extent of contamination, and legal and regulatory requirements, could affect its estimates of NREPA and CERCLA liability.
Ludington PCB: In 1998, during routine maintenance activities, Consumers identified PCB as a component in certain paint, grout, and sealant materials at Ludington. Consumers removed part of the PCB material and replaced it with non‑PCB material. Consumers has had several communications with the EPA regarding this matter, but cannot predict the financial impact or outcome.
MCV PPA: In 2017, the MCV Partnership initiated arbitration against Consumers, asserting a breach of contract associated with the MCV PPA. Under this PPA, Consumers pays the MCV Partnership a fixed energy charge based on Consumers’ annual average baseload coal generating plant operating and maintenance cost, fuel inventory, and administrative and general expenses. The MCV Partnership asserts that, under the Clean Air Act, Consumers should have installed pollution control equipment on coal-fueled electric generating units years before they were retired. The MCV Partnership also asserts that Consumers should have installed pollution control equipment earlier on its remaining coal-fueled electric generating units. Additionally, the MCV Partnership claims that Consumers improperly characterized certain costs included in the calculation of the fixed energy charge.

In January 2019, an arbitration panel issued an order concluding that the MCV Partnership is not entitled to any damages associated with its claim against Consumers related to the Clean Air Act; the majority of the MCV Partnership’s claim, which estimated damages and interest in excess of $270 million, was related to this dismissed claim. In November 2020, the MCV Partnership and Consumers signed a settlement agreement resolving all outstanding disputes between the parties, and filed the settlement and associated agreements with the MPSC for approval. Once those are approved, the parties will dismiss this matter with prejudice. If settlement is not approved, the arbitration panel will issue an order. Consumers believes that the MCV Partnership’s remaining claims are without merit, but cannot predict the financial impact or outcome of the matter.


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Underwater Cables in Straits of Mackinac: Consumers owns certain underwater electric cables in the Straits of Mackinac, which were de-energized and retired in 1990. Consumers was notified that some of
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these cables were damaged as a result of vessel activity in April 2018. Following the notification, Consumers located, inspected, sampled, capped, and returned the damaged retired cables to their original location on the lake bottom, and did not find any substantive evidence of environmental contamination. After collaborating with the State of Michigan, local Native American tribes, and other stakeholders, Consumers submitted a permit application and removal work plan with EGLE and the U.S. Army Corps of Engineers in December 2019 for partial removal of all Consumers-owned cables. Upon EGLE’s issuance ofIn March 2020, EGLE issued a permit or certificatefor the removal work and, as a result, Consumers recorded an ARO liability of coverage, which is expected in early 2020, Consumers will record an ARO$5 million for the cost to remove partially its cables, estimated to be up to $5 million. Ifcables. Removal work was completed in September 2020. Consumers were required to remove allrecovers the cables, it could incur costscost of up to $10 million. Consumers filed suit against the companies that own the vessels that allegedly caused the damage and settled that matter. Consumers will seek recovery from customers of any costs incurred.recorded AROs through MPSC-approved depreciation rates.
Consumers Gas Utility Contingencies
Gas Environmental Matters: Consumers expects to incur remediation and other response activity costs at a number of sites under the NREPA. These sites include 23 former MGP facilities. Consumers operated the facilities on these sites for some part of their operating lives. For some of these sites, Consumers has no present ownership interest or may own only a portion of the original site.
At December 31, 2019,2020, Consumers had a recorded liability of $68$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 $73$61 million. Consumers expects to pay the following amounts for remediation and other response activity costs in each of the next five years:
In Millions 
 2020 2021 2022 2023 2024 
Consumers          
Remediation and other response activity costs $12
 $8
 $20
 $11
 $2

In Millions
20212022202320242025
Consumers
Remediation and other response activity costs$3 $9 $23 $10 $1 
Consumers periodically reviews these cost estimates. Any significant change in the underlying assumptions, such as an increase in the number of sites, changes in remediation techniques, or legal and regulatory requirements, could affect Consumers’ estimates of annual response activity costs and the MGP liability.
Pursuant to orders issued by the MPSC, Consumers defers its MGP-related remediation costs and recovers them from its customers over a ten-year period. At December 31, 2019,2020, Consumers had a regulatory asset of $130$120 million related to the MGP sites.
Consumers estimates that its liability to perform remediation and other response activities at NREPA sites other than the MGP sites could reach $3 million. At December 31, 2019,2020, 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


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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
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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.
AsIn 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 resultrehearing challenging this disallowance. Consumers will file an appeal of the fire andMPSC’s denial with the resulting curtailment,Michigan Court of Appeals. Consumers could also be subject to disallowances of gas purchased and costs associated with the repairs torepair and modification of the Ray Compressor Station. Consumers’ incremental cost of gas purchased during the incident was $7 million. Additionally, atAt December 31, 2019,2020, Consumers had incurred capital expenditures of $12$17 million to restore and modify the compressor station.Consumersstation.
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, or regulatory penalties.damages. 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.
Consumers Electric and Gas Utility Contingencies
Electric and Gas Staking: In June 2019, the MPSC ordered Consumers to show cause as to why it should not be found in violation of the MISS DIG Act. The MPSC alleges that Consumers violated the law by failing to respond in a timely manner to over 20,000 requests to mark the location of underground facilities in April and May 2019 and only partially responding to others. The law provides the MPSC with discretion in setting fines for violations, if any; however, the fines cannot exceed $5,000 per violation. Consumers resolved the backlog of staking requests, and Consumers, the MPSC Staff, and the Michigan Attorney General filed an agreement with the MPSC settling this matter for an amount of less than $1 million. The MPSC approved the settlement agreement in January 2020.
Guarantees
Presented in the following table are CMS Energy’s and Consumers’ guarantees at December 31, 2019:2020:
In Millions
Guarantee DescriptionIssue DateExpiration DateMaximum ObligationCarrying Amount
CMS Energy, including Consumers
Indemnity obligations from purchase of VIE1
September 2020indefinite$349 $0 
Indemnity obligations from stock and asset sale agreements2
variousindefinite153 2 
Guarantee3
July 2011indefinite30 0 
Consumers
Guarantee3
July 2011indefinite$30 $0 
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 21, 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.
In Millions 
Guarantee DescriptionIssue DateExpiration DateMaximum Obligation Carrying Amount 
CMS Energy, including Consumers      
Indemnity obligations from stock and asset sale agreements1
variousindefinite $153
 $2
Guarantees2
variousindefinite 36
 —
Consumers      
Guarantee2
July 2011indefinite $30
 $—
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1
These obligations arose from stock and asset sale agreements under which CMS Energy or a subsidiary of CMS Energy indemnified the purchaser for losses resulting from various matters, primarily claims related to taxes. The maximum obligation amount is mostly related to the Equatorial Guinea tax claim discussed in the CMS Energy Contingencies section of this Note. CMS Energy believes the likelihood of material loss to be remote for the indemnity obligations not recorded as liabilities.
2
At Consumers, this
3This obligation comprises a guarantee provided by Consumers to the U.S. Department of Energy in connection with a settlement agreement regarding damages resulting from the department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by Consumers. At CMS Energy, the


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guarantee obligations comprise Consumers’ guarantee to the U.S. Department of Energy and CMS Energy’s 1994 guarantee of non‑recourse revenue bonds issued by Genesee. For additional details on this guarantee, see Note 21, Variable Interest Entities.
Additionally, in the normal course of business, CMS Energy, Consumers, and certain other subsidiaries of CMS Energy have entered into various agreements containing tax and other indemnity provisions for which they are unable to estimate the maximum potential obligation. 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 3, 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.
Contractual Commitments
Purchase Obligations: Purchase obligations arise from long-term contracts for the purchase of commodities and related services, and construction and service agreements. The commodities and related services include long-term PPAs, natural gas and associated transportation, and coal and associated transportation. Related-party PPAs are between Consumers and certain affiliates of CMS Enterprises. Presented in the following table are CMS Energy’s and Consumers’ contractual purchase obligations at December 31, 20192020 for each of the periods shown:
In MillionsIn Millions In Millions
Payments DuePayments Due
Total 2020 2021 2022 2023 2024 Beyond 2024 Total20212022202320242025Beyond 2025
CMS Energy, including ConsumersCMS Energy, including Consumers            CMS Energy, including Consumers
Total PPAs $9,336
 $1,030
 $1,035
 $750
 $608
 $605
 $5,308
Total PPAs$8,898 $1,057 $791 $731 $784 $732 $4,803 
Other 3,244
 1,685
 520
 451
 210
 199
 179
Other3,179 1,391 871 265 199 171 282 
Consumers              Consumers
PPAs              PPAs
MCV PPA $3,295
 $313
 $287
 $272
 $225
 $201
 $1,997
MCV PPA$2,815 $349 $340 $358 $376 $329 $1,063 
Palisades PPA 899
 388
 398
 113
 —
 —
 —
Palisades PPA517 398 119 0 0 0 0 
Related-party PPAs 472
 71
 72
 74
 74
 75
 106
Related-party PPAs318 58 58 58 58 39 47 
Other PPAs 4,670
 258
 278
 291
 309
 329
 3,205
Other PPAs5,248 252 274 315 350 364 3,693 
Total PPAs $9,336
 $1,030
 $1,035
 $750
 $608
 $605
 $5,308
Total PPAs$8,898 $1,057 $791 $731 $784 $732 $4,803 
Other 2,865
 1,638
 477
 413
 174
 162
 1
Other2,605 1,333 777 207 154 130 4 



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MCV PPA: Consumers has a 35-year PPA that began in 1990 with the MCV Partnership giving Consumers the right to purchase up to 1,240 MW of electricity.capacity and energy produced by the MCV Facility. The MCV PPA aswas amended during 2020 and is pending MPSC approval. The amended and restated MCV PPA provides for:
•an extension of the termination date from March 2025 to May 2030
•a capacity charge of $10.14 per MWh of available capacity through March 2025 and $5.00 per MWh of available capacity from March 2025 through the termination date of the PPA
•a fixed energy charge based on Consumers’ annual average baseload coal generating plant operatingof $6.30 per MWh for on-peak hours and maintenance cost, fuel inventory, and administrative and general expenses$6.00 for off-peak hours
•a variable energy charge based on the MCV Partnership’s cost of production when the plant is dispatchedfor energy delivered to Consumers
•a $5 million annual contribution by the MCV Partnership to a renewable resources program
an option for Consumers to extend the MCV PPA for five years or purchase the MCV Facility at the conclusion of the MCV PPA’s term in through March 2025; although Consumers is not obligated to exercise either of these options, the table above presents the impact on future cash flows of extending the MCV PPA through 20302025
Capacity and energy charges under the MCV PPA were $298 million in 2020, $318 million in 2019, and $353 million in 2018, and $321 million in 2017.2018.
Palisades PPA: Consumers has a PPA expiring in 2022 with Entergy to purchase virtually all of the capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. For all delivered energy, the Palisades PPA has escalating capacity and variable energy charges. Total capacity and energy charges under the Palisades PPA were $403 millionin 2020, $395 million in 2019, and $375 million in 2018, and $366 million in 2017.2018. For further details about Palisades, see Note 10, Leases and Palisades Financing.
Other PPAs: Consumers has PPAs expiring through 2040 with various counterparties. The majority of the PPAs have capacity and energy charges for delivered energy. In addition, CMS Energy and Consumers account for several of their PPAs as leases. Capacity and energy charges under these PPAs were $327 million in 2020, $336 million in 2019, and $350 million in 2018, and $349 million in 2017.2018. See Note 10, Leases and Palisades Financing for more information about CMS Energy’s and Consumers’ lease obligations.


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5:    Financings and Capitalization
5:Financings and Capitalization
Presented in the following table is CMS Energy’s long-term debt at December 31:
In Millions
Interest Rate
(%)		Maturity20202019
CMS Energy, including Consumers
CMS Energy, parent only
Senior notes5.050 2022$0 $300 
3.875 2024250 250 
3.600 2025250 250 
3.000 2026300 300 
2.950 2027275 275 
3.450 2027350 350 
4.700 2043250 250 
4.875 2044300 300 
$1,975 $2,275 
Term loan facilityvariable12021200 0 
Junior subordinated notes2
4.750 2050500 0 
3.750 2050400 0 
5.625 2078200 200 
5.875 2078280 280 
5.875 2079630 630 
$2,010 $1,110 
Total CMS Energy, parent only$4,185 $3,385 
Consumers8,197 7,322 
CMS Enterprises, including subsidiaries
Term loan facilityvariable3202585 92 
EnerBank
Certificates of deposit1.621 42021-20282,805 2,389 
Total principal amount outstanding$15,272 $13,188 
Current amounts(1,486)(1,111)
Unamortized discounts(33)(27)
Unamortized issuance costs(119)(99)
Total long-term debt$13,634 $11,951 
In Millions 
 Interest Rate (%)Maturity2019 2018 
CMS Energy, including Consumers        
CMS Energy, parent only        
Senior notes5.050 2022  $300
 $300
 3.875 2024  250
 250
 3.600 2025  250
 250
 3.000 2026  300
 300
 2.950 2027  275
 275
 3.450 2027  350
 350
 4.700 2043  250
 250
 4.875 2044  300
 300
Total senior notes     $2,275
 $2,275
         
Term loans and revolving credit agreementsvariable
2019  —
 180
 variable
2023  —
 30
      $—
 $210
         
Junior subordinated notes¹5.625 2078  200
 200
 5.875 2078  280
 280
 5.875 2079  630
 —
      $1,110
 $480
Total CMS Energy, parent only     $3,385
 $2,965
CMS Energy subsidiaries        
CMS Enterprises, including subsidiaries        
Term loan facilityvariable
2 
2025  $92
 $98
EnerBank        
Certificates of deposit2.445
3 
2020-2027  2,389
 1,758
Consumers     7,322
 6,862
Total principal amount outstanding     $13,188
 $11,683
Current amounts     (1,111) (974)
Unamortized discounts     (27) (21)
Unamortized issuance costs     (99) (73)
Total long-term debt     $11,951
 $10,615


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1
1At December 31, 2020, the interest rate on the balance of this term loan facility was 0.600 percent, based on an interest rate of one-week LIBOR plus 0.500 percent.
These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness.
2
A subsidiary of CMS Enterprises issued non‑recourse debt to finance the acquisition of a wind generation project in Northwest Ohio. The debt bears interest at an annual interest rate of LIBOR plus 1.500 percent through October 2022 (3.445 percent at December 31, 2019 and 4.303 percent at December 31, 2018).Beginning in October 2022, the debt will bear interest at an annual interest rate of LIBOR plus 1.750 percent. The same subsidiary of CMS Enterprises entered into interest rate swaps with the lending banks to fix the interest charges associated with the debt, at a rate of 4.702 percent through October 2022 and 4.952 percent beginning in October 2022. Principal and interest payments are made quarterly. For information about the interest rate swaps, see Note 6, Fair Value Measurements.
3
The weighted-average interest rate for EnerBank’s certificates of deposit was 2.445 percent at December 31, 2019 and 2.440 percent at December 31, 2018. EnerBank’s primary deposit product consists of brokered certificates of deposit with varying maturities and having a face value of $1,000.


2These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness.
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3A subsidiary of CMS Enterprises issued non‑recourse debt to finance the acquisition of a wind generation project in Northwest Ohio. The interest rate for the debt is three-month LIBOR plus 1.500 percent through October 2022 and three-month LIBOR plus 1.750 percent thereafter. At December 31, 2020 and 2019, the interest rate was 1.754 percent and 3.445 percent, respectively.The same subsidiary of CMS Enterprises entered into interest rate swaps with the lending banks to fix the interest charges associated with the debt, at a rate of 4.702 percent through October 2022 and 4.952 percent thereafter. Principal and interest payments are made quarterly. For information about the interest rate swaps, see Note 6, Fair Value Measurements.
Table4The weighted-average interest rate for EnerBank’s certificates of Contentsdeposit was 1.621 percent at December 31, 2020 and 2.445 percent at December 31, 2019. EnerBank’s primary deposit product consists of brokered certificates of deposit with varying maturities and having a face value of $1,000.

Presented in the following table is Consumers’ long-term debt at December 31:
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In Millions 
 Interest Rate (%)Maturity2019 2018 
Consumers        
First mortgage bonds5.650
 2020  $—
 $300
 3.770
 2020  100
 100
 2.850
 2022  375
 375
 5.300
 2022  250
 250
 3.375
 2023  325
 325
 3.125
 2024  250
 250
 3.190
 2024  52
 52
 3.680
 2027  100
 100
 3.390
 2027  35
 35
 3.800
 2028  300
 300
 3.180
 2032  100
 100
 5.800
 2035  175
 175
 3.520
 2037  335
 335
 4.010
 2038  215
 215
 6.170
 2040  50
 50
 4.970
 2040  50
 50
 4.310
 2042  263
 263
 3.950
 2043  425
 425
 4.100
 2045  250
 250
 3.250
 2046  450
 450
 3.950
 2047  350
 350
 4.050
 2048  550
 550
 4.350
 2049  550
 550
 3.750
 2050  300
 —
 3.100
 2050  550
 —
 3.860
 2052  50
 50
 4.280
 2057  185
 185
 4.350
 2064  250
 250
 variable
1 
2069  76
 —
Total first mortgage bonds

 
  $6,961
 $6,335
         
Tax-exempt revenue bondsvariable
2 
2035  35
 35
 1.800
3 
2049  75
 —
      $110
 $35
         
Securitization bonds3.220
4 
2025-2029
5 
 251
 277
Revolving credit agreementsvariable

2020-2023  —
 215
Total principal amount outstanding  
  $7,322
 $6,862
Current amounts  
  (202) (26)
Unamortized discounts  
  (23) (16)
Unamortized issuance costs     (49) (41)
Total long-term debt     $7,048
 $6,779

In Millions
Interest Rate
(%)		Maturity20202019
Consumers
First mortgage bonds3.770 2020$0 $100 
2.850 20220 375 
5.300 20220 250 
0.350 2023300 0 
3.375 2023325 325 
3.125 2024250 250 
3.190 202452 52 
3.680 2027100 100 
3.390 202735 35 
3.800 2028300 300 
3.180 2032100 100 
5.800 2035175 175 
3.520 2037335 335 
4.010 2038215 215 
6.170 204050 50 
4.970 204050 50 
4.310 2042263 263 
3.950 2043425 425 
4.100 2045250 250 
3.250 2046450 450 
3.950 2047350 350 
4.050 2048550 550 
4.350 2049550 550 
3.750 2050300 300 
3.100 2050550 550 
3.500 2051575 0 
3.860 205250 50 
4.280 2057185 185 
2.500 2060525 0 
4.350 2064250 250 
variable1206976 76 
variable12070134 0 
variable12070127 0 
$7,897 $6,961 
Tax-exempt revenue bondsvariable20350 35 
1.800 2204975 75 
$75 $110 
Securitization bonds3.250 32025-20294225 251 
Total principal amount outstanding$8,197 $7,322 
Current amounts(364)(202)
Unamortized discounts(29)(23)
Unamortized issuance costs(62)(49)
Total long-term debt$7,742 $7,048 

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1The variable-rate bonds bear interest quarterly at a rate of three-month LIBOR minus 0.300 percent, subject to a zero-percent floor (0 percent at December 31, 2020). The holders of these variable-rate bonds may put them to Consumers for redemption on certain dates prior to their stated maturity, including dates within one year of December 31, 2020.
1
2The interest rate on these tax‑exempt revenue bonds will reset on October 1, 2024.
3The weighted-average interest rate for Consumers’ securitization bonds issued through its subsidiary, Consumers 2014 Securitization Funding, was 3.250 percent at December 31, 2020 and 3.220 percent at December 31, 2019.
4Principal and interest payments are made semiannually.
The variable-rate bonds bear interest quarterly at a rate of three-month LIBOR minus 0.300 percent (1.594 percent at December 31, 2019).
2
The interest rate on these tax‑exempt revenue bonds is reset weekly and was 1.740 percent at December 31, 2019 and 1.780 percent at December 31, 2018.
3
The interest rate on these tax‑exempt revenue bonds will reset on October 1, 2024.
4
The weighted-average interest rate for Consumers’ securitization bonds issued through its subsidiary, Consumers 2014 Securitization Funding, was 3.220 percent at December 31, 2019 and 3.057 percent at December 31, 2018.
5
Principal and interest payments are made semiannually.
Financings: Presented in the following table is a summary of major long-term debt issuances during the year ended December 31, 2019:2020:
Principal
(In Millions)		Interest RateIssuance DateMaturity Date
CMS Energy, parent only
Term loan facility1
$300 variableFebruaryFebruary 2021
Junior subordinated notes2
500 4.750 %MayJune 2050
Junior subordinated notes3
400 3.750 %NovemberDecember 2050
Total CMS Energy, parent only$1,200 
Consumers
Term loan facility$300 variableJanuaryJanuary 2021
First mortgage bonds575 3.500 %MarchAugust 2051
First mortgage bonds525 2.500 %MayMay 2060
First mortgage bonds134 variableMayMay 2070
First mortgage bonds127 variableOctoberOctober 2070
First mortgage bonds300 0.350 %DecemberJune 2023
Total Consumers$1,961 
Total CMS Energy$3,161 
1In December 2020, CMS Energy repaid $100 million of this facility and, in February 2021, amended the facility by extending its maturity date to November 2021.
2These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness. On June 1, 2030, and every five years thereafter, the notes will reset to an interest rate equal to the five-year treasury rate plus 4.116 percent.
3These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness. On December 1, 2030, and every five years thereafter, the notes will reset to an interest rate equal to the five-year treasury rate plus 2.900 percent.
    Principal (In Millions) Interest Rate (%)Issuance DateMaturity Date
CMS Energy, parent only     
Term loan facility
$300
variableJanuary December 2019
Junior subordinated notes1

630
5.875February March 2079
Term loan facility
165
variableJune June 2020
Total CMS Energy, parent only
$1,095


 
Consumers     
First mortgage bonds $300
3.750MayFebruary 2050
First mortgage bonds 550
3.100SeptemberAugust 2050
First mortgage bonds 76
variableSeptemberSeptember 2069
Tax-exempt revenue bonds 75
1.800OctoberOctober 2049
Total Consumers $1,001
   
Total CMS Energy $2,096
   
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1
These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness.
Presented in the following table is a summary of major long-term debt retirements during the year ended December 31, 2019:2020:
Principal
(In Millions)		Interest RateRetirement DateMaturity Date
CMS Energy, parent only
Senior notes1
$300 5.050 %DecemberMarch 2022
Total CMS Energy, parent only$300 
Consumers
First mortgage bonds$100 3.770 %AprilOctober 2020
First mortgage bonds250 5.300 %JuneSeptember 2022
First mortgage bonds375 2.850 %SeptemberMay 2022
Term loan facility300 variableDecemberJanuary 2021
Total Consumers$1,025 
Total CMS Energy$1,325 
    Principal (In Millions) Interest Rate (%)
Retirement DateMaturity Date
CMS Energy, parent only     
Term loan facility $300
variable
February December 2019
Term loan facility 180
variable
February April 2019
Term loan facility 165
variable
August-DecemberJune 2020
Total CMS Energy, parent only $645
   
Consumers     
First mortgage bonds $300
5.650%May April 2020
Total Consumers $300
   
Total CMS Energy $945
   

1CMS Energy retired these senior notes at a premium and recorded a loss on extinguishment of $16 million in other expense on its consolidated statements of income.


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Term Loan Credit Agreement: In JanuaryJuly 2020, Consumers entered intopurchased, in lieu of redemption, $35 million of variable-rate tax-exempt revenue bonds due April 2035. At December 31, 2020, Consumers held the variable-rate tax-exempt revenue bonds and may remarket the bonds or replace them with debt instruments of an equivalent value.
In September 2020, proceeds from the sale of a $300Class A membership interest in Aviator Wind to a tax equity investor and additional contributions from the Class B membership interest (of which CMS Enterprises owns 51 percent) were used to retire $492 million unsecured term loan credit agreement. The term loan matures in January 2021.of debt assumed through the purchase of the VIE. For more information, see Note 21, Variable Interest Entities.
First Mortgage Bonds: Consumers secures its first mortgage bonds by a mortgage and lien on substantially all of its property. Consumers’ ability to issue first mortgage bonds is restricted by certain provisions in the First Mortgage Bond Indenture and the need for regulatory approvals under federal law. Restrictive issuance provisions in the First Mortgage Bond Indenture include achieving a 2-times interest coverage ratio and having sufficient unfunded net property additions.
Regulatory Authorization for Financings: Consumers is required to maintain FERC authorization for financings. Its current authorization terminates on AugustJuly 31, 2021.2022. Any long-term issuances during the authorization period are exempt from FERC’s competitive bidding and negotiated placement requirements.
Securitization Bonds: Certain regulatory assets held by Consumers’ subsidiary, Consumers 2014 Securitization Funding, collateralize Consumers’ securitization bonds. The bondholders have no recourse to Consumers’ assets except for those held by the subsidiary that issued the bonds. Consumers collects securitization surcharges to cover the principal and interest on the bonds as well as certain other qualified costs. The surcharges collected are remitted to a trustee and are not available to creditors of Consumers or creditors of Consumers’ affiliates other than the subsidiary that issued the bonds.
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Debt Maturities: At December 31, 2019,2020, the aggregate annual contractual maturities for long-term debt for the next five years, based on stated maturities or earlier put dates, were:
In Millions 
 2020 2021 2022 2023 2024 
CMS Energy, including Consumers          
Long-term debt $1,111
 $538
 $1,354
 $669
 $808
Consumers          
Long-term debt $202
 $27
 $653
 $354
 $332

In Millions
20212022202320242025
CMS Energy, including Consumers
Long-term debt
CMS Energy, parent only$200 $0 $0 $250 $250 
Consumers364 28 654 332 31 
CMS Enterprises, including subsidiaries7 8 9 10 51 
EnerBank915 572 477 325 244 
Total CMS Energy$1,486 $608 $1,140 $917 $576 
Consumers
Long-term debt$364 $28 $654 $332 $31 
Revolving Credit Facilities: The following revolving credit facilities with banks were available at December 31, 2019:2020:
In Millions
Expiration DateAmount of FacilityAmount BorrowedLetters of Credit OutstandingAmount Available
CMS Energy, parent only
June 5, 20231
$550 $0 $18 $532 
CMS Enterprises, including subsidiaries
September 25, 20252
$39 $0 $39 $0 
September 30, 20253
18 0 8 10 
Consumers4
June 5, 2023$850 $0 $7 $843 
November 19, 2022250 0 1 249 
April 18, 202230 0 30 0 
In Millions 
Expiration DateAmount of Facility Amount Borrowed Letters of Credit Outstanding Amount Available 
CMS Energy, parent only        
June 5, 20231
 $550
 $—
 $6
 $544
CMS Enterprises, including subsidiaries        
September 30, 20252
 $18
 $—
 $8
 $10
Consumers3
        
June 5, 2023 $850
 $—
 $7
 $843
November 19, 2021 250
 —
 10
 240
April 18, 2022 30
 —
 30
 —
1During the year ended December 31, 2020, CMS Energy’s average borrowings totaled $1 million with a weighted-average interest rate of 1.888 percent.
1
2This letter of credit facility is available to Aviator Wind Equity Holdings. For more information regarding the acquisition of Aviator Wind Equity Holdings, see Note 21, 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. There were 0 borrowings under this facility during the year ended December 31, 2020.
4Obligations under these facilities are secured by first mortgage bonds of Consumers. During the year ended December 31, 2020, Consumers’ average borrowings totaled less than $1 million with a weighted-average interest rate of 1.425 percent.
During the year ended December 31, 2019, CMS Energy’s average borrowings totaled $5 million with a weighted-average interest rate of 3.859 percent.


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2
Under this facility, $8 million is available solely for the purpose of issuing letters of credit. Obligations under this facility are secured by the collateral accounts with the lending bank. There were 0 borrowings under this facility during the year ended December 31, 2019.
3
Obligations under these facilities are secured by first mortgage bonds of Consumers. During the year ended December 31, 2019, Consumers’ average borrowings totaled $2 million with a weighted-average interest rate of 3.225 percent.
Short-term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, investment-grade commercial paper notes with maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities and may have an aggregate principal amount outstanding of up to $500 million. While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers
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does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At December 31, 2019,2020, there were $90 million0 commercial paper notes outstanding under this program at an annual interest rate of 2.050 percent, recorded as current notes payableprogram.
In December 2020, Consumers renewed a short-term credit agreement with CMS Energy, permitting Consumers to borrow up to $350 million. For more information on the consolidated balance sheets ofintercompany credit agreement between CMS Energy and Consumers, see Note 20, Related-Party Transactions—Consumers.
Dividend Restrictions: At December 31, 2019,2020, payment of dividends by CMS Energy on its common stock was limited to $5.0$5.5 billion under provisions of the Michigan Business Corporation Act of 1972.
Under the provisions of its articles of incorporation, at December 31, 2019,2020, Consumers had $1.4$1.6 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 year ended December 31, 2019,2020, Consumers paid $592$637 million in dividends on its common stock to CMS Energy.
Capitalization: The authorized capital stock of CMS Energy consists of:
•350 million shares of CMS Energy Common Stock, par value $0.01 per share
•10 million shares of CMS Energy Preferred Stock, par value $0.01 per share


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Issuance of Common Stock:In 2018 and 2020, CMS Energy entered into an equity offering programprograms under which it may sell, from time to time, shares of CMS Energy common stock having an aggregate sales price of up to $250 million.stock. Under this program,both programs, CMS Energy may sell its common stock in privately negotiated transactions, in “at the market” offerings, through forward sales transactions, or otherwise.
During 2018 and 2019, CMS Energy has entered into forward sales contracts having an aggregate sales price of  $250 million, the maximum allowed under the 2018 program. In 2020, CMS Energy settled the forward contracts under this program by issuing 4,879,022 shares of common stock at a weighted-average price of $48.86 per share, resulting in net proceeds of $238 million.
Under the 2020 program, 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 these contracts:CMS Energy’s forward sales contracts under this program at December 31, 2020:
Contract DateMaturity DateNumber of Shares
Initial Forward Price Per Share 
November 16, 2018May 16, 20202,017,783
 $49.06
November 20, 2018May 20, 2020777,899
 50.91
February 21, 2019August 21, 20202,083,340
 52.27

Forward Price Per Share
Contract DateMaturity DateNumber of SharesInitialDecember 31, 2020
September 15, 2020December 31, 2021846,759$61.04 $60.53 
December 22, 2020June 22, 2022115,59561.81 61.81 
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.
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The initial forward price in the forward equity sale contracts includes a deduction for commissions and will be adjusted on a daily basis over the term based on an interest rate factor and decreased on certain dates by certain predetermined amounts to reflect expected dividend payments.
No amounts have or will beare recorded on CMS Energy’s consolidated balance sheets until settlements of the forward equity sale contracts occur. If CMS Energy had elected to net share settle the contracts as of December 31, 2019,2020, CMS Energy would have been required to deliver 992,596 shares.6,666 shares.
Preferred Stock of Subsidiary: Consumers’ preferred stock is traded on the New York Stock Exchange under the symbol CMS-PB. Presented in the following table are details of Consumers’ preferred stock at December 31, 20192020 and 2018:2019:
 Par Value 
Optional
Redemption
Price
 Number of Shares Authorized
Number of
Shares
Outstanding

Cumulative, with no mandatory redemption $100
 $110
7,500,000
373,148

Par ValueOptional Redemption PriceNumber of Shares AuthorizedNumber of Shares Outstanding
Cumulative, with no mandatory redemption$100 $110 7,500,000373,148


6:    Fair Value Measurements
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6:Fair Value Measurements
Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. When measuring fair value, CMS Energy and Consumers are required to incorporate all assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. A fair value hierarchy prioritizes inputs used to measure fair value according to their observability in the market. The three levels of the fair value hierarchy are as follows:
•Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
•Level 2 inputs are observable, market-based inputs, other than Level 1 prices. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, and inputs derived from or corroborated by observable market data.
•Level 3 inputs are unobservable inputs that reflect CMS Energy’s or Consumers’ own assumptions about how market participants would value their assets and liabilities.
CMS Energy and Consumers classify fair value measurements within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement in its entirety.
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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
December 312020201920202019
Assets1
Restricted cash equivalents$17 $17 $15 $17 
CMS Energy common stock— — 0 1 
Nonqualified deferred compensation plan assets23 18 18 14 
Derivative instruments1 1 1 1 
Total assets$41 $36 $34 $33 
Liabilities1
Nonqualified deferred compensation plan liabilities$23 $18 $18 $14 
Derivative instruments17 8 0 0 
Total liabilities$40 $26 $18 $14 
In Millions 
 CMS Energy, including Consumers Consumers
December 312019 2018  2019 2018 
Assets1
         
Cash equivalents $—
 $27
  $—
 $—
Restricted cash and cash equivalents 17
 21
  17
 17
CMS Energy common stock —
 —
  1
 1
Nonqualified deferred compensation plan assets 18
 14
  14
 10
Other non-current assets —
 1
  —
 —
Derivative instruments 1
 1
  1
 1
Total $36
 $64
  $33
 $29
Liabilities1
         
Nonqualified deferred compensation plan liabilities $18
 $14
  $14
 $10
Derivative instruments 8
 3
  —
 —
Total $26
 $17
  $14
 $10
11All assets and liabilities were classified as Level 1 with the exception of derivative contracts, which were classified as Level 2 or Level 3.
All assets and liabilities were classified as Level 1 with the exception of derivative contracts, which were classified as Level 2 or Level 3.
Restricted Cash Equivalents: Cash equivalents and restrictedRestricted cash equivalents consist of money market funds with daily liquidity. For further details, see Note 18, Cash and Cash Equivalents.


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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.
In 2018, aA subsidiary of CMS Enterprises entered intouses floating-to-fixed interest rate swaps to reduce the impact of interest rate fluctuations associated with future interest payments on certain long‑term variable-rate debt. The interest rate swaps are accounted for as cash flow hedges of the future variability of interest payments on debt with a notional amount of $92$85 million at December 31, 2019.2020. Gains or losses on these swaps are initially reported in AOCIother comprehensive income (loss) and then, as interest payments are made on the hedged debt, are recognized in earnings within other interest expense on CMS Energy’s consolidated statements of income. CMS EnergyThe amount of losses recorded losses in AOCIother comprehensive loss was $6 million for the
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year ended December 31, 2020, $4 million for the year ended December 31, 2019 and $2 million for the year ended December 31, 2018. There were no material impacts on other interest expense associated with these swaps during the years presented. The fair value of these swaps recorded in other liabilities on CMS Energy’s consolidated balance sheets totaled $9 million at December 31, 2020 and $5 million at December 31, 2019 and $2 million at December 31, 2018.2019. 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 years presented.
In 2019, EnerBank entered intouses fixed-to-floating interest rate swaps to manage interest rate risk exposure associated with changes in the fair value of certain long‑term fixed‑rate loans. The interest rate swaps qualify as fair value hedges of long‑term, fixed‑rate notes receivable with a notional amount of $134 million at December 31, 2020 and 2019. The fair value of these interest rate swaps recorded in other liabilities was $6 million at December 31, 2020 and $1 million at December 31, 2019. CMS Energy is adjusting the carrying value of the hedged notes receivable for the change in their fair value due to the hedged risk. Both gains and losses onFor the year ended December 31, 2020, CMS Energy recorded a $5 million loss within operating revenue for the change in the fair value of the interest rate swaps and a $5 million gain within operating revenue for the changes tochange in the carrying value of the hedged notes receivable are recordednotes. Amounts recognized within operating revenue on CMS Energy’s consolidated statements of income. There were no material amounts recognized in operating revenue associated with these swaps for the year ended December 31, 2019.2019 were immaterial.
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 years presented.
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7:Financial Instruments
7:    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


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recorded at fair value and for additional details regarding the fair value hierarchy, see Note 6, Fair Value Measurements.
In Millions
December 31, 2020December 31, 2019
Carrying AmountFair ValueCarrying AmountFair Value
TotalLevelTotalLevel
1 2 3 1 2 3 
CMS Energy, including Consumers
Assets
Long-term receivables1
$17 $17 $0 $0 $17 $20 $20 $0 $0 $20 
Notes receivable2
2,887 3,248 0 0 3,248 2,500 2,652 0 0 2,652 
Securities held to maturity3
28 29 0 29 0 26 26 0 26 0 
Liabilities
Long-term debt4
15,120 17,512 1,249 14,178 2,085 13,062 14,185 1,197 11,048 1,940 
Long-term payables5
33 35 0 0 35 30 32 0 0 32 
Consumers
Assets
Long-term receivables1
$17 $17 $0 $0 $17 $20 $20 $0 $0 $20 
Notes receivable – related party6
107 107 0 0 107 103 103 0 0 103 
Liabilities
Long-term debt7
8,106 9,801 0 7,716 2,085 7,250 8,010 0 6,070 1,940 
1Includes current portion of long-term accounts receivable of $12 million at December 31, 2020 and $13 million at December 31, 2019.
2Includes current portion of notes receivable of $275 million at December 31, 2020 and $242 million at December 31, 2019. For further details, see Note 8, Notes Receivable.
3These investment securities consist primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank. There were $1 million of unrealized gains in 2020 and 0 unrealized gains or losses in 2019.
4Includes current portion of long-term debt of $1.5 billion at December 31, 2020 and $1.1 billion at December 31, 2019.
In Millions 
 December 31, 2019 December 31, 2018
   Fair Value   Fair Value
 Carrying  Level Carrying  Level
 AmountTotal123 AmountTotal123
CMS Energy, including Consumers                 
Assets                     
Long-term receivables1
 $20
 $20
 $—
 $—
 $20
  $22
 $22
 $—
 $—
 $22
Notes receivable2
 2,500
 2,652
 —
 —
 2,652
  1,857
 1,967
 —
 —
 1,967
Securities held to maturity 26
 26
 —
 26
 —
  22
 21
 —
 21
 —
Liabilities                     
Long-term debt3
 13,062
 14,185
 1,197
 11,048
 1,940
  11,589
 11,630
 459
 9,404
 1,767
Long-term payables4
 30
 32
 —
 —
 32
  27
 27
 —
 —
 27
Consumers                     
Assets                     
Long-term receivables1
 $20
 $20
 $—
 $—
 $20
  $22
 $22
 $—
 $—
 $22
Notes receivable – related party5
 103
 103
 —
 —
 103
  106
 106
 —
 —
 106
Liabilities                     
Long-term debt6
 7,250
 8,010
 —
 6,070
 1,940
  6,805
 6,833
 —
 5,066
 1,767
1
Includes current portion of long-term accounts receivable of $13 million at December 31, 2019 and $14 million at December 31, 2018.
2
Includes current portion of notes receivable of $242 million at December 31, 2019 and $233 million at December 31, 2018. For further details, see Note 8, Notes Receivable.
3
Includes current portion of long-term debt of $1.1 billion at December 31, 2019 and $1.0 billion at December 31, 2018.
4
Includes current portion of long-term payables of $1 million at December 31, 2019 and December 31, 2018.
5
Includes current portion of notes receivable – related party of $7 million at December 31, 2019 and December 31, 2018. For further details on this note receivable, see the DB SERP discussion below.
6
Includes current portion of long-term debt of $202 million at December 31, 2019 and $26 million at December 31, 2018.


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5Includes current portion of long-term payables of $6 million at December 31, 2020 and $1 million at December 31, 2019.
6Includes current portion of notes receivable – related party of $7 million at December 31, 2020 and 2019. For further details on this note receivable, see Note 8, Notes Receivable.
7Includes current portion of long-term debt of $364 million at December 31, 2020 and $202 million at December 31, 2019.
The effects of third-party credit enhancements were excluded from the fair value measurements of long-term debt. The principal amount of CMS Energy’s long-term debt supported by third-party credit enhancements was $35 million at December 31, 2019 and December 31, 2018.2019. The entirety of these amountsthis amount was at Consumers.
DB SERP Securities: Presented in the following table is a summary of the sales activity forIn 2018, CMS Energy and Consumers sold available-for-sale investment securities held within the DB SERP, and classified as available for sale:receiving proceeds of $142 million, $103 million of which was related to Consumers.
In Millions 
Years Ended December 312019 2018 2017 
CMS Energy, including Consumers      
Proceeds from sales of investment securities $—
 $142
 $145
Consumers      
Proceeds from sales of investment securities $—
 $103
 $105

In 2018, CMS Energy and Consumers sold the DB SERP debt securities and CMS Energy issued a $146 million demand note payable to the DB SERP rabbi trust. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028. The demand note payable and associated DB SERP investment were eliminated on CMS Energy’s consolidated balance sheets. The portion of the demand note attributable to Consumers was recorded as a note receivable – related party on Consumers’ consolidated balance sheets.8:    Notes Receivable
During 2017, CMS Energy and Consumers sold mutual fund securities held within the DB SERP and used the proceeds to purchase the debt securities, which were later sold in 2018. CMS Energy reclassified gains of $2 million ($1 million, net of tax) from AOCI and included this amount in other income on the consolidated statements of income. This amount included Consumers’ gains of $2 million ($1 million, net of tax).
Debt securities classified as held to maturity consisted primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank. Presented in the following table are these investment securities:
In Millions 
 December 31, 2019 December 31, 2018
 Cost 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
  Cost 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
CMS Energy             
Debt securities $26
 $—
 $—
 $26
  $22
 $—
 $1
 $21



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8:Notes Receivable
Presented in the following table are details of CMS Energy’s and Consumers’ current and non‑current notes receivable:
In Millions 
December 312019 2018 
CMS Energy, including Consumers    
Current    
EnerBank notes receivable, net of allowance for loan losses $223
 $233
EnerBank notes receivable held for sale 19
 —
Non‑current    
EnerBank notes receivable 2,258
 1,624
Total notes receivable $2,500
 $1,857
Consumers    
Current    
DB SERP note receivable – related party $7
 $7
Non‑current    
DB SERP note receivable – related party 96
 99
Total notes receivable $103
 $106

In Millions
December 3120202019
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses$275 $242 
Non‑current
EnerBank notes receivable, net of allowance for loan losses2,612 2,258 
Total notes receivable$2,887 $2,500 
Consumers
Current
DB SERP note receivable – related party$7 $7 
Non‑current
DB SERP note receivable – related party100 96 
Total notes receivable$107 $103 
EnerBank Notes Receivable
EnerBank notes receivable are primarily unsecured, consumerfixed-rate installment loans largely for financingprovided throughout the U.S. to finance home improvements. EnerBank records its notes receivable at cost, less an allowance for loan losses. During 2019, EnerBank completed sales of notes receivable, receiving proceeds of $67 million and recording immaterial gains. At December 31, 2019, $19 million of notes receivable were classified as held for sale; the fair value of notes receivable held for sale exceeded their carrying value. These notes are expected to be sold in 2020.
During 2019, EnerBank purchased a portfolio of secured and unsecured consumer installment loans with a principal value of $373 million.
Authorized contractors pay fees to EnerBank to provide borrowers with same-as-cash, zero interest, or reduced interest loans. Unearned income associated with the loan fees, which is recorded as a reduction to notes receivable on CMS Energy’s consolidated balance sheets, was $134$128 million at December 31, 20192020 and $102 million at December 31, 2018. Unearned income associated with loan fees for notes receivable held for sale was $2$134 million at December 31, 2019.
During 2020, EnerBank purchased portfolios of secured and unsecured consumer installment loans with a principal value of $90 million. During 2020, EnerBank completed sales of notes receivable with a principal value of $246 million and recorded gains of $6 million.
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EnerBank utilizes FICO scores as a key credit quality indicator when underwriting new loans and in assessing the credit exposures in its loan portfolio. The score is determined at the time of a borrower’s application and is generally not updated since the average duration of loans is about two years. At December 31, 2020, 86 percent of EnerBank’s loans had a FICO score rating between good and excellent. At December 31, 2020, 97 percent of EnerBank’s loan portfolio was originated within the past five years.
The allowance for loan losses is a valuationat December 31, 2020 reflects expected credit losses over the entire lifetime of the loan portfolio. EnerBank estimates the allowance by using the “weighted-average remaining maturity” methodology for their term loans, and the “probability of default and loss given default” methodology for their same-as-cash loans. These methodologies consider historical loan loss experience, prepayment expectations, and credit quality indicators. EnerBank considers current and projected economic conditions, and other reasonable and supportable forecast information to reflect estimated credit losses.determine if adjustments to the allowance are necessary. The allowance is increased by the provision for loan losses and decreased by loan charge-offscharge‑offs net of recoveries. Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors. Loan losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.


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Presented in the following table are the changes in the allowance for loan losses:
In Millions
Years Ended December 3120202019
Balance at beginning of period$33 $24 
Effects of new accounting standard1
62 0 
Provision for loan losses60 38 
Charge-offs(39)(35)
Recoveries7 6 
Balance at end of period$123 $33 
In Millions 
Years Ended December 312019 2018 
Balance at beginning of period $24
 $20
Charge-offs (35) (24)
Recoveries 6
 3
Provision for loan losses 38
 25
Balance at end of period $33
 $24

1The allowance for loan losses at December 31, 2019 reflected expected credit losses over a 12-month period. On January 1, 2020, in accordance with ASU 2016-13, Measurement of Credit Losses on Financial Instruments, the allowance for loan losses was adjusted to reflect expected credit losses over the life of the loan. Additionally, EnerBank recorded $3 million for expected credit losses related to unfunded loan commitments. For further details, see Note 2, New Accounting Standards.
Loans that are 30 days or more past due are considered delinquent. The balance of EnerBank’s delinquent consumer loans was $32 million at December 31, 2020 and $33 million at December 31, 2019 and $21 million at December 31, 2018.2019. At December 31, 20192020 and December 31, 2018,2019, EnerBank’s loans that had been modified as troubled debt restructurings were immaterial.
In response to the COVID-19 pandemic, and consistent with FDIC guidance, EnerBank offered new payment accommodations for current qualifying customers. At December 31, 2020, EnerBank had not experienced increased delinquent loans, charge-offs, or increased loan modifications due to the COVID-19 pandemic. EnerBank did not make any material adjustments to their allowance for loan losses at December 31, 2020 due to the COVID-19 pandemic. EnerBank cannot predict the longer-term impacts of the pandemic, but could experience slower lending growth, higher loan write-offs, and increased loan modifications.
EnerBank issues loan commitments to meet customer-financing needs. These commitments are agreements to provide credit as long as certain conditions are met and expire after 120 days. EnerBank uses the same credit policies in making these commitments as it uses for loans. EnerBank had $348 million of off-balance-sheet unfunded loan commitments at December 31, 2020, and had recorded a liability of $6 million for expected credit losses on those commitments.
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EnerBank has entered into interest rate swaps on $134 million of its loans (notes receivable). For information about interest rate swaps, see Note 6, Fair Value Measurements.
DB SERP Note Receivable – Related Party
The DB SERP note receivable – related party is Consumers’ portion of a demand note payable issued by CMS Energy to the DB SERP rabbi trust. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028.


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131

9:    Plant, Property, and Equipment
9:Plant, Property, and Equipment
Presented in the following table are details of CMS Energy’s and Consumers’ plant, property, and equipment:
In Millions
December 31Estimated
Depreciable
Life in Years		20202019
CMS Energy, including Consumers
Plant, property, and equipment, gross
Consumers3 - 125$26,757 $24,963 
Enterprises
Independent power production1
3 - 401,112 403 
Other3 - 51 2 
EnerBank1 - 737 22 
Plant, property, and equipment, gross$27,907 $25,390 
Construction work in progress1,085 896 
Accumulated depreciation and amortization(7,953)(7,360)
Total plant, property, and equipment2
$21,039 $18,926 
Consumers
Plant, property, and equipment, gross
Electric
Generation22 - 125$6,376 $5,942 
Distribution20 - 759,130 8,519 
Transmission46 - 750 113 
Other5 - 501,326 1,258 
Assets under finance leases and other financing3
323 326 
Gas
Distribution20 - 855,702 5,235 
Transmission17 - 752,003 1,752 
Underground storage facilities4
27 - 751,046 987 
Other5 - 50817 797 
Assets under finance leases3
13 14 
Other non-utility property3 - 5121 20 
Plant, property, and equipment, gross$26,757 $24,963 
Construction work in progress1,058 879 
Accumulated depreciation and amortization(7,844)(7,272)
Total plant, property, and equipment2
$19,971 $18,570 
1A significant portion of independent power production assets are leased to others under operating leases. For information regarding CMS Energy’s operating leases of owned assets, see Note 10, Leases and Palisades Financing.
2Consumers’ plant additions were $2.0 billion for the years ended December 31, 2020 and 2019. Consumers’ plant retirements were $220 million for the year ended December 31, 2020 and $380 million for the year ended December 31, 2019. Consumers plans to retire the D.E. Karn 1 & 2 coal-fueled electric generating units in 2023. Accordingly, in 2019, Consumers removed from total plant, property, and
In Millions 
December 31Estimated Depreciable Life in Years2019 2018 
CMS Energy, including Consumers       
Plant, property, and equipment, gross       
Consumers3—125 $24,963
 $23,963
Enterprises       
Independent power production1
3—40 403
 410
Other3—5 2
 2
EnerBank1—7 22
 25
Plant, property, and equipment, gross    $25,390
 $24,400
Construction work in progress    896
 763
Accumulated depreciation and amortization    (7,360) (7,037)
Total plant, property, and equipment    $18,926
 $18,126
Consumers       
Plant, property, and equipment, gross       
Electric       
Generation22—125 $5,942
 $6,305
Distribution20—75 8,519
 7,957
Transmission46—75 113
 154
Other5—50 1,258
 1,316
Assets under finance leases and other financing2
    326
 295
Gas       
Distribution20—85 5,235
 4,651
Transmission17—75 1,752
 1,521
Underground storage facilities3
27—75 987
 910
Other5—50 797
 823
Assets under finance leases2
    14
 14
Other non‑utility property3—51 20
 17
Plant, property, and equipment, gross    $24,963
 $23,963
Construction work in progress    879
 756
Accumulated depreciation and amortization    (7,272) (6,958)
Total plant, property, and equipment4
    $18,570
 $17,761
1
The majority of independent power production assets are leased to others under operating leases. For information regarding CMS Energy’s operating leases of owned assets, see Note 10, Leases and Palisades Financing.
2
For information regarding the amortization terms of Consumers’ assets under finance leases and other financing, see Note 10, Leases and Palisades Financing.


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equipment $667 million, representing the projected remaining book value of the 2 units upon their retirement, and recorded it as a regulatory asset. For additional details, see Note 3, Regulatory Matters.
3
3For information regarding the amortization terms of Consumers’ assets under finance leases and other financing, see Note 10, Leases and Palisades Financing.
4Underground storage includes base natural gas of $26 million at December 31, 2020 and 2019. Base natural gas is not subject to depreciation.
Underground storage includes base natural gas of $26 million at December 31, 2019 and 2018. Base natural gas is not subject to depreciation.
4
For the year ended December 31, 2019, Consumers’ plant additions were $2.0 billion and plant retirements were $380 million. For the year ended December 31, 2018, Consumers’ plant additions were $1.8 billion and plant retirements were $190 million. Consumers plans to retire the D.E. Karn 1 & 2 coal-fueled electric generating units in 2023. Accordingly, in 2019, Consumers removed from total plant, property, and equipment $667 million, representing the remaining book value of the 2 units upon their retirement, and recorded it as a regulatory asset. For additional details, see Note 3, Regulatory Matters.
Intangible Assets: Included in net plant, property, and equipment are intangible assets. Presented in the following table are details about CMS Energy’s and Consumers’ intangible assets:
In Millions
DescriptionAmortization
Life in Years		December 31, 2020December 31, 2019
Gross Cost1
Accumulated Amortization
Gross Cost1
Accumulated Amortization
CMS Energy, including Consumers
Software development1 - 15$883 $577 $882 $529 
Rights of way50 - 85197 57 180 55 
Franchises and consents5 - 5016 10 16 9 
Leasehold improvements
various2
10 7 9 7 
Other intangiblesvarious28 16 27 15 
Total$1,134 $667 $1,114 $615 
Consumers
Software development3 - 15$856 $568 $869 $521 
Rights of way50 - 85197 57 180 55 
Franchises and consents5 - 5016 10 16 9 
Leasehold improvements
various2
10 7 9 7 
Other intangiblesvarious25 16 26 15 
Total$1,104 $658 $1,100 $607 
In Millions 
  December 31, 2019 December 31, 2018
DescriptionAmortization Life in YearsGross Cost¹ Accumulated Amortization  Gross Cost¹ Accumulated Amortization 
CMS Energy, including Consumers         
Software development1—15 $882
 $529
  $1,024
 $603
Rights of way50—85 180
 55
  167
 52
Franchises and consents5—50 16
 9
  15
 9
Leasehold improvementsvarious² 9
 7
  9
 7
Other intangiblesvarious 27
 15
  27
 15
Total    $1,114
 $615
  $1,242
 $686
Consumers            
Software development3—15 $869
 $521
  $1,009
 $595
Rights of way50—85 180
 55
  167
 52
Franchises and consents5—50 16
 9
  15
 9
Leasehold improvementsvarious² 9
 7
  9
 7
Other intangiblesvarious 26
 15
  26
 15
Total    $1,100
 $607
  $1,226
 $678
1Consumers’ intangible asset additions were $69 million for the year ended December 31, 2020 and $67 million for the year ended December 31, 2019. Consumers’ intangible asset retirements were $65 million for the year ended December 31, 2020 and $193 million for the year ended December 31, 2019.
1
2Leasehold improvements are amortized over the life of the lease, which may change whenever the lease is renewed or extended.
For the year ended December 31, 2019, Consumers’ intangible asset additions were $67 million and intangible asset retirements were $193 million. For the year ended December 31, 2018, Consumers’ intangible asset additions were $90 million and intangible asset retirements were $7 million.
2
Leasehold improvements are amortized over the life of the lease, which may change whenever the lease is renewed or extended.
Capitalization: CMS Energy and Consumers record plant, property, and equipment at original cost when placed into service. The cost includes labor, material, applicable taxes, overhead such as pension and other benefits, and AFUDC, if applicable. Consumers’ plant, property, and equipment is generally recoverable through its general ratemaking process.
With the exception of utility property for which the remaining book value has been securitized, mothballed utility property stays in rate base and continues to be depreciated at the same rate as before the mothball period. When utility property is retired or otherwise disposed of in the ordinary course of business, Consumers records the original cost to accumulated depreciation, along with associated cost of removal, net of salvage. CMS Energy and Consumers recognize gains or losses on the retirement or disposal of non‑regulated assets in income. Consumers records cost of removal collected from customers, but not spent, as a regulatory liability.


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Software: CMS Energy and Consumers capitalize the costs to purchase and develop internal-use computer software. These costs are expensed evenly over the estimated useful life of the internal-use computer software. If computer software is integral to computer hardware, then its cost is capitalized and depreciated with the hardware.
AFUDC: Consumers capitalizes AFUDC on regulated major construction projects, except pollution control facilities on its fossil-fuel-fired power plants. AFUDC represents the estimated cost of debt and authorized return-on-equity funds used to finance construction additions. Consumers records the offsetting credit as a reduction of interest for the amount representing the borrowed funds component and as other income for the equity funds component on the consolidated statements of income. When construction is completed and the property is placed in service, Consumers depreciates and recovers the capitalized AFUDC from customers over the life of the related asset. Presented in the following table are Consumers’ average AFUDC capitalization rates:
Years Ended December 312019
2018
2017
Electric6.4%6.9%6.8%
Gas5.8
5.9
6.0

Years Ended December 31202020192018
Electric6.9 %6.4 %6.9 %
Gas5.7 5.8 5.9 
Assets Under Finance Leases and Other Financing: Presented in the following table are further details about changes in Consumers’ assets under finance leases and other financing:
In Millions 
Years Ended December 312019 2018 
Consumers    
Balance at beginning of period $309
 $312
Additions 26
 —
Net retirements and other adjustments 5
 (3)
Balance at end of period $340
 $309

In Millions
Years Ended December 3120202019
Consumers
Balance at beginning of period$340 $309 
Additions0 26 
Net retirements and other adjustments(4)5 
Balance at end of period$336 $340 
Assets under finance leases and other financing are presented as gross amounts. AccumulatedConsumers’ accumulated amortization of assets under finance leases and other financing was $254 million at December 31, 2020 and $239 million at December 31, 2019 and $212 million at December 31, 2018 for Consumers.2019.
Depreciation and Amortization: Presented in the following table are further details about CMS Energy’s and Consumers’ accumulated depreciation and amortization:
In Millions 
December 312019 2018 
CMS Energy, including Consumers    
Utility plant assets $7,269
 $6,956
Non‑utility plant assets
 91
 81
Consumers    
Utility plant assets $7,269
 $6,956
Non‑utility plant assets
 3
 2

In Millions
Years Ended December 3120202019
CMS Energy, including Consumers
Utility plant assets$7,841 $7,269 
Non-utility plant assets112 91 
Consumers
Utility plant assets$7,841 $7,269 
Non-utility plant assets3 3 
Consumers depreciates utility property on an asset-group basis, in which it applies a single MPSC-approved depreciation rate to the gross investment in a particular class of property within the electric and


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gas segments. Consumers performs depreciation studies periodically to determine appropriate group lives. Presented in the following table are the composite depreciation rates for Consumers’ segment properties:
Years Ended December 312019 2018 2017 
Electric utility property 3.9% 3.9% 3.9%
Gas utility property 2.9
 2.9
 2.9
Other property 10.0
 10.1
 10.0

Years Ended December 31202020192018
Electric utility property3.9 %3.9 %3.9 %
Gas utility property2.9 2.9 2.9 
Other property9.8 10.0 10.1 
CMS Energy and Consumers record property repairs and minor property replacement as maintenance expense. CMS Energy and Consumers record planned major maintenance activities as operating expense unless the cost represents the acquisition of additional long-lived assets or the replacement of an existing long-lived asset.
Presented in the following table are the components of CMS Energy’s and Consumers’ depreciation and amortization expense:
In Millions 
Years Ended December 312019 2018 2017 
CMS Energy, including Consumers      
Depreciation expense – plant, property, and equipment $842
 $778
 $739
Amortization expense      
Software 121
 127
 114
Other intangible assets 3
 3
 3
Securitized regulatory assets 26
 25
 25
Total depreciation and amortization expense $992
 $933
 $881
Consumers      
Depreciation expense – plant, property, and equipment $827
 $768
 $732
Amortization expense      
Software 119
 125
 112
Other intangible assets 3
 3
 3
Securitized regulatory assets 26
 25
 25
Total depreciation and amortization expense $975
 $921
 $872

In Millions
Years Ended December 31202020192018
CMS Energy, including Consumers
Depreciation expense – plant, property, and equipment$902 $842 $778 
Amortization expense
Software116 121 127 
Other intangible assets4 3 3 
Securitized regulatory assets26 26 25 
Total depreciation and amortization expense$1,048 $992 $933 
Consumers
Depreciation expense – plant, property, and equipment$881 $827 $768 
Amortization expense
Software112 119 125 
Other intangible assets4 3 3 
Securitized regulatory assets26 26 25 
Total depreciation and amortization expense$1,023 $975 $921 
Presented in the following table is CMS Energy’s and Consumers’ estimated amortization expense on intangible assets for each of the next five years:
In MillionsIn Millions In Millions
2020 2021 2022 2023 2024 20212022202320242025
CMS Energy, including Consumers          CMS Energy, including Consumers
Intangible asset amortization expense $118
 $112
 $107
 $87
 $70
Intangible asset amortization expense$120 $115 $100 $89 $86 
Consumers          Consumers
Intangible asset amortization expense $116
 $110
 $106
 $87
 $70
Intangible asset amortization expense$115 $111 $97 $86 $85 




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Jointly Owned Regulated Utility Facilities
Presented in the following table are Consumers’ investments in jointly owned regulated utility facilities at December 31, 2019:2020:
In Millions, Except Ownership Share 
J.H. Campbell Unit 3 Ludington  Other
Ownership share 93.3% 51.0% various
Utility plant in service $1,731
 $486
 $233
Accumulated depreciation (753) (166) (68)
Construction work in progress 16
 64
 15
Net investment $994
 $384
 $180

In Millions, Except Ownership Share
J.H. Campbell Unit 3LudingtonOther
Ownership share93.3 %51.0 %various
Utility plant in service$1,743 $489 $381 
Accumulated depreciation(822)(188)(107)
Construction work in progress12 78 12 
Net investment$933 $379 $286 
Consumers includes its share of the direct expenses of the jointly owned plants in operating expenses. Consumers shares operation, maintenance, and other expenses of these jointly owned utility facilities in proportion to each participant’s undivided ownership interest. Consumers is required to provide only its share of financing for the jointly owned utility facilities.
10:Leases and Palisades Financing
10:    Leases and Palisades Financing
Lessee
CMS Energy and Consumers lease various assets from third parties, including coal-carrying railcars, real estate, service vehicles, and gas pipeline capacity. In addition, CMS Energy and Consumers account for several of their PPAs as leases.
CMS Energy and Consumers do not record right-of-use assets or lease liabilities on their consolidated balance sheets for rentals with lease terms of 12 months or less, most of which are for the lease of real estate and service vehicles. Lease expense for these rentals is recognized on a straight-line basis over the lease term.
CMS Energy and Consumers include future payments for all renewal options, fair market value extensions, and buyout provisions reasonably certain of exercise in their measurement of lease right-of-use assets and lease liabilities. In addition, certain leases for service vehicles contain end-of-lease adjustment clauses based on proceeds received from the sale or disposition of the vehicles. CMS Energy and Consumers also include executory costs in the measurement of their right-of-use assets and lease liabilities, except for maintenance costs related to their coal-carrying railcar leases.
Most of Consumers’ PPAs contain provisions at the end of the initial contract terms to renew the agreements annually under mutually agreed‑upon terms at the time of renewal. Energy and capacity payments that vary depending on quantities delivered are recognized as variable lease costs when incurred. Consumers accounts for a PPA with one of CMS Energy’s equity method subsidiaries as a finance lease.


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Presented in the following table is information about CMS Energy’s and Consumers’ lease right-of-use assets and lease liabilities:
In Millions, Except as Noted
CMS Energy, including ConsumersConsumers
December 312020201920202019
Operating leases
Right-of-use assets1
$34$47$28$40
Lease liabilities
Current lease liabilities2
9978
Non-current lease liabilities3
25372132
Finance leases
Right-of-use assets$65$71$65$71
Lease liabilities4
Current lease liabilities7676
Non-current lease liabilities53605360
Weighted-average remaining lease term (in years)
Operating leases19171814
Finance leases12121212
Weighted-average discount rate
Operating leases3.9 %3.8 %3.8 %3.7 %
Finance leases5
1.8 %1.9 %1.8 %1.9 %
1CMS Energy’s and Consumers’ operating right-of-use lease assets are reported as other non‑current assets on their consolidated balance sheets.
2The current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other current liabilities on their consolidated balance sheets.
3The non‑current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other non‑current liabilities on their consolidated balance sheets.
4Includes related-party lease liabilities of $25 million, of which less than $1 million was current, at December 31, 2020 and December 31, 2019.
5This rate excludes the impact of Consumers’ pipeline agreements and long-term PPAs accounted for as finance leases. The required capacity payments under these agreements, when compared to the underlying fair value of the leased assets, result in effective interest rates that exceed market rates for leases with similar terms.
In Millions, Except as Noted 
December 31, 2019CMS Energy, including Consumers Consumers 
Operating leases    
Right-of-use assets1
 $47
 $40
Lease liabilities    
Current lease liabilities2
 9
 8
Non‑current lease liabilities3
 37
 32
Finance leases    
Right-of-use assets $71
 $71
Lease liabilities4
    
Current lease liabilities 6
 6
Non‑current lease liabilities
 60
 60
Weighted-average remaining lease term (in years)    
Operating leases 17
 14
Finance leases 12
 12
Weighted-average discount rate    
Operating leases 3.8% 3.7%
Finance leases5
 1.9
 1.9
1
CMS Energy’s and Consumers’ operating right-of-use lease assets are reported as other non‑current assets on their consolidated balance sheets.
2
The current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other current liabilities on their consolidated balance sheets.
3
The non‑current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other non‑current liabilities on their consolidated balance sheets.
4
This includes $25 million for leases with related parties, of which less than $1 million is current.
5
This rate excludes the impact of Consumers’ pipeline agreements and long-term PPAs accounted for as finance leases. The required capacity payments under these agreements, when compared to the underlying fair value of the leased assets, result in effective interest rates that exceed market rates for leases with similar terms.


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CMS Energy and Consumers report operating, variable, and short-term lease costs as operating expenses on their consolidated statements of income, except for certain amounts that may be capitalized to other assets. Presented in the following table is a summary of CMS Energy’s and Consumers’ total lease costs:
In Millions 
Year Ended December 31, 2019CMS Energy, including Consumers Consumers 
Operating lease costs $11
 $9
Finance lease costs    
Amortization of right-of-use assets 6
 6
Interest on lease liabilities 18
 18
Variable lease costs 95
 95
Total lease costs $130
 $128

In Millions
Years Ended December 3120202019
CMS Energy, including Consumers
Operating lease costs$10 $11 
Finance lease costs
Amortization of right-of-use assets6 6 
Interest on lease liabilities17 18 
Variable lease costs94 95 
Short-term lease costs17 16 
Total lease costs$144 $146 
Consumers
Operating lease costs$9 $9 
Finance lease costs
Amortization of right-of-use assets6 6 
Interest on lease liabilities17 18 
Variable lease costs94 95 
Short-term lease costs16 16 
Total lease costs$142 $144 
Presented in the following table is cash flow information related to amounts paid on CMS Energy’s and Consumers’ lease liabilities:
In MillionsIn Millions In Millions
Year Ended December 31, 2019CMS Energy, including Consumers Consumers 
Years Ended December 31Years Ended December 3120202019
CMS Energy, including ConsumersCMS Energy, including Consumers
Cash paid for amounts included in the measurement of lease liabilities    Cash paid for amounts included in the measurement of lease liabilities
Cash used in operating activities for operating leases $11
 $9
Cash used in operating activities for operating leases$11 $11 
Cash used in operating activities for finance leases 18
 18
Cash used in operating activities for finance leases17 18 
Cash used in financing activities for finance leases 7
 7
Cash used in financing activities for finance leases6 7 
ConsumersConsumers
Cash paid for amounts included in the measurement of lease liabilitiesCash paid for amounts included in the measurement of lease liabilities
Cash used in operating activities for operating leasesCash used in operating activities for operating leases$9 $9 
Cash used in operating activities for finance leasesCash used in operating activities for finance leases17 18 
Cash used in financing activities for finance leasesCash used in financing activities for finance leases6 7 



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Presented in the following table are the minimum rental commitments under CMS Energy’s and Consumers’ non‑cancelablenon-cancelable leases:
In Millions 
   Finance Leases
December 31, 2019Operating LeasesPipelines and PPAsOtherTotal
CMS Energy, including Consumers
        
2020 $11
 $17
 $6
 $23
2021 11
 17
 6
 23
2022 5
 14
 5
 19
2023 3
 13
 5
 18
2024 2
 13
 3
 16
2025 and thereafter 35
 78
 12
 90
Total minimum lease payments $67
 $152
 $37
 $189
Less discount 21
 119
 4
 123
Present value of minimum lease payments $46
 $33
 $33
 $66
Consumers        
2020 $9
 $17
 $6
 $23
2021 9
 17
 6
 23
2022 4
 14
 5
 19
2023 3
 13
 5
 18
2024 2
 13
 3
 16
2025 and thereafter 29
 78
 12
 90
Total minimum lease payments $56
 $152
 $37
 $189
Less discount 16
 119
 4
 123
Present value of minimum lease payments $40
 $33
 $33
 $66

In Millions
Finance Leases
December 31, 2020Operating LeasesPipelines and PPAsOtherTotal
CMS Energy, including Consumers
2021$10 $17 $5 $22 
20224 14 5 19 
20232 13 5 18 
20241 13 3 16 
20251 13 1 14 
2026 and thereafter34 66 11 77 
Total minimum lease payments$52 $136 $30 $166 
Less discount18 103 3 106 
Present value of minimum lease payments$34 $33 $27 $60 
Consumers
2021$8 $17 $5 $22 
20224 14 5 19 
20232 13 5 18 
20241 13 3 16 
20251 13 1 14 
2026 and thereafter27 66 11 77 
Total minimum lease payments$43 $136 $30 $166 
Less discount15 103 3 106 
Present value of minimum lease payments$28 $33 $27 $60 
Lessor
CMS Energy and Consumers are the lessor under power sales and natural gas delivery agreements that are accounted for as leases.
CMS Energy has power sales agreements that are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. For the year ended December 31, 2019, CMS Energy’s2020, lease revenue from itsthese power sales agreements was $148 million, which included variable lease payments of $93 million. For the year ended December 31, 2019, lease revenue from these power sales agreements was $174 million, which included variable lease payments of $119 million.


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Presented in the following table are the minimum rental payments to be received under CMS Energy’s non‑cancelable operating leases:
In Millions 
December 31, 2019  
2020 $55
2021 55
2022 48
2023 43
2024 43
2025 and thereafter 62
Total minimum lease payments $306

In Millions
December 31, 2020
2021$54 
202248 
202343 
202443 
202544 
2026 and thereafter18 
Total minimum lease payments$250 
Consumers has an agreement to build, own, operate, and maintain a compressed natural gas fueling station through December 2038. This agreement is accounted for as a direct finance lease, under which the lessee has the option to purchase the natural gas fueling station at the end of the lease term. Fixed monthly payments escalate annually with inflation.
Beginning inIn December 2018, Consumers and a subsidiary of CMS Energy executed a 20‑year natural gas transportation agreement, related to a pipeline owned by Consumers. This agreement is accounted for as a direct finance lease and will automatically extend annually unless terminated by either party. The effects of the lease are eliminated on CMS Energy’s consolidated financial statements.
Minimum rental payments to be received under Consumers’ direct financing leases are $1 million for each of the next five years and $19$18 million for the years thereafter. The lease receivable was $10 million as of December 31, 2019,2020, which does not include unearned income of $14$13 million.
Minimum rental payments to be received under CMS Energy’s direct finance lease are less than $1 million for each of the next five years and $10 million for the years thereafter. The lease receivable was $5 million as of December 31, 2019,2020, which does not include unearned income of $5 million.
Palisades Financing
In 2007, Consumers sold Palisades to Entergy and entered into a 15-year PPA to purchase virtually all of the capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. Consumers accounted for this transaction as a financing because of its continuing involvement with Palisades through security provided to Entergy for the PPA obligation and other arrangements. Palisades has therefore remained on Consumers’ consolidated balance sheets and Consumers has continued to depreciate it. At the time of the sale, Consumers recorded the sales proceeds as a financing obligation, and has subsequently recorded a portion of the payments under the PPA as interest expense and as a reduction of the financing obligation.
Total amortization and interest charges under the financing were $14 million for the year ended December 31, 2020, $15 million for the year ended December 31, 2019, and $16 million for the year ended December 31, 2018, and $17 million for the year ended December 31, 2017.2018. At December 31, 2019,2020, the Palisades asset and financing obligation both had a balance of $29$16 million.


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Presented in the following table are the minimum Palisades PPA payments included in the financing obligation:
In Millions 
December 31, 2019  
2020 $14
2021 14
2022 3
Total minimum payments $31
Less discount 2
Financing obligation $29
Less current portion 13
Non-current portion $16

In Millions
December 31, 2020
2021$14 
20223 
Total minimum payments$17 
Less discount1 
Financing obligation$16 
Less current portion13 
Non-current portion$3 
11:Asset Retirement Obligations
11:    Asset Retirement Obligations
CMS Energy and Consumers record the fair value of the cost to remove assets at the end of their useful lives, if there is a legal obligation to remove them. If a reasonable estimate of fair value cannot be made in the period in which the ARO is incurred, such as for assets with indeterminate lives, the liability is recognized when a reasonable estimate of fair value can be made. CMS Energy and Consumers have not recorded liabilities associated with the closure of certain gas wells that have an indeterminate life. CMS Energy and Consumers have not recorded liabilities for assets that have immaterial cumulative disposal costs, such as substation batteries.
CMS Energy and Consumers calculate the fair value of ARO liabilities using an expected present-value technique that reflects assumptions about costs and inflation, and uses a credit-adjusted risk-free rate to discount the expected cash flows. CMS Energy’s ARO liabilities are primarily at Consumers.
Presented below are the categories of assets that CMS Energy and Consumers have legal obligations to remove at the end of their useful lives and for which they have an ARO liability recorded:
Company and ARO DescriptionIn-Service DateLong-Lived Assets
CMS Energy, including Consumers
Closure of gas treating plant and gas wellsvariousGas transmission and storage
Closure of coal ash disposal areasvariousGenerating plants coal ash areas
Gas distribution cut, purge, and capvariousGas distribution mains and services
Asbestos abatement1973Electric and gas utility plant
Closure of renewable generation assetsvariousWind and solar generation facilities
Gas wells plug and abandonvariousGas transmission and storage
Consumers
Closure of coal ash disposal areasvariousGenerating plants coal ash areas
Gas distribution cut, purge, and capvariousGas distribution mains and services
Asbestos abatement1973Electric and gas utility plant
Closure of renewable generation assetsvariousWind and solar generation facilities
Gas wells plug and abandonvariousGas transmission and storage

No assets have been restricted for purposes of settling AROs.


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Presented in the following tables are the changes in CMS Energy’s and Consumers’ ARO liabilities:
In Millions
Company and ARO DescriptionARO Liability 12/31/2019IncurredSettledAccretionCash Flow RevisionsARO Liability 12/31/2020
CMS Energy, including Consumers
Consumers$474 $46 $(41)$23 $28 $530 
Renewable generation assets3 19 0 1 0 23 
Total CMS Energy$477 $65 $(41)$24 $28 $553 
Consumers
Coal ash disposal areas$166 $0 $(24)$6 $0 $148 
Gas distribution cut, purge, and cap231 1 (5)13 0 240 
Asbestos abatement34 0 0 2 0 36 
Renewable generation assets21 24 0 1 28 74 
Gas wells plug and abandon22 16 (7)1 0 32 
Cable under Straits of Mackinac1
0 5 (5)0 0 0 
Total Consumers$474 $46 $(41)$23 $28 $530 
1For further details, see Note 4, Contingencies and Commitments—Consumers Electric Utility Contingencies.
In Millions
Company and ARO DescriptionARO Liability 12/31/2018IncurredSettledAccretionCash Flow RevisionsARO Liability 12/31/2019
CMS Energy, including Consumers
Consumers$428 $55 $(37)$21 $7 $474 
Gas treating plant and gas wells1 0 (1)0 0 0 
Renewable generation assets3 0 0 0 0 3 
Total CMS Energy$432 $55 $(38)$21 $7 $477 
Consumers
Coal ash disposal areas$179 $0 $(27)$7 $7 $166 
Gas distribution cut, purge, and cap205 22 (8)12 0 231 
Asbestos abatement33 0 (1)2 0 34 
Renewable generation assets11 10 0 0 0 21 
Gas wells plug and abandon0 23 (1)0 0 22 
Total Consumers$428 $55 $(37)$21 $7 $474 
In Millions 
Company and ARO DescriptionARO Liability 12/31/2018 Incurred Settled Accretion Cash Flow Revisions ARO Liability 12/31/2019 
CMS Energy, including Consumers
Consumers $428
 $55
 $(37) $21
 $7
 $474
Gas treating plant and gas wells 1
 —
 (1) —
 —
 —
Renewable generation assets 3
 —
 —
 —
 —
 3
Total CMS Energy $432
 $55
 $(38) $21
 $7
 $477
Consumers            
Coal ash disposal areas $179
 $—
 $(27) $7
 $7
 $166
Gas distribution cut, purge, and cap 205
 22
 (8) 12
 —
 231
Asbestos abatement 33
 —
 (1) 2
 —
 34
Renewable generation assets 11
 10
 —
 —
 —
 21
Gas wells plug and abandon —
 23
 (1) —
 —
 22
Total Consumers $428
 $55
 $(37) $21
 $7
 $474
148
In Millions 
Company and ARO DescriptionARO Liability 12/31/2017 Incurred Settled Accretion Cash Flow Revisions ARO Liability 12/31/2018 
CMS Energy, including Consumers
Consumers $429
 $17
 $(40) $22
 $—
 $428
Gas treating plant and gas wells 1
 —
 —
 —
 —
 1
Renewable generation assets —
 3
 —
 —
 —
 3
Total CMS Energy $430
 $20
 $(40) $22
 $—
 $432
Consumers            
Coal ash disposal areas $191
 $—
 $(20) $8
 $—
 $179
Gas distribution cut, purge, and cap 186
 17
 (9) 11
 —
 205
Asbestos abatement 42
 —
 (11) 2
 —
 33
Renewable generation assets 10
 —
 —
 1
 —
 11
Total Consumers $429
 $17
 $(40) $22
 $—
 $428



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12:    Retirement Benefits
12:Retirement Benefits
Benefit Plans: CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans. These plans include:
•non‑contributory, qualified DB Pension Plans (closed to new non‑union participants as of July 1, 2003 and closed to new union participants as of September 1, 2005)
•a non‑contributory, qualified DCCP for employees hired on or after July 1, 2003
•benefits to certain management employees under a non‑contributory, nonqualified DB SERP (closed to new participants as of March 31, 2006)
•a non‑contributory, nonqualified DC SERP for certain management employees hired or promoted on or after April 1, 2006
•a contributory, qualified defined contribution 401(k) plan
•health care and life insurance benefits under an OPEB Plan
DB Pension Plans: Participants in the pension plans include present and former employees of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries. Pension plan trust assets are not distinguishable by company. Effective December 31, 2017, CMS Energy’s and Consumers’ then-existing pension plan was amended to include only retired and former employees already covered; this amended plan is referred to as DB Pension Plan B. Also effective December 31, 2017, active employees were moved to a newly created pension plan, referred to as DB Pension Plan A, whose benefits mirror those provided under DB Pension Plan B. Maintaining separate plans for the two groups allows CMS Energy and Consumers to employ a more targeted investment strategy and provides additional opportunities to mitigate risk and volatility.
In September 2020, CMS Energy and Consumers determined it was probable that 2020 lump-sum payments to retired employees under DB Pension Plan A would exceed the plan’s service cost and interest cost components of net periodic cost for the year. These lump-sum payments constitute pension plan liability settlements; once such settlements meet the service and interest cost threshold, recognition in earnings is required. As a result, in accordance with GAAP, CMS Energy, including Consumers, performed a remeasurement of DB Pension Plan A as of August 31, 2020 and recognized a settlement loss of $36 million; $35 million of this amount was recognized by Consumers and deferred as a regulatory asset. At December 31, 2020, CMS Energy, including Consumers, recognized an additional settlement loss of $10 million for the period September 1, 2020 to December 31, 2020; $10 million of this amount was recognized by Consumers and deferred as a regulatory asset. CMS Energy and Consumers will amortize the regulatory asset over nine years.
DCCP: CMS Energy and Consumers provide an employer contribution to the DCCP 401(k) plan for employees hired on or after July 1, 2003. The contribution ranges from 5 percent to 7 percent of base pay, depending on years of service. Employees are not required to contribute in order to receive the plan’s employer contribution. DCCP expense for CMS Energy, including Consumers, was $33 million for the year ended December 31, 2020, $30 million for the year ended December 31, 2019, and $26 million for the year ended December 31, 2018, and $232018. DCCP expense for Consumers was $31 million for the year ended December 31, 2017. DCCP expense for Consumers was2020, $28 million for the year ended December 31, 2019, and $25 million for the year ended December 31, 2018, and $22 million for the year ended December 31, 2017.2018.
149
DB SERP: The DB SERP is a nonqualified plan as defined by the Internal Revenue Code. DB SERP benefits are paid from a rabbi trust established in 1988. The trust assets are not considered plan assets under ASC 715. DB SERP rabbi trust earnings are taxable. Presented in the following table are the fair values of trust assets, ABO, and contributions for CMS Energy’s and Consumers’ DB SERP:
In Millions 
Years Ended December 312019 2018 
CMS Energy, including Consumers    
Trust assets $143
 $147
ABO 149
 137
Contributions —
 8
Consumers    
Trust assets $104
 $106
ABO 107
 98
Contributions —
 5



143

In Millions
Years Ended December 3120202019
CMS Energy, including Consumers
Trust assets$146 $143 
ABO159 149 
Contributions8 0 
Consumers
Trust assets$107 $104 
ABO115 107 
Contributions5 0 
DC SERP: On April 1, 2006, CMS Energy and Consumers implemented a DC SERP and froze further new participation in the DB SERP. The DC SERP provides participants benefits ranging from 5 percent to 15 percent of total compensation. The DC SERP requires a minimum of five years of participation before vesting. CMS Energy’s and Consumers’ contributions to the plan, if any, are placed in a grantor trust. For CMS Energy and Consumers, trust assets were $11 million at December 31, 2020 and $8 million at December 31, 2019 and $5 million at December 31, 2018.2019. DC SERP assets are included in other non‑current assets on CMS Energy’s and Consumers’ consolidated balance sheets. CMS Energy’s and Consumers’ DC SERP expense was $2 million for the yearyears ended December 31, 2020 and 2019, and $1 million for each of the yearsyear ended December 31, 2018 and 2017.2018.
401(k) Plan: The 401(k) plan employer match equals 100 percent of eligible contributions up to the first 3 percent of an employee’s wages and 50 percent of eligible contributions up to the next 2 percent of an employee’s wages. The total 401(k) plan cost for CMS Energy, including Consumers, was $30 million for the year ended December 31, 2020, $28 million for the year ended December 31, 2019, and $27 million for the year ended December 31, 2018,2018. The total 401(k) plan cost for Consumers was $29 million for the year ended December 31, 2020, $27 million for the year ended December 31, 2019, and $26 million for the year ended December 31, 2017. The total 401(k) plan cost for Consumers was $27 million for the year ended December 31, 2019, $26 million for the year ended December 31, 2018, and $25 million for the year ended December 31, 2017.2018.
OPEB Plan: Participants in the OPEB Plan include all regular full-time employees covered by the employee health care plan on the day before retirement from either CMS Energy or Consumers at age 55 or older with at least ten full years of applicable continuous service. Regular full-time employees who qualify for disability retirement under the DB Pension Plans or are disabled and covered by the DCCP and who have 15 years of applicable continuous service may also participate in the OPEB Plan. Retiree health care costs were based on the assumption that costs would increase 6.50 percent in 2021 and 6.75 percent in 2020 and 7.00 percent in 2019 for those under 65 and would increase 7.00 percent in 2021 and 7.25 percent in 2020 and 7.75 percent in 2019 for those over 65. The rate of increase was assumed to decline to 4.75 percent by 2027 and thereafter for all retirees.
In 2017, CMS Energy and Consumers approved certain amendments to the OPEB Plan. Under these amendments, effective January 1, 2019, certain Medicare-eligible retirees will purchase health care plans from private Medicare exchanges. CMS Energy and Consumers performed a remeasurement of the OPEB Plan as of October 31, 2017, resulting in a significant reduction in the benefit obligation. In July 2018, CMS Energy and Consumers approved an amendment to the OPEB Plan to improve survivor benefits for certain Medicare-eligible retirees, effective January 1, 2019, resulting in a $26 million increase in the benefit obligation.


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Assumptions: Presented in the following table are the weighted-average assumptions used in CMS Energy’s and Consumers’ retirement benefits plans to determine benefit obligations and net periodic benefit cost:
December 31202020192018
CMS Energy, including Consumers
Weighted average for benefit obligations1
Discount rate2
DB Pension Plan A2.73 %3.37 %4.48 %
DB Pension Plan B2.41 3.17 4.32 
DB SERP2.40 3.15 4.32 
OPEB Plan2.69 3.32 4.42 
Rate of compensation increase
DB Pension Plan A3.70 3.50 3.50 
DB SERP5.50 5.50 5.50 
Weighted average for net periodic benefit cost1
Service cost discount rate2,3
DB Pension Plan A3.44 %4.55 %3.85 %
DB SERP3.46 4.58 3.83 
OPEB Plan3.57 4.63 3.93 
Interest cost discount rate2,3
DB Pension Plan A2.92 4.08 3.39 
DB Pension Plan B2.74 3.93 3.24 
DB SERP2.74 3.94 3.26 
OPEB Plan2.88 4.03 3.35 
Expected long-term rate of return on plan assets4
DB Pension Plans6.75 7.00 7.00 
OPEB Plan6.75 7.00 7.00 
Rate of compensation increase
DB Pension Plan A3.50 3.50 3.50 
DB SERP5.50 5.50 5.50 
1The mortality assumption for benefit obligations was based on the Pri-2012 Mortality Table for 2020 and 2019 and the RP-2014 Mortality Table for 2018, with improvement scales MP-2020 for 2020, MP-2019 for 2019, and MP-2018 for 2018. The mortality assumption for net periodic benefit cost was based on the Pri-2012 Mortality Table for 2020 and the RP-2014 Mortality Table for 2019 and 2018, with improvement scales MP-2019 for 2020, MP-2018 for 2019, and MP-2017 for 2018.
2The discount rate reflects the rate at which benefits could be effectively settled and is equal to the equivalent single rate resulting from a yield-curve analysis. This analysis incorporated the projected benefit payments specific to CMS Energy’s and Consumers’ DB Pension Plans and OPEB Plan and the yields on high-quality corporate bonds rated Aa or better.
3CMS Energy and Consumers have elected to use a full-yield-curve approach in the estimation of service cost and interest cost; this approach applies individual spot rates along the yield curve to future projected benefit payments based on the time of payment.
4CMS Energy and Consumers determined the long-term rate of return using historical market returns, the present and expected future economic environment, the capital market principles of risk and return, and the
December 312019
2018
2017
CMS Energy, including Consumers   
Weighted average for benefit obligations1
   
Discount rate2
   
DB Pension Plan A3.37%4.48%3.78%
DB Pension Plan B3.17
4.32
3.64
DB SERP3.15
4.32
3.65
OPEB Plan3.32
4.42
3.74
Rate of compensation increase   
DB Pension Plan A3.50
3.50
3.50
DB SERP5.50
5.50
5.50
Weighted average for net periodic benefit cost1
   
Service cost discount rate2,3
   
DB Pension Plan A4
4.55
3.85


DB SERP4.58
3.83
4.51
OPEB Plan4.63
3.93
4.89
Interest cost discount rate2,3
   
DB Pension Plan A4
4.08
3.39
 
DB Pension Plan B4
3.93
3.24


DB SERP3.94
3.26
3.51
OPEB Plan4.03
3.35
3.79
Expected long-term rate of return on plan assets5
   
DB Pension Plans7.00
7.00
7.25
OPEB Plan7.00
7.00
7.25
Rate of compensation increase   
DB Pension Plan A4
3.50
3.50


DB SERP5.50
5.50
5.50
1
The mortality assumption for benefit obligations was based on the Pri-2012 mortality table for 2019 and on the RP-2014 mortality table for 2018 and 2017, with projection scales MP-2019 for 2019, MP-2018 for 2018, and MP-2017 for 2017. The mortality assumption for net periodic benefit cost for 2019, 2018, and 2017 was based on the RP-2014 mortality table, with projection scales MP-2018 for 2019, MP-2017 for 2018, and MP-2016 for 2017.
2
The discount rate reflects the rate at which benefits could be effectively settled and is equal to the equivalent single rate resulting from a yield-curve analysis. This analysis incorporated the projected benefit payments specific to CMS Energy’s and Consumers’ DB Pension Plans and OPEB Plan and the yields on high-quality corporate bonds rated Aa or better.
3
CMS Energy and Consumers have elected to use a full-yield-curve approach in the estimation of service cost and interest cost; this approach applies individual spot rates along the yield curve to future projected benefit payments based on the time of payment.


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4
Effective December 31, 2017, CMS Energy’s and Consumers’ existing defined benefit pension plan was amended to include only retired or inactive employees; this amended plan is referred to as DB Pension Plan B. Active employees were moved to a newly created pension plan, referred to as DB Pension Plan A.
expert opinions of individuals and firms with financial market knowledge. CMS Energy and Consumers considered the asset allocation of the portfolio in forecasting the future expected total return of the portfolio. The assumptionsgoal was to determine a long-term rate of return that could be incorporated into the planning of future cash flow requirements in conjunction with the change in the liability. Annually, CMS Energy and Consumers review for reasonableness and appropriateness the forecasted returns for various classes of assets used to measureconstruct an expected return model. CMS Energy’s and Consumers’ expected long-term rate of return on the plan costassets of the previous defined benefit pension plan at December 31, 2017 were:DB Pension Plans was 6.75 percent in 2020. The actual return (loss) on the assets of the DB Pension Plans was 13.6 percent in 2020, 21.0 percent in 2019, and (6.7) percent in 2018.
•
service cost discount rate of 4.53 percent
•
interest cost discount rate of 3.56 percent
•
weighted-average rate of compensation increase of 3.60 percent
5
CMS Energy and Consumers determined the long-term rate of return using historical market returns, the present and expected future economic environment, the capital market principles of risk and return, and the expert opinions of individuals and firms with financial market knowledge. CMS Energy and Consumers considered the asset allocation of the portfolio in forecasting the future expected total return of the portfolio. The goal was to determine a long-term rate of return that could be incorporated into the planning of future cash flow requirements in conjunction with the change in the liability. Annually, CMS Energy and Consumers review for reasonableness and appropriateness the forecasted returns for various classes of assets used to construct an expected return model. CMS Energy’s and Consumers’ expected long-term rate of return on the assets of the DB Pension Plans was 7.00 percent in 2019. The actual return (loss) on the assets of the DB Pension Plans was 21.0 percent in 2019, (6.7) percent in 2018, and 18.0 percent in 2017.
Costs: Presented in the following table are the costs (credits) and other changes in plan assets and benefit obligations incurred in CMS Energy’s and Consumers’ retirement benefits plans:
In Millions 
 DB Pension Plans and DB SERP OPEB Plan
Years Ended December 312019 2018 2017  2019 2018 2017 
CMS Energy, including Consumers             
Net periodic cost (credit)             
Service cost $41
 $48
 $45
  $14
 $17
 $19
Interest cost 103
 95
 93
  41
 34
 51
Expected return on plan assets (162) (149) (153)  (88) (97) (90)
Amortization of:             
Net loss 50
 76
 82
  26
 15
 29
Prior service cost (credit) 1
 3
 5
  (62) (67) (40)
Net periodic cost (credit) $33
 $73
 $72
  $(69) $(98) $(31)
Consumers             
Net periodic cost (credit)             
Service cost $40
 $47
 $44
  $13
 $16
 $19
Interest cost 97
 88
 90
  40
 33
 49
Expected return on plan assets (153) (139) (149)  (82) (91) (84)
Amortization of:             
Net loss 47
 73
 79
  26
 16
 29
Prior service cost (credit) 1
 3
 4
  (61) (65) (39)
Net periodic cost (credit) $32
 $72
 $68
  $(64) $(91) $(26)

In Millions
DB Pension Plans and DB SERPOPEB Plan
Years Ended December 31202020192018202020192018
CMS Energy, including Consumers
Net periodic cost (credit)
Service cost$50 $41 $48 $16 $14 $17 
Interest cost83 103 95 33 41 34 
Settlement loss1 0 0 0 0 0 
Expected return on plan assets(191)(162)(149)(100)(88)(97)
Amortization of:
Net loss95 50 76 15 26 15 
Prior service cost (credit)1 1 3 (56)(62)(67)
Settlement loss2 0 0 0 0 0 
Net periodic cost (credit)$41 $33 $73 $(92)$(69)$(98)
Consumers
Net periodic cost (credit)
Service cost$49 $40 $47 $15 $13 $16 
Interest cost78 97 88 31 40 33 
Expected return on plan assets(181)(153)(139)(93)(82)(91)
Amortization of:
Net loss90 47 73 15 26 16 
Prior service cost (credit)1 1 3 (54)(61)(65)
Settlement loss2 0 0 0 0 0 
Net periodic cost (credit)$39 $32 $72 $(86)$(64)$(91)
CMS Energy and Consumers amortize net gains and losses in excess of 10 percent of the greater of the PBO or the MRV over the average remaining service period for DB Pension Plan A and the OPEB Plan and began in 2018, over the average remaining life expectancy of participants for DB Pension Plan B.


146

For DB Pension Plan A, the estimated period of amortization of gains and losses was eight years for the year ended December 31, 2020, and nine years for the years ended December 31, 2019 and 2018. For DB Pension Plan B, the estimated period of amortization of gains and losses was 19 years for the year ended December 31, 2020, and 20 years for the years ended December 31, 2019 and 2018. The estimated period of amortization for gains and losses for CMS Energy and Consumers was ten years for the DB Pension Plans for the year ended December 31, 2017. For the OPEB Plan, the estimated amortization period was tennine years for the year ended December 31, 20192020, and 2018 and 11ten years for the yearyears ended December 31, 2017.2019 and 2018.
Prior service cost (credit) amortization is established in the year in which the prior service cost (credit) first occurred, and is based on the same amortization period for all future years until the prior service cost
152
(credit) is fully amortized. CMS Energy and Consumers had new prior service costs (credits) for OPEBDB Pension Plan A in 2018 and 2017.2020. The estimated period of amortization of these new prior service costs (credits) foris eight years. CMS Energy and Consumers had new prior service credits for OPEB in 2018. The estimated period of amortization of these new prior service credits is nine years.
CMS Energy and Consumers determine the MRV for the assets of the DB Pension Plans as the fair value of plan assets on the measurement date, adjusted by the gains or losses that will not be admitted into the MRV until future years. CMS Energy and Consumers reflect each year’s gain or loss in the MRV in equal amounts over a five-year period beginning on the date the original amount was determined. CMS Energy and Consumers determine the MRV for OPEB Plan assets as the fair value of assets on the measurement date.


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Reconciliations: Presented in the following table are reconciliations of the funded status of CMS Energy’s and Consumers’ retirement benefits plans with their retirement benefits plans’ liabilities:
In Millions
DB Pension PlansDB SERPOPEB Plan
Years Ended December 31202020192020201920202019
CMS Energy, including Consumers
Benefit obligation at beginning of period$2,973 $2,512 $150 $140 $1,165 $1,045 
Service cost50 41 0 0 16 14 
Interest cost79 98 4 5 33 41 
Plan amendments24 0 0 0 0 0 
Actuarial loss355 1476 116 15 39 1110 1
Benefits paid(215)(154)(10)(10)(48)(45)
Benefit obligation at end of period$3,266 $2,973 $160 $150 $1,205 $1,165 
Plan assets at fair value at beginning of period$2,546 $2,247 $0 $0 $1,509 $1,280 
Actual return on plan assets371 453 0 0 182 273 
Company contribution700 0 10 10 1 0 
Actual benefits paid(215)(154)(10)(10)(47)(44)
Plan assets at fair value at end of period$3,402 $2,546 $0 $0 $1,645 $1,509 
Funded status$136 2$(427)2$(160)$(150)$440 $344 
Consumers
Benefit obligation at beginning of period$109 $101 $1,120 $1,004 
Service cost0 0 15 13 
Interest cost3 4 31 40 
Actuarial loss12 11 37 1106 1
Benefits paid(7)(7)(45)(43)
Benefit obligation at end of period$117 $109 $1,158 $1,120 
Plan assets at fair value at beginning of period$0 $0 $1,410 $1,197 
Actual return on plan assets0 0 169 255 
Company contribution7 7 1 0 
Actual benefits paid(7)(7)(45)(42)
Plan assets at fair value at end of period$0 $0 $1,535 $1,410 
Funded status$(117)$(109)$377 $290 
1The actuarial loss for 2020 and 2019 for the DB Pension Plans was primarily the result of lower discount rates and lower interest rates used to calculate the value of lump-sum payments. The actuarial loss for 2020 and 2019 for the OPEB Plan was primarily the result of lower discount rates.
2The total funded status of the DB Pension Plans attributable to Consumers, based on an allocation of expenses, was $138 million at December 31, 2020 and $(408) million at December 31, 2019.
In Millions
 DB Pension Plans DB SERP OPEB Plan
Years Ended December 312019 2018  2019 2018  2019 2018  
CMS Energy, including Consumers
Benefit obligation at beginning of period $2,512
 $2,780
  $140
 $154
  $1,045
 $1,097
 
Service cost 41
 48
  —
 —
  14
 17
 
Interest cost 98
 90
  5
 5
  41
 34
 
Plan amendments —
 —
  —
 —
  —
 26
 
Actuarial loss (gain) 476
1 
(258)
1 
 15
 (10)  110
1 
(74)
1 
Benefits paid (154) (148)  (10) (9)  (45) (55) 
Benefit obligation at end of period $2,973
 $2,512
  $150
 $140
  $1,165
 $1,045
 
Plan assets at fair value at beginning of period $2,247
 $2,305
  $—
 $—
  $1,280
 $1,420
 
Actual return on plan assets 453
 (150)  —
 —
  273
 (86) 
Company contribution —
 240
  10
 9
  —
 —
 
Actual benefits paid (154) (148)  (10) (9)  (44) (54) 
Plan assets at fair value at end of period $2,546
 $2,247
  $—
 $—
  $1,509
 $1,280
 
Funded status $(427)
2 
$(265)
2 
 $(150) $(140)  $344
 $235
 
Consumers               
Benefit obligation at beginning of period      $101
 $112
  $1,004
 $1,053
 
Service cost      —
 —
  13
 16
 
Interest cost      4
 4
  40
 33
 
Plan amendments      —
 —
  —
 25
 
Actuarial loss (gain)      11
 (8)  106
1 
(70)
1 
Benefits paid      (7) (7)  (43) (53) 
Benefit obligation at end of period      $109
 $101
  $1,120
 $1,004
 
Plan assets at fair value at beginning of period      $—
 $—
  $1,197
 $1,329
 
Actual return on plan assets      —
 —
  255
 (80) 
Company contribution      7
 7
  —
 —
 
Actual benefits paid      (7) (7)  (42) (52) 
Plan assets at fair value at end of period      $—
 $—
  $1,410
 $1,197
 
Funded status      $(109) $(101)  $290
 $193
 
1
The actuarial loss for 2019 for the DB Pension Plans was primarily the result of lower discount rates and lower interest rates used to calculate the value of lump-sum payments. The actuarial gain for 2018 was primarily the result of higher discount rates. The actuarial loss for 2019 for the OPEB Plan was primarily the result of lower discount rates. The actuarial gain for 2018 was primarily the result of higher discount rates.


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2
The total funded status of the DB Pension Plans attributable to Consumers, based on an allocation of expenses, was $408 million at December 31, 2019 and $246 million at December 31, 2018.
Presented in the following table is the classification of CMS Energy’s and Consumers’ retirement benefit plans’ assets and liabilities:
In Millions 
December 312019 2018 
CMS Energy, including Consumers    
Non‑current assets
    
DB Pension Plans $104
 $38
OPEB Plan 344
 235
Current liabilities    
DB SERP 10
 10
Non‑current liabilities
    
DB Pension Plans 531
 303
DB SERP 140
 130
Consumers    
Non‑current assets
    
DB Pension Plans $109
 $49
OPEB Plan 290
 193
Current liabilities    
DB SERP 7
 7
Non‑current liabilities
    
DB Pension Plans 517
 295
DB SERP 102
 94

In Millions
December 3120202019
CMS Energy, including Consumers
Non-current assets
DB Pension Plans$136 $104 
OPEB Plan440 344 
Current liabilities
DB SERP10 10 
Non-current liabilities
DB Pension Plans0 531 
DB SERP150 140 
Consumers
Non-current assets
DB Pension Plans$138 $109 
OPEB Plan377 290 
Current liabilities
DB SERP7 7 
Non-current liabilities
DB Pension Plans0 517 
DB SERP110 102 
The ABO for the DB Pension Plans was $2.9 billion at December 31, 2020 and $2.6 billion at December 31, 2019 and $2.2 billion at2019. At December 31, 2018. Presented2019, the PBO and ABO for one of the defined benefit pension plans exceeded plan assets; presented in the following table is information related to the defined benefit pension plan for which the PBO and the ABO exceed plan assets:that plan:
In Millions
December 312019
CMS Energy, including Consumers
PBO$1,736 
ABO1,398 
Fair value of plan assets1,205 
In Millions 
December 312019 2018 
CMS Energy, including Consumers    
PBO $1,736
 $1,363
ABO 1,398
 1,091
Fair value of plan assets 1,205
 1,059
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Items Not Yet Recognized as a Component of Net Periodic Benefit Cost: Presented in the following table are the amounts recognized in regulatory assets and AOCI that have not been recognized as components of net periodic benefit cost. For additional details on regulatory assets, see Note 3, Regulatory Matters.
In Millions 
 DB Pension Plans and DB SERP OPEB Plan
Years Ended December 312019 2018  2019 2018 
CMS Energy, including Consumers         
Regulatory assets         
Net loss $1,114
 $978
  $308
 $402
Prior service cost (credit) 8
 9
  (300) (361)
Regulatory assets $1,122
 $987
  $8
 $41
AOCI         
Net loss (gain) 105
 90
  (6) 2
Prior service credit —
 —
  (8) (9)
Total amounts recognized in regulatory assets and AOCI $1,227
 $1,077
  $(6) $34
Consumers         
Regulatory assets         
Net loss $1,114
 $978
  $308
 $402
Prior service cost (credit) 8
 9
  (300) (361)
Regulatory assets $1,122
 $987
  $8
 $41
AOCI         
Net loss 36
 27
  —
 —
Total amounts recognized in regulatory assets and AOCI $1,158
 $1,014
  $8
 $41

In Millions
DB Pension Plans and DB SERPOPEB Plan
December 312020201920202019
CMS Energy, including Consumers
Regulatory assets
Net loss$1,194 $1,114 $254 $308 
Prior service cost (credit)29 8 (246)(300)
Regulatory assets$1,223 $1,122 $8 $8 
AOCI
Net loss (gain)120 105 (10)(6)
Prior service cost (credit)1 0 (6)(8)
Total amounts recognized in regulatory assets and AOCI$1,344 $1,227 $(8)$(6)
Consumers
Regulatory assets
Net loss$1,194 $1,114 $254 $308 
Prior service cost (credit)29 8 (246)(300)
Regulatory assets$1,223 $1,122 $8 $8 
AOCI
Net loss47 36 0 0 
Total amounts recognized in regulatory assets and AOCI$1,270 $1,158 $8 $8 
Plan Assets: Presented in the following tables are the fair values of the assets of CMS Energy’s DB Pension Plans and OPEB Plan, by asset category and by level within the fair value hierarchy. For additional details regarding the fair value hierarchy, see Note 6, Fair Value Measurements.
In Millions
DB Pension Plans
December 31, 2020December 31, 2019
TotalLevel 1Level 2TotalLevel 1Level 2
CMS Energy, including Consumers
Cash and short-term investments$115 $115 $— $44 $44 $— 
U.S. government and agencies securities150 — 150 66 — 66 
Corporate debt540 — 540 493 — 493 
State and municipal bonds11 — 11 17 — 17 
Foreign corporate bonds41 — 41 33 — 33 
Mutual funds971 971 — 640 640 — 
$1,828 $1,086 $742 $1,293 $684 $609 
Pooled funds1,574 1,253 
Total$3,402 $2,546 
In Millions 
 DB Pension Plans
 December 31, 2019 December 31, 2018
 Total Level 1 Level 2  Total Level 1 Level 2 
CMS Energy, including Consumers
Cash and short-term investments $44
 $44
 $—
  $242
 $242
 $—
U.S. government and agencies securities 66
 —
 66
  11
 —
 11
Corporate debt 493
 —
 493
  400
 —
 400
State and municipal bonds 17
 —
 17
  6
 —
 6
Foreign corporate bonds 33
 —
 33
  35
 —
 35
Mutual funds 640
 640
 —
  552
 552
 —
  $1,293
 $684
 $609
  $1,246
 $794
 $452
Pooled funds 1,253
      1,001
    
Total $2,546
      $2,247
    


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In Millions 
 OPEB Plan
 December 31, 2019 December 31, 2018
 Total Level 1 Level 2  Total Level 1 Level 2 
CMS Energy, including Consumers
Cash and short-term investments $9
 $9
 $—
  $36
 $36
 $—
U.S. government and agencies securities 10
 —
 10
  2
 —
 2
Corporate debt 71
 —
 71
  55
 —
 55
State and municipal bonds 2
 —
 2
  1
 —
 1
Foreign corporate bonds 5
 —
 5
  5
 —
 5
Common stocks 55
 55
 —
  41
 41
 —
Mutual funds 713
 713
 —
  594
 594
 —
  $865
 $777
 $88
  $734
 $671
 $63
Pooled funds 644
      546
    
Total $1,509
      $1,280
    

In Millions
OPEB Plan
December 31, 2020December 31, 2019
TotalLevel 1Level 2TotalLevel 1Level 2
CMS Energy, including Consumers
Cash and short-term investments$33 $33 $— $9 $9 $— 
U.S. government and agencies securities18 — 18 10 — 10 
Corporate debt64 — 64 71 — 71 
State and municipal bonds2 — 2 2 — 2 
Foreign corporate bonds5 — 5 5 — 5 
Common stocks66 66 — 55 55 — 
Mutual funds807 807 — 713 713 — 
$995 $906 $89 $865 $777 $88 
Pooled funds650 644 
Total$1,645 $1,509 
Cash and Short-Term Investments: Cash and short-term investments consist of money market funds with daily liquidity.
U.S. Government and Agencies Securities: U.S. government and agencies securities consist of U.S. Treasury notes and other debt securities backed by the U.S. government and related agencies. These securities are valued based on quoted market prices.
Corporate Debt: Corporate debt investments consist of investment grade bonds of U.S. issuers from diverse industries. These securities are valued based on quoted market prices, when available, or yields available on comparable securities of issuers with similar credit ratings.
State and Municipal Bonds: State and municipal bonds are valued using a matrix-pricing model that incorporates Level 2 market-based information. The fair value of the bonds is derived from various observable inputs, including benchmark yields, reported securities trades, broker/dealer quotes, bond ratings, and general information on market movements for investment grade state and municipal securities normally considered by market participants when pricing such debt securities.
Foreign Corporate Bonds: Foreign corporate debt securities are valued based on quoted market prices, when available, or on yields available on comparable securities of issuers with similar credit ratings.
Common Stocks: Common stocks in the OPEB Plan consist of equity securities that are actively managed and tracked to the S&P 500 Index. These securities are valued at their quoted closing prices.
Mutual Funds: Mutual funds represent shares in registered investment companies that are priced based on the daily quoted net asset values that are publicly available and are the basis for transactions to buy or sell shares in the funds.
Pooled Funds: Pooled funds include both common and collective trust funds as well as special funds that contain only employee benefit plan assets from two or more unrelated benefit plans. These funds primarily consist of U.S. and foreign equity securities, but also include U.S. and foreign fixed-income securities and multi-asset investments. Since these investments are valued at their net asset value as a practical expedient, they are not classified in the fair value hierarchy.


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Asset Allocations: Presented in the following table are the investment components of the assets of CMS Energy’s DB Pension Plans and OPEB Plan as of December 31, 2019:2020:
 DB Pension Plans OPEB Plan 
Equity securities 55% 48%
Fixed-income securities 39
 33
Multi-asset investments 6
 19
  100% 100%

DB Pension PlansOPEB Plan
Equity securities55.0 %50.0 %
Fixed-income securities34.0 30.0 
Multi-asset investments11.0 20.0 
100.0 %100.0 %
CMS Energy’s target 2020 asset allocation for the assets of the DB Pension Plans iswas 53 percent equity, 35 percent fixed income, and 12 percent multi-asset investments. ThisThe goal of this target asset allocation is expected to continuewas to maximize the long-term return on plan assets, while maintaining a prudent level of risk. The level of acceptable risk is a function of the liabilities of the plan. Equity investments are diversified mostly across the S&P 500 Index, with lesser allocations to the S&P MidCap and SmallCap Indexes and Foreign Equity Funds. Fixed-income investments are diversified across investment grade instruments of government and corporate issuers as well as high-yield and global bond funds. Multi-assets are diversified across absolute return investment approaches and global tactical asset allocation, such as inflation protected securities, real estate investment trusts, commodities, currency, and preferred stock. CMS Energy uses annual liability measurements, quarterly portfolio reviews, and periodic asset/liability studies to evaluate the need for adjustments to the portfolio allocation.
CMS Energy established union and non‑union VEBA trusts to fund future retiree health and life insurance benefits. These trusts are funded through the ratemaking process for Consumers and through direct contributions from the non‑utility subsidiaries. CMS Energy’s target 2020 asset allocation for the health trusts iswas 50 percent equity, 30 percent fixed income, and 20 percent multi-asset investments. CMS Energy’s target asset allocation for the life trusts iswas 42 percent equity, 28 percent fixed income, and 30 percent multi-asset investments. TheseThe goal of these target allocations are expected to continuewas to maximize the long-term return on plan assets, while maintaining a prudent level of risk. The level of acceptable risk is a function of the liabilities of the plans. Equity investments are diversified mostly across the S&P 500 Index, with lesser allocations to the S&P SmallCap Index and Foreign Equity Funds. Fixed-income investments are diversified across investment grade instruments of government and corporate issuers. Multi-assets are diversified across absolute return investment approaches and global tactical asset allocation, such as inflation protected securities, real estate investment trusts, commodities, currency and preferred stock. CMS Energy uses annual liability measurements, quarterly portfolio reviews, and periodic asset/liability studies to evaluate the need for adjustments to the portfolio allocation.
Contributions: Presented in the following table are the contributions to CMS Energy’s and Consumers’ DB Pension Plans:Plans and OPEB Plan:
In Millions 
Years Ended December 312019 2018 
CMS Energy, including Consumers    
DB Pension Plans $—
 $240
Consumers    
DB Pension Plans $—
 $234

In Millions
Years Ended December 3120202019
CMS Energy, including Consumers
DB Pension Plans$700 $0 
OPEB Plan1 0 
Consumers
DB Pension Plans$682 $0 
OPEB Plan1 0 
Contributions comprise required amounts and discretionary contributions. Neither CMS Energy nor Consumers contributedplans to the OPEB Plan in 2019 and 2018. CMS Energy, including Consumers, contributed $531 millioncontribute to the DB Pension Plans in January 2020. Consumers contributed $518 million


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to the DB Pension Plans in January 2020. Neither CMS Energy nor Consumers plans to contribute to theor OPEB Plan in 2020.2021. Actual future
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contributions will depend on future investment performance, discount rates, and various factors related to the participants of the DB Pension Plans and OPEB Plan. CMS Energy and Consumers will, at a minimum, contribute to the plans as needed to comply with federal funding requirements.
Benefit Payments: Presented in the following table are the expected benefit payments for each of the next five years and the five-year period thereafter:
In Millions 
 DB Pension Plans DB SERP OPEB Plan 
CMS Energy, including Consumers      
2020 $174
 $10
 $58
2021 176
 10
 60
2022 177
 10
 62
2023 177
 10
 63
2024 175
 10
 64
2025-2029 870
 46
 319
Consumers      
2020 $165
 $7
 $56
2021 166
 7
 58
2022 167
 7
 59
2023 167
 7
 60
2024 166
 7
 61
2025-2029 825
 32
 305

In Millions
DB Pension PlansDB SERPOPEB Plan
CMS Energy, including Consumers
2021$191 $10 $52 
2022188 10 54 
2023184 10 56 
2024182 10 57 
2025182 10 58 
2026-2030890 46 299 
Consumers
2021$181 $7 $50 
2022178 7 52 
2023175 7 53 
2024173 7 55 
2025172 7 56 
2026-2030845 32 286 
Collective Bargaining Agreements: At December 31, 2019,2020, unions represented 3541 percent of CMS Energy’s employees and 3744 percent of Consumers’ employees. The UWUA represents Consumers’ operating, maintenance, construction, and callcustomer contact center employees. The USW represents Zeeland plant employees. UnionThe UWUA and USW agreements expired and new agreements were ratified in 2020. These union contracts expire in 2020.2025.
13:Stock-Based Compensation
13:    Stock-Based Compensation
CMS Energy and Consumers provide a PISP to officers, employees, and non‑employee directors based on their contributions to the successful management of the company. The PISP has a ten-year term, expiring in May 2024.2030.
In 2019,2020, all awards were in the form of restricted stock or restricted stock units. The PISP also allows for unrestricted common stock, stock options, stock appreciation rights, phantom shares, performance units, and incentive options, none of which was granted in 2020, 2019, 2018, or 2017.2018.
Shares awarded or subject to stock options, phantom shares, or performance units may not exceed 6.5 million shares from June 20142020 through May 2024, nor may such awards to any recipient exceed 500,000 shares in any calendar year.2030. CMS Energy and Consumers may issue awards of up to 3,258,0006,477,579 shares of common stock under the PISP as of December 31, 2019.2020. Shares for which payment or exercise is in cash, as well as shares that expire, terminate, or are canceled or forfeited, may be awarded or granted again under the PISP.


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All awards under the PISP vest fully upon death. Upon a change of control of CMS Energy or termination under an officer separation agreement, the awards will vest in accordance with specific officer
159
agreements. If stated in the award, for restricted stock recipients who terminate employment due to retirement or disability, a pro-rata portion of the award will vest upon termination, with any market-based award also contingent upon the outcome of the market condition and any performance-based award contingent upon the outcome of the performance condition. The pro-rata portion is equal to the portion of the service period served between the award grant date and the employee’s termination date. The remaining portion of the awards will be forfeited. All awards for directors vest fully upon retirement. Restricted shares may be forfeited if employment terminates for any other reason or if the minimum service requirements are not met, as described in the award document.
Restricted Stock Awards: Restricted stock awards for employees under the PISP are in the form of performance-based, market-based, and time-lapse restricted stock. Award recipients receive shares of CMS Energy common stock that have dividend and voting rights. The dividends on time-lapse restricted stock are paid in cash or in CMS Energy common stock. The dividends on performance-based and market-based restricted stock are paid in restricted shares equal to the value of the dividends. These additional restricted shares are subject to the same vesting conditions as the underlying restricted stock shares.
Performance-based restricted stock vesting is contingent on meeting at least a 36-month service requirement and a performance condition. The performance condition is based on an adjusted measure of CMS Energy’s EPS growth relative to a peer group over a three-year period. The awards granted in 2020, 2019, 2018, and 20172018 require a 38-month service period. Market-based restricted stock vesting is generally contingent on meeting a three-year service requirement and a market condition. The market condition is based on a comparison of CMS Energy’s total shareholder return with the median total shareholder return of a peer group over the same three-year period. Depending on the outcome of the performance condition or the market condition, a recipient may earn a total award ranging from 0 to 200 percent of the initial grant. Time-lapse restricted stock generally vests after a service period of three years.
Restricted Stock Units: In 2020, 2019, 2018, and 2017,2018, CMS Energy and Consumers granted restricted stock units to certain non‑employee directors who elected to defer their restricted stock awards. The restricted stock units generally vest after a service period of one year or, if earlier, at the next annual meeting. The restricted stock units will be distributed to the recipients as shares in accordance with the directors’ deferral agreements. Restricted stock units do not have voting rights, but do have dividend rights. In lieu of cash dividend payments, the dividends on restricted stock units are paid in additional units equal to the value of the dividends. These additional restricted stock units are subject to the same vesting and distribution conditions as the underlying restricted stock units. NaN restricted stock units were forfeited during 2019.2020.


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Presented in the following tables is the activity for restricted stock and restricted stock units under the PISP:
CMS Energy, including ConsumersConsumers
Year Ended December 31, 2020Number of
Shares		Weighted-Average
Grant Date Fair Value
per Share		Number of
Shares		Weighted-Average
Grant Date Fair Value
per Share
Nonvested at beginning of period1,186,962 $44.56 1,138,182 $44.57 
Granted
Restricted stock512,326 45.56 490,346 45.53 
Restricted stock units15,074 49.76 14,409 49.70 
Vested
Restricted stock(551,897)30.98 (532,833)31.04 
Restricted stock units(15,234)49.24 (14,517)49.50 
Forfeited – restricted stock(329,874)51.22 (314,056)51.22 
Nonvested at end of period817,357 $51.68 781,531 $51.73 
 CMS Energy, including Consumers Consumers
Year Ended December 31, 2019 Number of Shares
Weighted-Average Grant Date Fair Value per Share  Number of Shares
Weighted-Average Grant Date Fair Value per Share 
Nonvested at beginning of period 1,211,229
 $39.70
 1,158,836
 $39.71
Granted        
Restricted stock 488,594
 43.57
 464,485
 43.57
Restricted stock units 14,899
 50.35
 14,050
 51.15
Vested        
Restricted stock (468,308) 31.09
 (447,214) 31.11
Restricted stock units (12,503) 41.59
 (11,836) 42.35
Forfeited – restricted stock (46,949) 45.81
 (40,139) 45.69
Nonvested at end of period 1,186,962
 $44.56
 1,138,182
 $44.57
Year Ended December 31, 2019CMS Energy, including Consumers
Consumers
Granted  
Time-lapse awards119,167
113,627
Market-based awards144,963
137,636
Performance-based awards144,963
137,636
Director restricted stock units13,575
13,005
Dividend equivalents on market-based awards12,779
12,176
Dividend equivalents on performance-based awards15,899
15,145
Dividend equivalents on restricted stock units1,324
1,045
Additional market-based shares based on achievement of condition15,320
14,550
Additional performance-based shares based on achievement of condition35,503
33,715
Total granted503,493
478,535

Year Ended December 31, 2020CMS Energy, including
Consumers		Consumers
Granted
Time-lapse awards106,520 101,439 
Market-based awards123,246 118,011 
Performance-based awards123,246 118,011 
Restricted stock units13,405 12,800 
Dividends on market-based awards17,937 17,152 
Dividends on performance-based awards17,505 16,736 
Dividends on restricted stock units1,669 1,609 
Additional market-based shares based on achievement of condition71,678 68,857 
Additional performance-based shares based on achievement of condition52,194 50,140 
Total granted527,400 504,755 
CMS Energy and Consumers charge the fair value of the restricted stock awards to expense over the required service period and charge the fair value of the restricted stock units to expense immediately. For performance-based awards, CMS Energy and Consumers estimate the number of shares expected to vest at the end of the performance period based on the probable achievement of the performance objective. Performance-based and market-based restricted stock awards have graded vesting features for retirement-eligible employees, and CMS Energy and Consumers recognize expense for those awards on a graded vesting schedule over the required service period. Expense for performance-based and market-based restricted stock awards for non‑retirement-eligible employees and time-lapse awards is recognized on a straight-line basis over the required service period.
The fair value of performance-based and time-lapse restricted stock and restricted stock units is based on the price of CMS Energy’s common stock on the grant date. The fair value of market-based restricted stock awards is calculated on the grant date using a Monte Carlo simulation. CMS Energy and Consumers base expected volatilities on the historical volatility of the price of CMS Energy common stock. The risk-free rate for valuation of the market-based restricted stock awards was based on the three-year U.S. Treasury yield at the award grant date.


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Presented in the following table are the most importantsignificant assumptions used to estimate the fair value of the market-based restricted stock awards:
Years Ended December 312019
2018
2017
Expected volatility14.9%16.7%18.0%
Expected dividend yield2.8
2.8
3.0
Risk-free rate2.5
2.1
1.5

Years Ended December 31202020192018
Expected volatility14.2 %14.9 %16.7 %
Expected dividend yield2.4 2.8 2.8 
Risk-free rate1.6 2.5 2.1 
Presented in the following table is the weighted-average grant-date fair value of all awards under the PISP:
Years Ended December 312019 2018 2017 
CMS Energy, including Consumers      
Weighted-average grant-date fair value per share      
Restricted stock granted $43.57
 $26.49
 $28.61
Restricted stock units granted 50.35
 41.77
 41.98
Consumers      
Weighted-average grant-date fair value per share      
Restricted stock granted $43.57
 $26.51
 $28.67
Restricted stock units granted 51.15
 42.01
 41.97

In Millions
Years Ended December 31202020192018
CMS Energy, including Consumers
Weighted-average grant-date fair value per share
Restricted stock granted$45.56 $43.57 $26.49 
Restricted stock units granted49.76 50.35 41.77 
Consumers
Weighted-average grant-date fair value per share
Restricted stock granted$45.53 $43.57 $26.51 
Restricted stock units granted49.70 51.15 42.01 
Presented in the following table are amounts related to restricted stock awards and restricted stock units:
In Millions 
Years Ended December 31 2019
 2018
 2017
CMS Energy, including Consumers      
Fair value of shares that vested during the year $26
 $27
 $37
Compensation expense recognized 22
 17
 17
Income tax benefit recognized 1
 1
 7
Consumers      
Fair value of shares that vested during the year $25
 $26
 $35
Compensation expense recognized 21
 16
 16
Income tax benefit recognized 1
 1
 7

In Millions
Years Ended December 31202020192018
CMS Energy, including Consumers
Fair value of shares that vested during the year$22 $26 $27 
Compensation expense recognized11 22 17 
Income tax benefit recognized3 1 1 
Consumers
Fair value of shares that vested during the year$21 $25 $26 
Compensation expense recognized10 21 16 
Income tax benefit recognized3 1 1 
At December 31, 2019, $21.72020, $18.5 million of total unrecognized compensation cost was related to restricted stock for CMS Energy, including Consumers, and $20.8$17.7 million of total unrecognized compensation cost was related to restricted stock for Consumers. CMS Energy and Consumers expect to recognize this cost over a weighted-average period of two years.


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14:    Income Taxes
14:Income Taxes
CMS Energy and its subsidiaries file a consolidated U.S. federal income tax return as well as a Michigan Corporate Income Tax return for the unitary business group and various other state unitary group combined income tax returns. Income taxes are allocated based on each company’s separate taxable income in accordance with the CMS Energy tax sharing agreement.
In December 2017, the TCJA was enacted, which changed existing federal tax law and included numerous provisions that affect businesses, with the primary impact being a reduction of the corporate tax rate from 35 percent to 21 percent.
Presented in the following table is the difference between actual income tax expense on continuing operations and income tax expense computed by applying the statutory U.S. federal income tax rate:
In Millions, Except Tax Rate
Years Ended December 31202020192018
CMS Energy, including Consumers
Income from continuing operations before income taxes$885 $829 $774 
Income tax expense at statutory rate186 174 163 
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect46 48 46 
TCJA excess deferred taxes1
(35)(31)(26)
Production tax credits(28)(20)(14)
Accelerated flow-through of regulatory tax benefits2
(13)(13)(39)
Research and development tax credits, net3
(11)(2)(11)
Refund of alternative minimum tax sequestration4
(9)0 0 
Other, net(3)(9)(4)
Income tax expense$133 $147 $115 
Effective tax rate15.0 %17.7 %14.9 %
Consumers
Income from continuing operations before income taxes$989 $928 $847 
Income tax expense at statutory rate208 195 178 
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect47 53 51 
TCJA excess deferred taxes1
(35)(31)(26)
Accelerated flow-through of regulatory tax benefits2
(13)(13)(39)
Production tax credits(19)(12)(12)
Research and development tax credits, net3
(11)(2)(11)
Other, net(4)(5)1 
Income tax expense$173 $185 $142 
Effective tax rate17.5 %19.9 %16.8 %
In Millions, Except Tax Rate 
Years Ended December 312019 2018 2017 
CMS Energy, including Consumers      
Income from continuing operations before income taxes $829
 $774
 $886
Income tax expense at statutory rate 174
 163
 310
Increase (decrease) in income taxes from:      
State and local income taxes, net of federal effect1
 48
 46
 26
TCJA excess deferred taxes2
 (31) (26) —
Production tax credits (20) (14) (8)
Accelerated flow-through of regulatory tax benefits3
 (13) (39) (39)
Research and development tax credits, net4
 (2) (11) (1)
Impact of the TCJA5
 —
 (4) 148
Other, net (9) —
 (12)
Income tax expense $147
 $115
 $424
Effective tax rate 17.7% 14.9% 47.9%
Consumers      
Income from continuing operations before income taxes $928
 $847
 $971
Income tax expense at statutory rate 195
 178
 340
Increase (decrease) in income taxes from:      
State and local income taxes, net of federal effect1
 53
 51
 30
TCJA excess deferred taxes2
 (31) (26) —
Accelerated flow-through of regulatory tax benefits3
 (13) (39) (39)
Production tax credits (12) (12) (8)
Research and development tax credits, net4
 (2) (11) (1)
Impact of the TCJA5
 —
 1
 33
Other, net (5) —
 (16)
Income tax expense $185
 $142
 $339
Effective tax rate 19.9% 16.8% 34.9%

1In December 2017, Consumers remeasured its deferred tax assets and liabilities at the new federal tax rate enacted by the TCJA and recorded a net $1.6 billion regulatory liability. As a result of an order received in September 2019, Consumers began refunding these excess deferred taxes to customers. In September 2020, the MPSC approved a settlement agreement in Consumers’ 2019 gas rate case including Consumers’ request to accelerate the amortization of its regulatory liability associated with the unprotected, non‑property-related excess deferred income taxes resulting from the TCJA. Consumers will increase its TCJA amortization to fully refund this regulatory liability during the period October 2021 through September 2022 instead of the previous amortization schedule through 2029.
1
2In 2013, the MPSC issued an order authorizing Consumers to accelerate the flow-through to electric and gas customers of certain income tax benefits associated primarily with the cost of removal of plant placed
In 2017, CMS Energy completed the evaluation of its methodology for the state apportionment of Consumers’ electricity sales to MISO, taking into account recent state tax law developments in the electric utility sector. To recognize the anticipated refund and the impact of the expected lower effective tax rate on their deferred state tax liabilities, CMS Energy, including Consumers, recorded a $14 million income tax benefit in 2017. These tax benefits were net of reserves for uncertain tax positions and primarily


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in service before 1993. Consumers implemented this regulatory treatment beginning in 2014, with the electric portion ending in 2018 and the gas portion expected to continue through 2025. In September 2020, the MPSC approved a settlement agreement in Consumers’ 2019 gas rate case including Consumers’ request to accelerate the amortization of this income tax benefit to fully amortize the balance during the period October 2021 through September 2022 instead of the previous amortization schedule through 2025.
attributable to Consumers. 3In 2018,March 2020, CMS Energy amendedfinalized a study of research and development tax credits for tax years 2012 through 2018. As a result, in 2020, CMS Energy, including Consumers, recognized a $9 million increase in the credit, net of reserves for uncertain tax positions. Of this amount, $8 million was recognized at Consumers. Also, in March 2018, Consumers finalized a study of research and development tax credits for the tax years 2012 through 2016. As a result, CMS Energy and Consumers recognized an $8 million increase in the credit, net of reserves for uncertain tax positions, at that time.
4In January 2020, the IRS issued a decision restoring alternative minimum tax credit refunds sequestered in years prior to 2018. As a result, in 2020, CMS Energy recognized a $9 million income tax benefit for sequestered amounts related to its 2013 Michigan Corporate Income Tax return and submitted a refund claim for taxes previously paid. The refund claim was denied by the State of Michigan. In 2019,2017 tax return. CMS Energy received an unfavorable informal conference decision and filed a petition with the Michigan Tax Tribunal. A trial is anticipatedrefund in April 2020. CMS Energy’s uncertain tax position on this matter remains unchanged.
2
In December 2017, Consumers remeasured its deferred tax assets and liabilities at the new federal tax rate enacted by the TCJA and recorded a net $1.6 billion regulatory liability. As a result of an order received in September 2019, Consumers began refunding these excess deferred taxes to customers. For additional details on the order received, see Note 3, Regulatory Matters.
3
In 2013, the MPSC issued an order authorizing Consumers to accelerate the flow-through to electric and gas customers of certain income tax benefits associated primarily with the cost of removal of plant placed in service before 1993. Consumers implemented this regulatory treatment beginning in 2014, with the electric portion ending in 2018 and the gas portion continuing through 2025.
4
In March 2018, Consumers finalized a study of research and development tax credits for the tax years 2012 through 2016. As a result, Consumers recognized an $8 million increase in the credit, net of reserves for uncertain tax positions, at that time.
5
In December 2017, CMS Energy and Consumers recorded a reasonable estimate to measure and account for the impact of the TCJA. In December 2018, CMS Energy recorded a true-up of their estimate and eliminated the $9 million valuation allowance on the sequestration of alternative minimum tax credits.


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Presented in the following table are the significant components of income tax expense on continuing operations:
In MillionsIn Millions In Millions
Years Ended December 312019 2018 2017 Years Ended December 31202020192018
CMS Energy, including Consumers      CMS Energy, including Consumers
Current income taxes      Current income taxes
Federal $(31) $(67) $—
Federal$(35)$(31)$(67)
State and local 28
 —
 6
State and local(2)28 0 
 $(3) $(67) $6
$(37)$(3)$(67)
Deferred income taxes      Deferred income taxes
Federal $97
 $112
 $368
Federal115 97 112 
State and local 32
 58
 36
State and local60 32 58 
 $129
 $170
 $404
$175 $129 $170 
Deferred income tax credit 21
 12
 14
Deferred income tax credit(5)21 12 
Tax expense $147
 $115
 $424
Tax expense$133 $147 $115 
Consumers      Consumers
Current income taxes      Current income taxes
Federal $107
 $6
 $159
Federal$3 $107 $6 
State and local 41
 13
 17
State and local(7)41 13 
 $148
 $19
 $176
$(4)$148 $19 
Deferred income taxes      Deferred income taxes
Federal $(10) $60
 $120
Federal115 (10)60 
State and local 26
 51
 29
State and local67 26 51 
 $16
 $111
 $149
$182 $16 $111 
Deferred income tax credit 21
 12
 14
Deferred income tax credit(5)21 12 
Tax expense $185
 $142
 $339
Tax expense$173 $185 $142 

For the year ended December 31, 2017, the impact of the TCJA was a $148 million increase in deferred income tax expense at CMS Energy, including Consumers, and a $33 million increase in deferred income tax expense at Consumers. The TCJA had no impact on current income tax expense in 2017.


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Presented in the following table are the principal components of deferred income tax assets (liabilities) recognized:
In Millions 
December 312019 2018 
CMS Energy, including Consumers    
Deferred income tax assets    
Tax loss and credit carryforwards $239
 $385
Net regulatory tax liability 385
 395
Reserves and accruals 43
 39
Total deferred income tax assets $667
 $819
Valuation allowance (2) (8)
Total deferred income tax assets, net of valuation allowance $665
 $811
Deferred income tax liabilities    
Plant, property, and equipment $(2,033) $(1,955)
Employee benefits (172) (165)
Securitized costs (59) (65)
Gas inventory (32) (35)
Other (24) (78)
Total deferred income tax liabilities $(2,320) $(2,298)
Total net deferred income tax liabilities $(1,655) $(1,487)
Consumers    
Deferred income tax assets    
Net regulatory tax liability $385
 $395
Tax loss and credit carryforwards 20
 64
Reserves and accruals 24
 21
Total deferred income tax assets $429
 $480
Deferred income tax liabilities    
Plant, property, and equipment $(1,995) $(1,943)
Employee benefits (178) (172)
Securitized costs (59) (65)
Gas inventory (32) (35)
Other (29) (74)
Total deferred income tax liabilities $(2,293) $(2,289)
Total net deferred income tax liabilities $(1,864) $(1,809)

In Millions
December 3120202019
CMS Energy, including Consumers
Deferred income tax assets
Tax loss and credit carryforwards$483 $239 
Net regulatory tax liability372 385 
Reserves and accruals62 43 
Total deferred income tax assets$917 $667 
Valuation allowance(1)(2)
Total deferred income tax assets, net of valuation allowance$916 $665 
Deferred income tax liabilities
Plant, property, and equipment$(2,287)$(2,033)
Employee benefits(364)(172)
Securitized costs(53)(59)
Gas inventory(24)(32)
Other(51)(24)
Total deferred income tax liabilities$(2,779)$(2,320)
Total net deferred income tax liabilities$(1,863)$(1,655)
Consumers
Deferred income tax assets
Net regulatory tax liability$372 $385 
Tax loss and credit carryforwards216 20 
Reserves and accruals24 24 
Total deferred income tax assets$612 $429 
Deferred income tax liabilities
Plant, property, and equipment$(2,230)$(1,995)
Employee benefits(365)(178)
Securitized costs(53)(59)
Gas inventory(24)(32)
Other(34)(29)
Total deferred income tax liabilities$(2,706)$(2,293)
Total net deferred income tax liabilities$(2,094)$(1,864)
Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary differences between the tax basis of assets or liabilities and the reported amounts on CMS Energy’s and Consumers’ consolidated financial statements.


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Presented in the following table are the tax loss and credit carryforwards at December 31, 2019:2020:
In Millions
 Gross Amount Tax Attribute Expiration
CMS Energy, including Consumers     
Local net operating loss carryforwards $389
 $4
2023 – 2036 
General business credits 206
 206
2026 – 2039
Alternative minimum tax credits 29
 29
Not applicable
Total tax attributes   $239
 
Consumers     
General business credits $20
 $20
2027 – 2039
Total tax attributes   $20
 

In Millions
Gross AmountTax AttributeExpiration
CMS Energy, including Consumers
Federal net operating loss carryforwards$747 $157 None
State net operating loss carryforwards1,241 78 2030
Local net operating loss carryforwards346 3 2024 – 2040
General business credits245 245 2026 – 2040
Total tax attributes$483 
Consumers
Federal net operating loss carryforwards$505 $106 None
State net operating loss carryforwards1,026 61 2030
General business credits49 49 2027 – 2040
Total tax attributes$216 
CMS Energy has provided a valuation allowance of $2$1 million for the local tax loss carryforward. The TCJA repealed the corporate alternative minimum tax and requires companies to recover (through offsets of regular tax and through cash refunds) all alternative minimum tax credits over the four-year period ending in 2021. Therefore, for the year ended December 31, 2019, CMS Energy reclassified $31 million of alternative minimum tax credits to a current receivable.
CMS Energy and Consumers expect to utilize fully their tax loss and credit carryforwards for which no valuation allowance has been provided. It is reasonably possible that further adjustments will be made to the valuation allowances within one year.
As a result of a provision in the TCJA, as amended by the CARES Act, CMS Energy recovered all of its remaining alternative minimum tax credits in 2020. CMS Energy utilized $7 million of these credits on its 2019 consolidated tax return, and received the remaining $69 million through a cash refund.
Presented in the following table is a reconciliation of the beginning and ending amount of uncertain tax benefits:
In Millions 
Years Ended December 312019 2018 2017 
CMS Energy, including Consumers      
Balance at beginning of period $19
 $14
 $5
Additions for current-year tax positions 1
 1
 10
Additions for prior-year tax positions 3
 4
 —
Reductions for prior-year tax positions —
 —
 (1)
Balance at end of period $23
 $19
 $14
Consumers      
Balance at beginning of period $28
 $21
 $5
Additions for current-year tax positions 1
 2
 17
Additions for prior-year tax positions 5
 5
 —
Reductions for prior-year tax positions —
 —
 (1)
Balance at end of period $34
 $28
 $21

In Millions
Years Ended December 31202020192018
CMS Energy, including Consumers
Balance at beginning of period$23 $19 $14 
Additions for current-year tax positions1 1 1 
Additions for prior-year tax positions3 3 4 
Reductions for prior-year tax positions(2)0 0 
Balance at end of period$25 $23 $19 
Consumers
Balance at beginning of period$34 $28 $21 
Additions for current-year tax positions1 1 2 
Additions for prior-year tax positions4 5 5 
Reductions for prior-year tax positions(8)0 0 
Balance at end of period$31 $34 $28 
If recognized, all of these uncertain tax benefits would affect CMS Energy’s and Consumers’ annual effective tax rates in future years. A trial is anticipated in 2021 with the Michigan Tax Tribunal related to the methodology of state apportionment for Consumers’ electricity sales to MISO. A favorable outcome
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of the court case or a potential settlement could result in a tax benefit of up to $9 million in the next 12 months.
CMS Energy and Consumers recognize accrued interest and penalties, where applicable, as part of income tax expense. CMS Energy, including Consumers, recognized 0 interest or penalties for the years ended December 31, 2020, 2019, 2018, or 2017.


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2018.
The amount of income taxes paid is subject to ongoing audits by federal, state, local, and foreign tax authorities, which can result in proposed assessments. CMS Energy’s federal income tax returns for 20162017 and subsequent years remain subject to examination by the IRS. CMS Energy’s Michigan Corporate Income Tax returns for 2013 and subsequent years remain subject to examination by the State of Michigan. CMS Energy’s and Consumers’ estimate of the potential outcome for any uncertain tax issue is highly judgmental. CMS Energy and Consumers believe that their accrued tax liabilities at December 31, 20192020 were adequate for all years.
15:Earnings Per Share—CMS Energy
15:    Earnings Per Share—CMS Energy
Presented in the following table are CMS Energy’s basic and diluted EPS computations based on net income:
In Millions, Except Per Share Amounts 
Years Ended December 312019 2018 2017 
Income available to common stockholders      
Net income $682
 $659
 $462
Less income attributable to noncontrolling interests 2
 2
 2
Net income available to common stockholders – basic and diluted $680
 $657
 $460
Average common shares outstanding      
Weighted-average shares – basic 283.0
 282.2
 280.0
Add dilutive nonvested stock awards 0.7
 0.7
 0.8
Add dilutive forward equity sale contracts 0.6
 —
 —
Weighted-average shares – diluted 284.3
 282.9
 280.8
Net income per average common share available to common stockholders      
Basic $2.40
 $2.33
 $1.64
Diluted 2.39
 2.32
 1.64

In Millions, Except Per Share Amounts
Years Ended December 31202020192018
Income available to common stockholders
Net income$752 $682 $659 
Less income (loss) attributable to noncontrolling interests(3)2 2 
Net income available to common stockholders – basic and diluted$755 $680 $657 
Average common shares outstanding
Weighted-average shares – basic285.0 283.0 282.2 
Add dilutive nonvested stock awards0.7 0.7 0.7 
Add dilutive forward equity sale contracts0.6 0.6 0 
Weighted-average shares – diluted286.3 284.3 282.9 
Net income per average common share available to common stockholders
Basic$2.65 $2.40 $2.33 
Diluted2.64 2.39 2.32 
Nonvested Stock Awards
CMS Energy’s nonvested stock awards are composed of participating and non‑participating securities. The participating securities accrue cash dividends when common stockholders receive dividends. Since the recipient is not required to return the dividends to CMS Energy if the recipient forfeits the award, the nonvested stock awards are considered participating securities. As such, the participating nonvested stock awards were included in the computation of basic EPS. The non‑participating securities accrue stock dividends that vest concurrently with the stock award. If the recipient forfeits the award, the stock dividends accrued on the non‑participating securities are also forfeited. Accordingly, the non‑participating awards and stock dividends were included in the computation of diluted EPS, but not in the computation of basic EPS.
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Forward Equity Sale Contracts
In November 2018 and February 2019, CMS Energy has entered into forward equity sale contracts. These forward equity sale contracts are non‑participating securities. While the forward sale price in the forward equity sale contract is decreased on certain dates by certain predetermined amounts to reflect expected dividend payments, these price adjustments were set upon inception of the agreement and the forward contract does not give the owner the right to participate in undistributed earnings. Accordingly, the forward equity sale contracts were included in the computation of diluted EPS, but not in the computation


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of basic EPS. For further details on the forward equity sale contracts, see Note 5, Financings and Capitalization.
16:Revenue
16:    Revenue
Presented in the following tables are the components of operating revenue:
In Millions
Year Ended December 31, 2020Electric UtilityGas Utility
Enterprises1
EnerBankConsolidated
CMS Energy, including Consumers
Consumers utility revenue$4,348 $1,809 $— $— $6,157 
Other— — 81 — 81 
Revenue recognized from contracts with customers$4,348 $1,809 $81 $— $6,238 
Leasing income— — 148 — 148 
Financing income11 6 — 262 279 
Consumers alternative-revenue programs29 14 — — 43 
Consumers revenues to be refunded(16)(12)— — (28)
Total operating revenue – CMS Energy$4,372 $1,817 $229 $262 $6,680 
Consumers
Consumers utility revenue
Residential$2,109 $1,232 $3,341 
Commercial1,444 337 1,781 
Industrial570 46 616 
Other225 194 419 
Revenue recognized from contracts with customers$4,348 $1,809 $6,157 
Financing income11 6 17 
Alternative-revenue programs29 14 43 
Revenues to be refunded(16)(12)(28)
Total operating revenue – Consumers$4,372 $1,817 $6,189 
1Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities.
In Millions 
Year Ended December 31, 2019Electric Utility Gas Utility 
Enterprises1
 EnerBank Consolidated 
CMS Energy, including Consumers
Consumers utility revenue $4,407
 $1,922
 $—
 $—
 $6,329
Other —
 —
 74
 —
 74
Revenue recognized from contracts with customers $4,407
 $1,922
 $74
 $—
 $6,403
Leasing income —
 —
 174
 —
 174
Financing income 9
 5
 —
 221
 235
Consumers alternative-revenue programs 23
 10
 —
 —
 33
Total operating revenue – CMS Energy $4,439
 $1,937
 $248
 $221
 $6,845
Consumers
Consumers utility revenue          
Residential $1,988
 $1,316
 $—
 $—
 $3,304
Commercial 1,502
 372
 —
 —
 1,874
Industrial 669
 51
 —
 —
 720
Other 248
 183
 —
 —
 431
Revenue recognized from contracts with customers $4,407
 $1,922
 $—
 $—
 $6,329
Financing income 9
 5
 —
 —
 14
Alternative-revenue programs 23
 10
 —
 —
 33
Total operating revenue – Consumers $4,439
 $1,937
 $—
 $—
 $6,376
1
Amounts represent the enterprises segment’s operating revenue from independent power production and CMS ERM’s sales of energy commodities in support of the independent power production portfolio.


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In Millions
Year Ended December 31, 2019Electric UtilityGas Utility
Enterprises1
EnerBankConsolidated
CMS Energy, including Consumers
Consumers utility revenue$4,407 $1,922 $— $— $6,329 
Other— — 74 — 74 
Revenue recognized from contracts with customers$4,407 $1,922 $74 $— $6,403 
Leasing income— — 174 — 174 
Financing income9 5 — 221 235 
Consumers alternative-revenue programs23 10 — — 33 
Total operating revenue – CMS Energy$4,439 $1,937 $248 $221 $6,845 
Consumers
Consumers utility revenue
Residential$1,988 $1,316 $3,304 
Commercial1,502 372 1,874 
Industrial669 51 720 
Other248 183 431 
Revenue recognized from contracts with customers$4,407 $1,922 $6,329 
Financing income9 5 14 
Alternative-revenue programs23 10 33 
Total operating revenue – Consumers$4,439 $1,937 $6,376 
1Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities.
In Millions 
Year Ended December 31, 2018Electric Utility Gas Utility 
Enterprises1
 EnerBank Consolidated 
CMS Energy, including Consumers
Consumers utility revenue $4,528
 $1,882
 $—
 $—
 $6,410
Other —
 —
 92
 —
 92
Revenue recognized from contracts with customers $4,528
 $1,882
 $92
 $—
 $6,502
Leasing income —
 —
 160
 —
 160
Financing income 10
 5
 —
 157
 172
Consumers alternative-revenue programs 23
 16
 —
 —
 39
Total operating revenue – CMS Energy $4,561
 $1,903
 $252
 $157
 $6,873
Consumers
Consumers utility revenue          
Residential $2,049
 $1,284
 $—
 $—
 $3,333
Commercial 1,545
 367
 —
 —
 1,912
Industrial 674
 55
 —
 —
 729
Other 260
 176
 —
 —
 436
Revenue recognized from contracts with customers $4,528
 $1,882
 $—
 $—
 $6,410
Financing income 10
 5
 —
 —
 15
Alternative-revenue programs 23
 16
 —
 ���
 39
Total operating revenue – Consumers $4,561
 $1,903
 $—
 $—
 $6,464
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1
In Millions
Year Ended December 31, 2018Electric UtilityGas Utility
Enterprises1
EnerBankConsolidated
CMS Energy, including Consumers
Consumers utility revenue$4,528 $1,882 $— $— $6,410 
Other— — 92 — 92 
Revenue recognized from contracts with customers$4,528 $1,882 $92 $— $6,502 
Leasing income— — 160 — 160 
Financing income10 5 — 157 172 
Consumers alternative-revenue programs23 16 — — 39 
Total operating revenue – CMS Energy$4,561 $1,903 $252 $157 $6,873 
Consumers
Consumers utility revenue
Residential$2,049 $1,284 $3,333 
Commercial1,545 367 1,912 
Industrial674 55 729 
Other260 176 436 
Revenue recognized from contracts with customers$4,528 $1,882 $6,410 
Financing income10 5 15 
Alternative-revenue programs23 16 39 
Total operating revenue – Consumers$4,561 $1,903 $6,464 
1Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities.
Amounts represent the enterprises segment’s operating revenue from independent power production and CMS ERM’s sales of energy commodities in support of the independent power production portfolio.
Electric and Gas Utilities
Consumers Utility Revenue: Consumers recognizes revenue primarily from the sale of electric and gas utility services at tariff-based rates regulated by the MPSC. Consumers’ customer base consists of a mix of residential, commercial, and diversified industrial customers. Consumers’ tariff-based sales performance obligations are described below.
•Consumers has performance obligations for the service of standing ready to deliver electricity or natural gas to customers, and it satisfies these performance obligations over time. Consumers recognizes revenue at a fixed rate as it provides these services. These arrangements generally do not have fixed terms and remain in effect as long as the customer consumes the utility service. The rates are set by the MPSC through the rate-making process and represent the stand-alone selling price of Consumers’ service to stand ready to deliver.
•Consumers has performance obligations for the service of delivering the commodity of electricity or natural gas to customers, and it satisfies these performance obligations upon delivery. Consumers recognizes revenue at a price per unit of electricity or natural gas delivered, based on the tariffs established by the MPSC. These arrangements generally do not have fixed terms and remain in effect as long as the customer consumes the utility service. The rates are set by the MPSC through the rate-making process and represent the stand-alone selling price of a bundled product comprising the commodity, electricity or natural gas, and the service of delivering such commodity.


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In some instances, Consumers has specific fixed-term contracts with large commercial and industrial customers to provide electricity or gas at certain tariff rates or to provide gas transportation services at contracted rates. The amount of electricity and gas to be delivered under these contracts and the associated future revenue to be received are generally dependent on the customers’ needs. Accordingly, Consumers recognizes revenues at the tariff or contracted rate as electricity or gas is delivered to the customer. Consumers also has other miscellaneous contracts with customers related to pole and other property rentals, appliance service plans, and utility contract work. Generally, these contracts are short term or evergreen in nature.
Accounts Receivable and Unbilled Revenues: Accounts receivable comprise trade receivables and unbilled receivables. CMS Energy and Consumers record their accounts receivable at cost which approximates fair value.less an allowance for uncollectible accounts. The allowance is increased for uncollectible accounts expense and decreased for account write-offs net of recoveries. CMS Energy and Consumers establish anthe allowance for uncollectible accounts based on historical losses, management’s assessment of existing economic conditions, customer payment trends, and other factors.reasonable and supported forecast information. CMS Energy and Consumers assess late payment fees on trade receivables based on contractual past-due terms established with customers. Accounts are written off when deemed uncollectible, which is generally when they become six months past due.
CMS Energy and Consumers charge offrecorded uncollectible accounts deemed uncollectible to operating expense. Uncollectible expense for CMS Energy and Consumers was $29of $33 million for the year ended December 31, 20192020, and $29 million for the yearyears ended December 31, 2019 and 2018. At December 31, 2020, Consumers had deferred $4 million of uncollectible accounts expense as a non-current regulatory asset. For additional information, see Note 3, Regulatory Matters.
Consumers’ customers are billed monthly in cycles having billing dates that do not generally coincide with the end of a calendar month. This results in customers having received electricity or natural gas that they have not been billed for as of the month-end. Consumers estimates its unbilled revenues by applying an average billed rate to total unbilled deliveries for each customer class. Unbilled revenues, which are recorded as accounts receivable and accrued revenue on CMS Energy’s and Consumers’ consolidated balance sheets, were $437 million at December 31, 2020 and $426 million at December 31, 2019 and $409 million at December 31, 2018.2019.
Alternative‑Revenue Programs: TheConsumers accounts for its energy waste reduction incentive mechanism provides aand financial incentive if the energy savings of Consumers’ customers exceed annual targets established by the MPSC.compensation mechanism as alternative-revenue programs. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizingrecognizes revenue related to the energy waste reduction incentive as soon as energy savings exceed the annual targets established by the MPSC.
Under a gasMPSC and recognizes revenue decouplingrelated to the financial compensation mechanism authorized by the MPSC, Consumers is allowed to adjust future gas rates for differences between Consumers’ actual weather‑normalized, non‑fuel revenues and the revenues approved by the MPSC. Consumers accounts for this program as an alternative‑revenue program that meets the criteria for recognizing the effects of decoupling adjustmentspayments are made on revenue as gas is delivered.MPSC-approved PPAs. For additional information on these mechanisms, see Note 3, Regulatory Matters.
Consumers does not reclassify revenue from its alternative-revenue program to revenue from contracts with customers at the time the amounts are collected from customers.

Revenues to Be Refunded: In December 2020, the MPSC issued an order authorizing Consumers to refund $28 million voluntarily to utility customers. For additional information, see Note 3, Regulatory Matters.

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17:    Other Income and Other Expense
17:Other Income and Other Expense
Other income was not significant for any of the periods presented except for a $14 million gain on the sale of CMS Energy common stock by Consumers in 2017. This gain was eliminated on CMS Energy’s consolidated statements of income.
presented. Presented in the following table are the components of other expense at CMS Energy and Consumers:
In Millions 
Years Ended December 312019 2018 2017 
CMS Energy, including Consumers      
Donations $(3) $(13) $(31)
Civic and political expenditures (6) (6) (27)
Loss on reacquired and extinguished debt —
 (16) (18)
All other (4) (13) —
Total other expense – CMS Energy $(13) $(48) $(76)
Consumers      
Donations $(3) $(13) $(31)
Civic and political expenditures (6) (6) (27)
All other (4) (11) —
Total other expense – Consumers $(13) $(30) $(58)

In Millions
Years Ended December 31202020192018
CMS Energy, including Consumers
Other expense
Donations$(35)$(3)$(13)
Civic and political expenditures(5)(6)(6)
Loss on reacquired and extinguished debt(16)0 (16)
All other(6)(4)(13)
Total other expense – CMS Energy$(62)$(13)$(48)
Consumers
Other expense
Donations$(33)$(3)$(13)
Civic and political expenditures(5)(6)(6)
All other(5)(4)(11)
Total other expense – Consumers$(43)$(13)$(30)
18:Cash and Cash Equivalents
18:    Cash and Cash Equivalents
Presented in the following table are the components of total cash and cash equivalents, including restricted amounts, and their location on CMS Energy’s and Consumers’ consolidated balance sheets:
In Millions 
December 312019 2018 
CMS Energy, including Consumers    
Cash and cash equivalents $140
 $153
Restricted cash and cash equivalents 17
 21
Other non‑current assets —
 1
Cash and cash equivalents, including restricted amounts $157
 $175
Consumers    
Cash and cash equivalents $11
 $39
Restricted cash and cash equivalents 17
 17
Cash and cash equivalents, including restricted amounts $28
 $56

In Millions
December 3120202019
CMS Energy, including Consumers
Cash and cash equivalents$168 $140 
Restricted cash and cash equivalents17 17 
Cash and cash equivalents, including restricted amounts$185 $157 
Consumers
Cash and cash equivalents$20 $11 
Restricted cash and cash equivalents15 17 
Cash and cash equivalents, including restricted amounts$35 $28 
Cash and Cash Equivalents: Cash and cash equivalents include short-term, highly liquid investments with original maturities of three months or less.
Restricted Cash and Cash Equivalents: Restricted cash and cash equivalents are held primarily for the repayment of securitization bonds and funds held in escrow. Cash and cash equivalents may also be restricted to pay other contractual obligations such as leasing of coal railcars. These amounts are classified as current assets since they relate to payments that could or will occur within one year.


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19:    Reportable Segments
19:Reportable Segments
Reportable segments consist of business units defined by the products and services they offer. CMS Energy and Consumers evaluate the performance of each segment based on its contribution to net income available to CMS Energy’s common stockholders.
Accounting policies for CMS Energy’s and Consumers’ segments are as described in Note 1, Significant Accounting Policies. The consolidated financial statements reflect the assets, liabilities, revenues, and expenses of the individual segments when appropriate. Accounts are allocated among the segments when common accounts are attributable to more than one segment. The allocations are based on certain measures of business activities, such as revenue, labor dollars, customers, other operating and maintenance expense, construction expense, leased property, taxes, or functional surveys. For example, customer receivables are allocated based on revenue, and pension provisions are allocated based on labor dollars.
Inter-segment sales and transfers are accounted for at current market prices and are eliminated in consolidated net income available to common stockholders by segment.
CMS Energy
The segments reported for CMS Energy are:
•electric utility, consisting of regulated activities associated with the generation, purchase, transmission, distribution, and sale of electricity in Michigan
•gas utility, consisting of regulated activities associated with the purchase, transmission, storage, distribution, and sale of natural gas in Michigan
•enterprises, consisting of various subsidiaries engaging in domestic independent power production, including the development and operation of renewable generation, and the marketing of independent power production
•EnerBank, a Utah state-chartered, FDIC-insured industrial bank providing primarily unsecured, consumerfixed-rate installment loans largely for financingthroughout the U.S. to finance home improvements
CMS Energy presents corporate interest and other expenses and Consumers’ other consolidated entities within other reconciling items. In 2019, EnerBank’s assets exceeded ten percent of CMS Energy’s consolidated assets.
Consumers
The segments reported for Consumers are:
•electric utility, consisting of regulated activities associated with the generation, purchase, transmission, distribution, and sale of electricity in Michigan
•gas utility, consisting of regulated activities associated with the purchase, transmission, storage, distribution, and sale of natural gas in Michigan
Consumers’ other consolidated entities are presented within other reconciling items.


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Presented in the following tables is financial information by segment:
In Millions
Years Ended December 312020 2019 2018 
CMS Energy, including Consumers
Operating revenue
Electric utility$4,372 $4,439 $4,561 
Gas utility1,817 1,937 1,903 
Enterprises229 248 252 
EnerBank262 221 157 
Total operating revenue – CMS Energy$6,680 $6,845 $6,873 
Consumers
Operating revenue
Electric utility$4,372 $4,439 $4,561 
Gas utility1,817 1,937 1,903 
Total operating revenue – Consumers$6,189 $6,376 $6,464 
CMS Energy, including Consumers
Depreciation and amortization
Electric utility$739 $713 $682 
Gas utility283 261 239 
Enterprises20 14 8 
EnerBank5 3 4 
Other reconciling items1 1 0 
Total depreciation and amortization – CMS Energy$1,048 $992 $933 
Consumers
Depreciation and amortization
Electric utility$739 $713 $682 
Gas utility283 261 239 
Other reconciling items1 1 0 
Total depreciation and amortization – Consumers$1,023 $975 $921 
CMS Energy, including Consumers
Income from equity method investees1
Enterprises$5 $10 $9 
Total income from equity method investees – CMS Energy$5 $10 $9 
CMS Energy, including Consumers
Interest charges
Electric utility$217 $213 $209 
Gas utility102 83 79 
Enterprises7 7 2 
EnerBank56 59 32 
Other reconciling items179 157 136 
Total interest charges – CMS Energy$561 $519 $458 
In Millions 
Years Ended December 312019 2018 2017 
CMS Energy, including Consumers      
Operating revenue      
Electric utility $4,439
 $4,561
 $4,448
Gas utility 1,937
 1,903
 1,774
Enterprises 248
 252
 229
EnerBank 221
 157
 132
Total operating revenue – CMS Energy $6,845
 $6,873
 $6,583
Consumers      
Operating revenue      
Electric utility $4,439
 $4,561
 $4,448
Gas utility 1,937
 1,903
 1,774
Total operating revenue – Consumers $6,376
 $6,464
 $6,222
CMS Energy, including Consumers      
Depreciation and amortization      
Electric utility $713
 $682
 $654
Gas utility 261
 239
 218
Enterprises 14
 8
 6
EnerBank 3
 4
 3
Other reconciling items 1
 —
 —
Total depreciation and amortization – CMS Energy $992
 $933
 $881
Consumers      
Depreciation and amortization      
Electric utility $713
 $682
 $654
Gas utility 261
 239
 218
Other reconciling items 1
 —
 —
Total depreciation and amortization – Consumers $975
 $921
 $872
CMS Energy, including Consumers      
Income from equity method investees¹      
Enterprises $10
 $9
 $15
Total income from equity method investees – CMS Energy $10
 $9
 $15
CMS Energy, including Consumers      
Interest charges      
Electric utility $213
 $209
 $201
Gas utility 83
 79
 74
Enterprises 7
 2
 —
EnerBank 59
 32
 19
Other reconciling items 157
 136
 144
Total interest charges – CMS Energy $519
 $458
 $438


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In Millions 
Years Ended December 312019 2018 2017 
Consumers      
Interest charges      
Electric utility $213
 $209
 $201
Gas utility 83
 79
 74
Other reconciling items 1
 1
 1
Total interest charges – Consumers $297
 $289
 $276
CMS Energy, including Consumers      
Income tax expense (benefit)      
Electric utility $134
 $109
 $245
Gas utility 51
 33
 96
Enterprises 2
 2
 72
EnerBank 16
 12
 22
Other reconciling items (56) (41) (11)
Total income tax expense – CMS Energy $147
 $115
 $424
Consumers      
Income tax expense (benefit)      
Electric utility $134
 $109
 $245
Gas utility 51
 33
 96
Other reconciling items —
 —
 (2)
Total income tax expense – Consumers $185
 $142
 $339
CMS Energy, including Consumers      
Net income (loss) available to common stockholders      
Electric utility $509
 $535
 $455
Gas utility 233
 169
 173
Enterprises 33
 34
 (27)
EnerBank 49
 38
 28
Other reconciling items (144) (119) (169)
Total net income available to common stockholders – CMS Energy $680
 $657
 $460
Consumers      
Net income (loss) available to common stockholder      
Electric utility $509
 $535
 $455
Gas utility 233
 169
 173
Other reconciling items (1) (1) 2
Total net income available to common stockholder – Consumers $741
 $703
 $630
CMS Energy, including Consumers      
Plant, property, and equipment, gross      
Electric utility2,3
 $16,158
 $16,027
 $15,221
Gas utility² 8,785
 7,919
 7,080
Enterprises 405
 412
 167
EnerBank 22
 25
 21
Other reconciling items 20
 17
 17
Total plant, property, and equipment, gross – CMS Energy $25,390
 $24,400
 $22,506

In Millions
Years Ended December 312020 2019 2018 
Consumers
Interest charges
Electric utility$217 $213 $209 
Gas utility102 83 79 
Other reconciling items1 1 1 
Total interest charges – Consumers$320 $297 $289 
CMS Energy, including Consumers
Income tax expense (benefit)
Electric utility$115 $134 $109 
Gas utility58 51 33 
Enterprises(4)2 2 
EnerBank17 16 12 
Other reconciling items(53)(56)(41)
Total income tax expense – CMS Energy$133 $147 $115 
Consumers
Income tax expense
Electric utility$115 $134 $109 
Gas utility58 51 33 
Total income tax expense – Consumers$173 $185 $142 
CMS Energy, including Consumers
Net income (loss) available to common stockholders
Electric utility$554 $509 $535 
Gas utility261 233 169 
Enterprises36 33 34 
EnerBank58 49 38 
Other reconciling items(154)(144)(119)
Total net income available to common stockholders – CMS Energy$755 $680 $657 
Consumers
Net income (loss) available to common stockholder
Electric utility$554 $509 $535 
Gas utility261 233 169 
Other reconciling items(1)(1)(1)
Total net income available to common stockholder – Consumers$814 $741 $703 
CMS Energy, including Consumers
Plant, property, and equipment, gross
Electric utility2,3
$17,155 $16,158 $16,027 
Gas utility2
9,581 8,785 7,919 
Enterprises1,113 405 412 
EnerBank37 22 25 
Other reconciling items21 20 17 
Total plant, property, and equipment, gross – CMS Energy$27,907 $25,390 $24,400 

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In Millions
Years Ended December 312020 2019 2018 
Consumers
Plant, property, and equipment, gross
Electric utility2,3
$17,155 $16,158 $16,027 
Gas utility2
9,581 8,785 7,919 
Other reconciling items21 20 17 
Total plant, property, and equipment, gross – Consumers$26,757 $24,963 $23,963 
CMS Energy, including Consumers
Investments in equity method investees1
Enterprises$70 $71 $69 
Total investments in equity method investees – CMS Energy$70 $71 $69 
CMS Energy, including Consumers
Total assets
Electric utility2
$15,829 $14,911 $14,079 
Gas utility2
9,429 8,659 7,806 
Enterprises1,276 527 540 
EnerBank3,109 2,692 2,006 
Other reconciling items23 48 98 
Total assets – CMS Energy$29,666 $26,837 $24,529 
Consumers
Total assets
Electric utility2
$15,893 $14,973 $14,143 
Gas utility2
9,477 8,706 7,853 
Other reconciling items29 20 29 
Total assets – Consumers$25,399 $23,699 $22,025 
CMS Energy, including Consumers
Capital expenditures4
Electric utility5
$1,281 $1,162 $865 
Gas utility5
885 971 958 
Enterprises108 5 246 
EnerBank5 8 10 
Other reconciling items1 1 2 
Total capital expenditures – CMS Energy$2,280 $2,147 $2,081 
Consumers
Capital expenditures4
Electric utility5
$1,281 $1,162 $865 
Gas utility5
885 971 958 
Other reconciling items1 1 2 
Total capital expenditures – Consumers$2,167 $2,134 $1,825 
1Consumers had no significant equity method investments.
2Amounts include a portion of Consumers’ other common assets attributable to both the electric and gas utility businesses.
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In Millions 
Years Ended December 312019 2018 2017 
Consumers      
Plant, property, and equipment, gross      
Electric utility2,3
 $16,158
 $16,027
 $15,221
Gas utility² 8,785
 7,919
 7,080
Other reconciling items 20
 17
 17
Total plant, property, and equipment, gross – Consumers $24,963
 $23,963
 $22,318
CMS Energy, including Consumers      
Investments in equity method investees¹      
Enterprises $71
 $69
 $64
Total investments in equity method investees – CMS Energy $71
 $69
 $64
CMS Energy, including Consumers      
Total assets      
Electric utility² $14,911
 $14,079
 $13,906
Gas utility² 8,659
 7,806
 7,139
Enterprises 527
 540
 342
EnerBank 2,692
 2,006
 1,453
Other reconciling items 48
 98
 210
Total assets – CMS Energy $26,837
 $24,529
 $23,050
Consumers      
Total assets      
Electric utility² $14,973
 $14,143
 $13,907
Gas utility² 8,706
 7,853
 7,139
Other reconciling items 20
 29
 53
Total assets – Consumers $23,699
 $22,025
 $21,099
CMS Energy, including Consumers      
Capital expenditures4
      
Electric utility5
 $1,162
 $865
 $882
Gas utility5
 971
 958
 800
Enterprises 5
 246
 33
EnerBank 8
 10
 6
Other reconciling items 1
 2
 1
Total capital expenditures – CMS Energy $2,147
 $2,081
 $1,722
Consumers      
Capital expenditures4
      
Electric utility5
 $1,162
 $865
 $882
Gas utility5
 971
 958
 800
Other reconciling items 1
 2
 1
Total capital expenditures – Consumers $2,134
 $1,825
 $1,683
1
Consumers had no significant equity method investments.
2
Amounts include a portion of Consumers’ other common assets attributable to both the electric and gas utility businesses.


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3Costs related to coal-fueled electric generating units to be retired in 2023 were removed and recorded as a regulatory asset in June 2019. For additional details, see Note 3, Regulatory Matters.
3
4Amounts include assets placed under finance lease.
5Amounts include a portion of Consumers’ capital expenditures for plant and equipment attributable to both the electric and gas utility businesses.
20:    Related-Party Transactions—Consumers
Costs related to coal-fueled electric generating units to be retired in 2023 were removed and recorded as a regulatory asset in June 2019. For additional details, see Note 3, Regulatory Matters.
4
Amounts include finance lease additions.
5
Amounts include a portion of Consumers’ capital expenditures for plant and equipment attributable to both the electric and gas utility businesses.
20:Related-Party Transactions—Consumers
Consumers enters into a number of transactions with related parties in the normal course of business. These transactions include:include but are not limited to:
•purchases of electricity from affiliates of CMS Enterprises
•payments to and from CMS Energy related to parent company overhead costs

Transactions involving power supply purchases from certain affiliates of CMS Enterprises are based on avoided costs under PURPA, state law, and competitive bidding. The payment of parent company overhead costs is based on the use of accepted industry allocation methodologies. These payments are for costs that occur in the normal course of business.
Presented in the following table is Consumers’ expense recorded from related-party transactions for the years ended December 31:
In Millions 
DescriptionRelated Party2019 2018 2017 
Purchases of capacity and energyAffiliates of CMS Enterprises $75
 $83
 $90

In Millions
DescriptionRelated Party202020192018
Purchases of capacity and energyAffiliates of CMS Enterprises$64 $75 $83 
Amounts payable to related parties for purchased power and other services were $13 million at December 31, 2020 and $26 million at December 31, 2019 and $20 million at December 31, 2018.2019. Accounts receivable from related parties were $16 million at December 31, 2020 and $8 million at December 31, 2019 and $13 million at December 31, 2018.2019.
In 2018, CMS Energy and Consumers sold the DB SERP debt securities and CMS Energy issued a demand note payable to the DB SERP rabbi trust. The portion of the demand note attributable to Consumers was recorded as a note receivable – related party on Consumers’ consolidated balance sheets at December 31, 20192020 and December 31, 2018.2019. For additional details about the note receivable – related party, see Note 7, Financial Instruments and Note 8, Notes Receivable.
Beginning inIn December 2018, Consumers and a subsidiary of CMS Energy executed a 20‑year natural gas transportation agreement, related to a pipeline owned by Consumers. For additional details about the agreement, see Note 10, Leases and Palisades Financing.
Consumers owned no shares of CMS Energy common stock at December 31, 2020 and CMS Energy common stock with a fair value of $1 million at December 31, 2019 and December 31, 2018.2019.
In JanuaryDecember 2020, Consumers renewed a short-term credit agreement with CMS Energy, permitting Consumers to borrow up to $300$350 million. AtAs of December 31, 2019, there were 02020, $307 million was outstanding loans under the agreement.agreement with an interest rate of 0.042 percent.


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21:    Variable Interest Entities
In July 2020, CMS Enterprises purchased a 51-percent ownership interest in Aviator Wind Equity Holdings. At that time, Aviator Wind Equity Holdings owned 100 percent of Aviator Wind, a 525-MW wind generation project being developed and constructed in Coke County, Texas. Of Aviator Wind’s 525-MW nameplate capacity, 420 MW has been committed under long-term PPAs.
Aviator Wind became operational in September 2020 and, at that time, Aviator Wind Equity Holdings sold a Class A membership interest in Aviator Wind to a tax equity investor, BHE Renewables, LLC, a subsidiary of Berkshire Hathaway Energy Company. Aviator Wind Equity Holdings retained a Class B membership interest in Aviator Wind. Earnings, tax attributes, and cash flows generated by Aviator Wind are allocated among and distributed to the membership classes in accordance with the ratios specified in the associated limited liability company operating agreement; these ratios change over time and are not representative of the ownership interest percentages of each membership class.
Since Aviator Wind’s income and cash flows are not distributed among its investors based on ownership interest percentages, CMS Enterprises allocates Aviator Wind’s income (loss) among its investors by applying the hypothetical liquidation at book value method. This method calculates each investor’s earnings based on a hypothetical liquidation of Aviator Wind at the net book value of its underlying net assets as of the balance sheet date. The liquidation tax gain (loss) is allocated to each investor’s capital account, resulting in income (loss) equal to the period change in the investor’s capital account balance. CMS Enterprises then receives 51 percent of the earnings, tax attributes, and cash flows that were allocated to Aviator Wind Equity Holdings.
Aviator Wind Equity Holdings and Aviator Wind represent VIEs. In accordance with the associated limited liability company operating agreement, the tax equity investor is guaranteed preferred returns from Aviator Wind. However, CMS Enterprises manages and controls the operating activities of Aviator Wind Equity Holdings and, ultimately, Aviator Wind. As a result, CMS Enterprises is the primary beneficiary of Aviator Wind Equity Holdings and Aviator Wind, as it has the power to direct the activities that most significantly impact the economic performance of the companies, as well as the obligation to absorb losses or the right to receive benefits from the companies. CMS Enterprises consolidates Aviator Wind Equity Holdings and Aviator Wind and presents the Class A membership interest and 49 percent of the Class B membership interest in Aviator Wind as noncontrolling interests. NaN gain or loss was recognized upon initial consolidation of Aviator Wind Equity Holdings and Aviator Wind.
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Presented in the following table are the carrying values of the VIEs’ assets and liabilities included in CMS Energy’s consolidated balance sheets:
21:In MillionsVariable Interest Entities
December 312020
Current
Cash and cash equivalents$7 
Accounts receivable5 
Prepayments and other current assets1 
Non-current
Plant, property, and equipment, net692 
Total assets1
$705 
Current
Accounts payable$3 
Non-current
Asset retirement obligations19 
Total liabilities$22 
1Assets may be used only to meet VIEs’ obligations and commitments.
Other VIEs: CMS Energy has variable interests in T.E.S. Filer City, Grayling, Genesee, and Craven. While CMS Energy owns 50 percent of each partnership, it is not the primary beneficiary of any of these partnerships because decision making is shared among unrelated parties, and no one party has the ability to direct the activities that most significantly impact the entities’ economic performance, such as operations and maintenance, plant dispatch, and fuel strategy. The partners must agree on all major decisions for each of the partnerships.
Presented in the following table is information about these partnerships:
NameNature of the EntityNature of CMS Energy’s Involvement
T.E.S. Filer CityCoal-fueled power generatorLong-term PPA between partnership and Consumers
Employee assignment agreement
GraylingWood waste-fueled power generatorLong-term PPA between partnership and Consumers
Reduced dispatch agreement with Consumers¹Consumers1
Operating and management contract
GeneseeWood waste-fueled power generatorLong-term PPA between partnership and Consumers
Reduced dispatch agreement with Consumers¹Consumers1
Operating and management contract
Guarantee of fixed rate debt²
Deferred collection of certain receivables³
CravenWood waste-fueled power generatorOperating and management contract

1Reduced dispatch agreements allow the facilities to be dispatched based on the market price of power compared with the cost of production of the plants. This results in fuel cost savings that each partnership shares with Consumers’ customers.
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1
Reduced dispatch agreements allow the facilities to be dispatched based on the market price of power compared with the cost of production of the plants. This results in fuel cost savings that each partnership shares with Consumers’ customers.
2
CMS Energy’s guarantee is capped at $3 million annually through 2021. For additional details on this guarantee, see Note 4, Contingencies and Commitments—Guarantees.
3
CMS Energy’s maximum exposure to loss from these receivables is $10 million.
The creditors of these partnerships do not have recourse to the general credit of CMS Energy or Consumers, except as noted in the table above.Consumers. Consumers has not provided any financial or other support during the periods presented that was not previously contractually required.
CMS Energy’s investment in these partnerships is included in investments on its consolidated balance sheets in the amount of $70 million as of December 31, 2020 and $71 million as of December 31, 2019 and $69 million as of December 31, 2018.2019.


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22:Asset Sales22:    Asset Sale and Exit Activities
Enterprises
In April 2019, DIG completed a sale of transmission equipment to ITC and recognized a pre-tax gain of $16 million within maintenance and other operating expenses on CMS Energy’s consolidated statements of income.
Consumers
Asset Sale: In September 2019,October 2020, Consumers completed a sale of a portion of itsthe electric utility’s substationremaining transmission equipment to METC. In December 2019,2020, Consumers filed an application with the MPSC requesting approval to share voluntarily half of the gain from the sale with customers.electric utility customers; this application was approved by the MPSC in February 2021. As a result, during 2019,2020, Consumers recorded a regulatory liability of $17$14 million and recognized a pre-tax gain of $17$14 million within maintenance and other operating expenses on its consolidated statements of income. For additional details on the sharing of the gain with customers, see Note 3, Regulatory Matters.Matters.
Exit Activities: Under its Clean Energy Plan, Consumers plans to retire the D.E. Karn 1 & 2 coal-fueled electric generating units in 2023. For additional details on Consumers’ plans to request recovery ofrecover the remaining book value of the 2two units upon their retirement, see Note 3, Regulatory Matters.Matters.
In October 2019, Consumers announced a retention incentive program to ensure necessary staffing at the D.E. Karn generating complex through the anticipated retirement of the coal-fueled electric generating units. Based on the number of employees that have chosen to participate, the aggregate cost of the program through 2023 is estimated to be $35 million.$35 million. In its order in Consumers’ 2020 electric rate case, the MPSC approved deferred accounting treatment for these costs; Consumers will seek recovery ofbegin deferring these costs from customers.as a regulatory asset in 2021.
In 2019, Consumers’ electric utility recognized $6 millionAs of December 31, 2020, the cumulative cost incurred and charged to expense related to this program was $16 million; an amount of $3 million has been capitalized as a cost of plant, property, and equipment. Presented in the following table is a reconciliation of the retention and severance benefits within maintenance andbenefit liability recorded in other operating expensesliabilities on Consumers’ consolidated statementsbalance sheets:
In Millions
Years Ended December 3120202019
Retention benefit liability at beginning of period$4 $0 
Costs incurred and charged to maintenance and other operating expenses13 3 
Costs incurred and capitalized2 1 
Costs paid or settled(8)0 
Retention benefit liability at the end of the period1
$11 $4 
1Includes current portion of income. The amount was reported as other liabilities on its consolidated balance sheetsof $3 million at December 31, 2019, which included2020 and $2 million of current liabilities.at December 31, 2019.


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23:    Quarterly Financial and Common Stock Information (Unaudited)
23:Quarterly Financial and Common Stock Information (Unaudited)
In Millions, Except Per Share Amounts
2020
Three Months EndedMarch 31June 30September 30December 31
CMS Energy, including Consumers
Operating revenue$1,864 $1,443 $1,575 $1,798 
Operating income368 273 369 352 
Net income243 137 210 162 
Income (loss) attributable to noncontrolling interests0 1 (8)4 
Net income available to common stockholders243 136 218 158 
Basic earnings per average common share1
0.86 0.48 0.76 0.55 
Diluted earnings per average common share1
0.85 0.48 0.76 0.55 
Consumers
Operating revenue$1,744 $1,330 $1,450 $1,665 
Operating income329 246 338 308 
Net income235 160 230 191 
Preferred stock dividends0 1 0 1 
Net income available to common stockholder235 159 230 190 
1The sum of the quarters may not equal annual EPS due to changes in the number of shares outstanding.
In Millions, Except Per Share Amounts
2019
Three Months EndedMarch 31June 30September 30December 31
CMS Energy, including Consumers
Operating revenue$2,059 $1,445 $1,546 $1,795 
Operating income359 218 351 311 
Net income213 94 207 168 
Income attributable to noncontrolling interests0 1 0 1 
Net income available to common stockholders213 93 207 167 
Basic earnings per average common share1
0.75 0.33 0.73 0.59 
Diluted earnings per average common share1
0.75 0.33 0.73 0.58 
Consumers
Operating revenue$1,943 $1,334 $1,429 $1,670 
Operating income328 175 319 308 
Net income226 98 213 206 
Preferred stock dividends0 1 0 1 
Net income available to common stockholder226 97 213 205 
1The sum of the quarters may not equal annual EPS due to changes in the number of shares outstanding.
In Millions, Except Per Share Amounts 
 2019
Quarters EndedMarch 31 June 30 Sept 30 Dec 31 
CMS Energy, including Consumers        
Operating revenue $2,059
 $1,445
 $1,546
 $1,795
Operating income 359
 218
 351
 311
Net income 213
 94
 207
 168
Income attributable to noncontrolling interests —
 1
 —
 1
Net income available to common stockholders 213
 93
 207
 167
Basic earnings per average common share¹ 0.75
 0.33
 0.73
 0.59
Diluted earnings per average common share¹ 0.75
 0.33
 0.73
 0.58
Consumers        
Operating revenue $1,943
 $1,334
 $1,429
 $1,670
Operating income 328
 175
 319
 308
Net income 226
 98
 213
 206
Preferred stock dividends —
 1
 —
 1
Net income available to common stockholder 226
 97
 213
 205
1
The sum of the quarters may not equal annual EPS due to changes in the number of shares outstanding.
181
In Millions, Except Per Share Amounts 
 2018
Quarters EndedMarch 31 June 30 Sept 30 Dec 31 
CMS Energy, including Consumers        
Operating revenue $1,953
 $1,492
 $1,599
 $1,829
Operating income 363
 255
 294
 250
Net income 241
 140
 169
 109
Income attributable to noncontrolling interests —
 1
 —
 1
Net income available to common stockholders 241
 139
 169
 108
Basic earnings per average common share¹ 0.86
 0.49
 0.60
 0.38
Diluted earnings per average common share¹ 0.86
 0.49
 0.59
 0.38
Consumers        
Operating revenue $1,855
 $1,395
 $1,502
 $1,712
Operating income 334
 229
 271
 231
Net income 242
 152
 180
 131
Preferred stock dividends —
 1
 —
 1
Net income available to common stockholder 242
 151
 180
 130
1
The sum of the quarters may not equal annual EPS due to changes in the number of shares outstanding.


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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of CMS Energy Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of CMS Energy Corporation and its subsidiaries (the “Company”) as of December 31, 20192020 and 2018,2019, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2019,2020, including the related notes and financial statement schedules of CMS Energy Corporation listed in the index appearing under Item 15 (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2019,2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20192020 and 2018,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20192020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the Effects of New Regulatory Matters
As described in Note 3 to the consolidated financial statements, the Company is a utility and must apply regulatory accounting when its rates are designed to recover specific costs of providing regulated services. Under regulatory accounting, the Company records regulatory assets or liabilities for certain transactions that would have been treated as expense or revenue by a non-regulated business. As of December 31, 2019,2020, the Company has recognized a total of $2,522$2,695 million of regulatory assets and $3,829$3,895 million of regulatory liabilities. As described by management, there are multiple participants to rate case proceedings who often challenge various aspects of those proceedings, including the prudence of the Company’s policies and practices. These participants often seek cost disallowances and other relief and have appealed significant decisions reached by the regulators. The recovery of regulatory assets and the settlement of regulatory liabilities are contingent upon the outcomes of rate cases and regulatory proceedings.
The principal considerations for our determination that performing procedures relating to management’s accounting for the effects of new regulatory matters is a critical audit matter are (i) there was athe high degree of auditor judgment and subjectivity applied to evaluate management’s assessment of the potential outcomes and related accounting impacts associated with pending rate case proceedings, (ii) in some cases, there wasthe significant audit effort necessary to assess contrary evidence from various parties involved in rate case proceedings, and (iii) there wasthe significant audit effort necessary to evaluate audit evidence related to the recovery of regulatory assets and the settlement of regulatory liabilities.


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Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of regulatory proceedings, including the probability of recovering incurred costs and the related accounting and disclosure impacts. These procedures also included, among others, obtaining and evaluating the Company’s correspondence with regulators, evaluating the reasonableness of management’s assessment regarding whether recovery of regulatory assets and settlement of regulatory liabilities is probable and evaluating the sufficiency of the disclosures in the consolidated financial statements. Procedures were performed to evaluate the regulatory assets and liabilities, including those subject to pending rate cases, based on provisions and formulas outlined in rate orders, other regulatory correspondence, or application of relevant regulatory precedents.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
February 6, 202011, 2021
We have served as the Company’s auditor since 2007.


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179

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholder of Consumers Energy Company
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Consumers Energy Company and its subsidiaries (the “Company”) as of December 31, 20192020 and 2018,2019, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2019,2020, including the related notes and financial statement schedule of Consumers Energy Company listed in the index appearing under Item 15 (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2019,2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20192020 and 2018,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20192020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the Effects of New Regulatory Matters
As described in Note 3 to the consolidated financial statements, the Company is a utility and must apply regulatory accounting when its rates are designed to recover specific costs of providing regulated services. Under regulatory accounting, the Company records regulatory assets or liabilities for certain transactions that would have been treated as expense or revenue by a non-regulated business. As of December 31, 2020, the Company has recognized a total of $2,695 million of regulatory assets and $3,895 million of regulatory liabilities. As described by management, there are multiple participants to rate case proceedings who often challenge various aspects of those proceedings, including the prudence of the Company’s policies and practices. These participants often seek cost disallowances and other relief and have appealed significant decisions reached by the regulators. The recovery of regulatory assets and the settlement of regulatory liabilities are contingent upon the outcomes of rate cases and regulatory proceedings.
The principal considerations for our determination that performing procedures relating to management’s accounting for the effects of new regulatory matters is a critical audit matter are (i) the high degree of auditor judgment and subjectivity applied to evaluate management’s assessment of the potential outcomes and related accounting impacts associated with pending rate case proceedings, (ii) in some cases, the significant audit effort necessary to assess contrary evidence from various parties involved in rate case proceedings, and (iii) the significant audit effort necessary to evaluate audit evidence related to the recovery of regulatory assets and the settlement of regulatory liabilities.
187
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of regulatory proceedings, including the probability of recovering incurred costs and the related accounting and disclosure impacts. These procedures also included, among others, obtaining and evaluating the Company’s correspondence with regulators, evaluating the reasonableness of management’s assessment regarding whether recovery of regulatory assets and settlement of regulatory liabilities is probable and evaluating the sufficiency of the disclosures in the consolidated financial statements. Procedures were performed to evaluate the regulatory assets and liabilities, including those subject to pending rate cases, based on provisions and formulas outlined in rate orders, other regulatory correspondence, or application of relevant regulatory precedents.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
February 6, 202011, 2021
We have served as the Company’s auditor since 2007.


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Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.    Controls and Procedures
CMS Energy
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures: Under the supervision and with the participation of management, including its CEO and CFO, CMS Energy conducted an evaluation of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on such evaluation, CMS Energy’s CEO and CFO have concluded that its disclosure controls and procedures were effective as of December 31, 2019.2020.
Management’s Annual Report on Internal Control Over Financial Reporting: CMS Energy’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). CMS Energy’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that:
•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of CMS Energy
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of CMS Energy are being made only in accordance with authorizations of management and directors of CMS Energy
•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of CMS Energy’s assets that could have a material effect on its financial statements
Management, including its CEO and CFO, does not expect that its internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. In addition, any evaluation of the effectiveness of controls is subject to risks that those internal controls may become inadequate in future periods because of changes in business conditions, or that the degree of compliance with the policies or procedures deteriorates.
Under the supervision and with the participation of management, including its CEO and CFO, CMS Energy conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2019.2020. In making this evaluation, management used the criteria set forth in the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, CMS Energy’s management concluded that its internal control over financial reporting was effective as of December 31, 2019.2020. The effectiveness of CMS Energy’s internal control over financial reporting as of December 31, 20192020 has been


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been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under Item 8. Financial Statements and Supplementary Data.
Changes in Internal Control over Financial Reporting: There have been no changes in CMS Energy’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to affect materially, its internal control over financial reporting.
Consumers
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures: Under the supervision and with the participation of management, including its CEO and CFO, Consumers conducted an evaluation of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on such evaluation, Consumers’ CEO and CFO have concluded that its disclosure controls and procedures were effective as of December 31, 2019.2020.
Management’s Annual Report on Internal Control Over Financial Reporting: Consumers’ management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Consumers’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that:
•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Consumers
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of Consumers are being made only in accordance with authorizations of management and directors of Consumers
•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Consumers’ assets that could have a material effect on its financial statements
Management, including its CEO and CFO, does not expect that its internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. In addition, any evaluation of the effectiveness of controls is subject to risks that those internal controls may become inadequate in future periods because of changes in business conditions, or that the degree of compliance with the policies or procedures deteriorates.
Under the supervision and with the participation of management, including its CEO and CFO, Consumers conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2019.2020. In making this evaluation, management used the criteria set forth in the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, Consumers’ management concluded that its internal control over financial reporting was effective as of December 31, 2019.2020. The effectiveness of Consumers’ internal control over financial reporting as of December 31, 20192020 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under Item 8. Financial Statements and Supplementary Data.


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Changes in Internal Control over Financial Reporting: There have been no changes in Consumers’ internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to affect materially, its internal control over financial reporting.
Item 9B.    Other Information
None.
Part III
Item 10.     Directors, Executive Officers and Corporate Governance
CMS Energy
Information that is required in Item 10 of this Form 10‑K regarding executive officers is included in the Item 1. Business—Information About CMS Energy’s and Consumers’ Executive Officers section, which is incorporated by reference herein.
Information that is required in Item 10 of this Form 10‑K regarding directors, executive officers, and corporate governance is incorporated by reference from CMS Energy’s and Consumers’ definitive proxy statement for their 20202021 Annual Meetings of Shareholders to be held May 1, 2020.7, 2021. The proxy statement will be filed with the SEC, pursuant to Regulation 14A under the Exchange Act, within 120 days after the end of the fiscal year covered by this Form 10‑K, all of which information is hereby incorporated by reference in, and made part of, this Form 10‑K.
Code of Ethics
CMS Energy has adopted an employee code of ethics, entitled “CMS Energy 20202021 Code of Conduct” (“Employee Code”) that applies to its CEO, CFO, and CAO, as well as all other officers and employees of CMS Energy and its affiliates, except for EnerBank, which has its own code of conduct. The Employee Code is administered by the Chief Compliance Officer of CMS Energy, who reports directly to the Audit Committee of the Board of Directors of CMS Energy. CMS Energy has also adopted a director code of ethics entitled “2020“2021 Board of Directors Code of Conduct” (“Director Code”) that applies to its directors. The Director Code is administered by the Audit Committee of the Board of Directors of CMS Energy. Any alleged violation of the Director Code by a director will be investigated by disinterested members of the Audit Committee of the Board of Directors of CMS Energy, or if none, by disinterested members of the entire Board of Directors of CMS Energy. The Employee Code and Director Code and any waivers of, or amendments or exceptions to, a provision of the Employee Code that applies to CMS Energy’s CEO, CFO, CAO or persons performing similar functions and any waivers of, or amendments or exceptions to, a provision of CMS Energy’s Director Code will be disclosed on CMS Energy’s website at www.cmsenergy.com/corporate-governance/compliance-and-ethics.
Consumers
Information that is required in Item 10 of this Form 10‑K regarding executive officers is included in the Item 1. Business—Information About CMS Energy’s and Consumers’ Executive Officers section, which is incorporated by reference herein.


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Information that is required in Item 10 of this Form 10‑K regarding directors, executive officers, and corporate governance is incorporated by reference from CMS Energy’s and Consumers’ definitive proxy statement for their 20202021 Annual Meetings of Shareholders to be held May 1, 2020.7, 2021. The proxy statement will be filed with the SEC, pursuant to Regulation 14A under the Exchange Act, within 120 days after the end of the fiscal year covered by this Form 10‑K, all of which information is hereby incorporated by reference in, and made part of, this Form 10‑K.
Code of Ethics
Consumers has adopted an employee code of ethics, entitled “CMS Energy 20202021 Code of Conduct” (“Employee Code”) that applies to its CEO, CFO, and CAO, as well as all other officers and employees of Consumers and its affiliates, except for EnerBank, which has its own code of conduct. The Employee Code is administered by the Chief Compliance Officer of Consumers, who reports directly to the Audit Committee of the Board of Directors of Consumers. Consumers has also adopted a director code of ethics entitled “2020“2021 Board of Directors Code of Conduct” (“Director Code”) that applies to its directors. The Director Code is administered by the Audit Committee of the Board of Directors of Consumers. Any alleged violation of the Director Code by a director will be investigated by disinterested members of the Audit Committee of the Board of Directors of Consumers, or if none, by disinterested members of the entire Board of Directors of Consumers. The Employee Code and Director Code and any waivers of, or amendments or exceptions to, a provision of the Employee Code that applies to Consumers’ CEO, CFO, CAO or persons performing similar functions and any waivers of, or amendments or exceptions to, a provision of Consumers’ Director Code will be disclosed on Consumers’ website at www.cmsenergy.com/corporate-governance/compliance-and-ethics.
Item 11.    Executive Compensation
See the note below.
Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Securities Authorized for Issuance Under Equity Compensation Plans
Presented in the following table is information regarding CMS Energy’s equity compensation plans as of December 31, 2019:
2020:
(a)
(b)		(b)(c)
Plan Category
Number of securities to

be issued upon exercise

of outstanding options,

warrants, and rights
Weighted-average
Weighted-average
exercise price of

outstanding options,

warrants, and rights
Number of securities remaining

available for future issuance under

equity compensation plans (excluding

securities reflected in column (a))

Equity compensation plan approved by shareholders—
$—
3,258,0006,477,579 
Also see the note below.


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Item 13.    Certain Relationships and Related Transactions, and Director Independence
See the note below.
Item 14.    Principal Accountant Fees and Services
See the note below.
NOTE: Information that is required by Part III—Items 11, 12, 13, and 14 of this Form 10‑K is incorporated by reference from CMS Energy’s and Consumers’ definitive proxy statement for their 20202021 Annual Meetings of Shareholders to be held May 1, 2020.7, 2021. The proxy statement will be filed with the SEC, pursuant to Regulation 14A under the Exchange Act, within 120 days after the end of the fiscal year covered by this Form 10‑K, all of which information is hereby incorporated by reference in, and made part of, this Form 10‑K.


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Part IV
Item 15.    Exhibits and Financial Statement Schedules
The following financial statements are filed as part of this report under Item 8. Financial Statements and Supplementary Data:
•Consolidated Statements of Income of CMS Energy for the years ended December 31, 2020, 2019, 2018, and 20172018
•Consolidated Statements of Comprehensive Income of CMS Energy for the years ended December 31, 2020, 2019, 2018, and 20172018
•Consolidated Statements of Cash Flows of CMS Energy for the years ended December 31, 2020, 2019, 2018, and 20172018
•Consolidated Balance Sheets of CMS Energy at December 31, 2020 and 2019
•
Consolidated Balance Sheets of CMS Energy at December 31, 2019 and 2018
Consolidated Statements of Changes in Equity of CMS Energy for the years ended December 31, 2020, 2019, 2018, and 20172018
•Consolidated Statements of Income of Consumers for the years ended December 31, 2020, 2019, 2018, and 20172018
•Consolidated Statements of Comprehensive Income of Consumers for the years ended December 31, 2020, 2019, 2018, and 20172018
•Consolidated Statements of Cash Flows of Consumers for the years ended December 31, 2020, 2019, 2018, and 20172018
•Consolidated Balance Sheets of Consumers at December 31, 20192020 and 20182019
•Consolidated Statements of Changes in Equity of Consumers for the years ended December 31, 2020, 2019, 2018, and 20172018
•Notes to the Consolidated Financial Statements
•
•Report of Independent Registered Public Accounting Firm for CMS Energy
•Report of Independent Registered Public Accounting Firm for CMS Energy
•
Report of Independent Registered Public Accounting Firm for Consumers
The following financial statement schedules are included below:
•
•Schedule I — Condensed Financial Information of Registrant,, CMS Energy—Parent Company at December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019, and 2018
•Schedule II — Valuation and Qualifying Accounts and Reserves of CMS Energy for the years ended December 31, 2020, 2019, and 2018
•Schedule II — Valuation and Qualifying Accounts and Reserves of Consumers for the years ended December 31, 2020, 2019, and 2018 and for the years ended December 31, 2019, 2018, and 2017
•
Schedule II — Valuation and Qualifying Accounts and Reserves of CMS Energy for the years ended December 31, 2019, 2018, and 2017
•
Schedule II — Valuation and Qualifying Accounts and Reserves of Consumers for the years ended December 31, 2019, 2018, and 2017


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Schedule I — Condensed Financial Information of Registrant
CMS Energy—Parent Company
Condensed Statements of Income
In MillionsIn Millions In Millions
Years Ended December 312019 2018 2017 Years Ended December 31202020192018
      
Operating Expenses      Operating Expenses
Other operating expenses $(38) $(7) $(9)Other operating expenses$(6)$(38)$(7)
Total operating expenses (38) (7) (9)Total operating expenses(6)(38)(7)
      
Operating Loss (38) (7) (9)Operating Loss(6)(38)(7)
      
Other Income (Expense)      Other Income (Expense)
Equity earnings of subsidiaries 826
 780
 633
Equity earnings of subsidiaries909 826 780 
Nonoperating retirement benefits, net (1) (1) (1)Nonoperating retirement benefits, net(1)(1)(1)
Interest income 1
 2
 1
Interest income1 1 2 
Other income 1
 —
 2
Other income1 1 0 
Other expense —
 (17) (31)Other expense(19)0 (17)
Total other income 827
 764
 604
Total other income891 827 764 
      
Interest Charges      Interest Charges
Interest on long-term debt 156
 135
 143
Interest on long-term debt178 156 135 
Intercompany interest expense and other 10
 7
 3
Intercompany interest expense and other7 10 7 
Total interest charges 166
 142
 146
Total interest charges185 166 142 
      
Income Before Income Taxes 623
 615
 449
Income Before Income Taxes700 623 615 
Income Tax Benefit (57) (42) (11)Income Tax Benefit(55)(57)(42)
      
Net Income Available to Common Stockholders $680
 $657
 $460
Net Income Available to Common Stockholders$755 $680 $657 
The accompanying notes are an integral part of these statements.


196
188

Schedule I — Condensed Financial Information of Registrant (Continued)
CMS Energy—Parent Company
Condensed Statements of Cash Flows
In MillionsIn Millions In Millions
Years Ended December 312019 2018 2017 Years Ended December 31202020192018
      
Cash Flows from Operating Activities      Cash Flows from Operating Activities
Net cash provided by operating activities $697
 $702
 $433
Net cash provided by operating activities$507 $697 $702 
      
Cash Flows from Investing Activities      Cash Flows from Investing Activities
Investment in subsidiaries (683) (363) (447)Investment in subsidiaries(657)(683)(363)
Increase in notes receivable – intercompanyIncrease in notes receivable – intercompany(307)0 0 
Proceeds from DB SERP investments —
 22
 —
Proceeds from DB SERP investments0 0 22 
Net cash used in investing activities (683) (341) (447)Net cash used in investing activities(964)(683)(341)
      
Cash Flows from Financing Activities      Cash Flows from Financing Activities
Proceeds from issuance of debt 1,158
 560
 799
Proceeds from issuance of debt1,225 1,158 560 
Issuance of common stock 12
 41
 83
Issuance of common stock253 12 41 
Retirement of long-term debt (738) (675) (425)Retirement of long-term debt(425)(738)(675)
Debt prepayment costs —
 (16) (18)Debt prepayment costs(16)0 (16)
Payment of dividends on common stock (434) (405) (375)Payment of dividends on common stock(465)(434)(405)
Debt issuance costs and financing fees (18) (8) (3)Debt issuance costs and financing fees(10)(18)(8)
Change in notes payable – intercompany 6
 142
 (47)Change in notes payable – intercompany(105)6 142 
Net cash provided by (used in) financing activities (14) (361) 14
Net cash provided by (used in) financing activities457 (14)(361)
      
Net Increase in Cash and Cash Equivalents, Including Restricted Amounts —
 —
 —
Net Increase in Cash and Cash Equivalents, Including Restricted Amounts0 0 0 
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period —
 —
 —
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period0 0 0 
      
Cash and Cash Equivalents, Including Restricted Amounts, End of Period $—
 $—
 $—
Cash and Cash Equivalents, Including Restricted Amounts, End of Period$0 $0 $0 
The accompanying notes are an integral part of these statements.


197
189

Schedule I — Condensed Financial Information of Registrant (Continued)
CMS Energy—Parent Company
Condensed Balance Sheets
ASSETS
In Millions
December 3120202019
Current Assets
Notes and accrued interest receivable – intercompany$358 $2 
Accounts receivable – intercompany and related parties3 9 
Federal income tax receivable0 18 
Accrued taxes48 0 
Prepayments and other current assets1 1 
Total current assets410 30 
Other Non‑current Assets
Deferred income taxes91 126 
Investments in subsidiaries9,372 8,526 
Other investments5 4 
Other5 16 
Total other non‑current assets9,473 8,672 
Total Assets$9,883 $8,702 
ASSETS
In Millions 
December 312019 2018 
     
Current Assets    
Notes and accrued interest receivable $2
 $2
Accounts receivable – intercompany and related parties 9
 7
Federal income tax receivable 18
 44
Accrued taxes —
 26
Prepayments and other current assets 1
 1
Total current assets 30
 80
     
Other Non‑current Assets
    
Deferred income taxes 126
 180
Investments in subsidiaries 8,526
 7,706
Other investments 4
 3
Other 16
 10
Total other non‑current assets
 8,672
 7,899
     
Total Assets $8,702
 $7,979


198
190

Table of Contents





LIABILITIES AND EQUITYLIABILITIES AND EQUITYLIABILITIES AND EQUITY
In MillionsIn Millions In Millions
December 312019 2018 December 3120202019
    
Current Liabilities    Current Liabilities
Current portion of long-term debt $—
 $180
Current portion of long-term debt$200 $0 
Accounts and notes payable – intercompany 123
 113
Accounts and notes payable – intercompany69 123 
Accrued interest, including intercompany 34
 32
Accrued interest, including intercompany33 34 
Accrued taxes 5
 —
Accrued taxes0 5 
Other current liabilities 38
 7
Other current liabilities9 38 
Total current liabilities 200
 332
Total current liabilities311 200 
    
Non‑current Liabilities
    
Non‑current LiabilitiesNon‑current Liabilities
Long-term debt 3,334
 2,750
Long-term debt3,926 3,334 
Notes payable – intercompany 112
 116
Notes payable – intercompany116 112 
Postretirement benefits 21
 17
Postretirement benefits21 21 
Other non‑current liabilities
 17
 9
Total non‑current liabilities
 3,484
 2,892
Other non‑current liabilitiesOther non‑current liabilities13 17 
Total non‑current liabilitiesTotal non‑current liabilities4,076 3,484 
    
Equity    Equity
Common stockholders’ equity 5,018
 4,755
Common stockholders’ equity5,496 5,018 
    
Total Liabilities and Equity $8,702
 $7,979
Total Liabilities and Equity$9,883 $8,702 
The accompanying notes are an integral part of these statements.


199
191

Schedule I — Condensed Financial Information of Registrant (Continued)
CMS Energy—Parent Company
Notes to the Condensed Financial Statements
1:Basis of Presentation
1:    Basis of Presentation
CMS Energy’s condensed financial statements have been prepared on a parent-only basis. In accordance with Rule 12-04 of Regulation S-X, these parent-only financial statements do not include all of the information and notes required by GAAP for annual financial statements, and therefore these parent-only financial statements and other information included should be read in conjunction with CMS Energy’s audited consolidated financial statements contained within Item 8. Financial Statements and Supplementary Data.
2:Contingencies
2:Contingencies
Gas Index Price Reporting Litigation: CMS Energy, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company, were named as defendants in 4 class action lawsuits filed in Kansas, Missouri, and Wisconsin and 1 individual lawsuit arisingfiled in Kansas; these lawsuits arose as a result of alleged inaccurate natural gas price reporting to publications that report trade information. Allegations includeincluded price-fixing conspiracies, restraint of trade, and artificial inflation of natural gas retail prices in Kansas, Missouri, and Wisconsin.prices. In 2016, CMS Energy entities reached a settlement with the plaintiffs in the Kansas and Missouri class action cases for an amount that was not material to CMS Energy. In 2017, the federal district court approved the settlement.
In 2019, CMS Energy and the plaintiffs in each of the remaining Kansas individual lawsuit and the Wisconsin actionsclass action lawsuit engaged in settlement discussions and CMS Energy has recorded a $30 million liability at December 31, 2019 as athe probable estimate to settle thesethe two cases. CMS Energy can give no assurancesThe parties executed a settlement agreement in the Kansas case in February 2020, and that it can reach a final settlement with the plaintiffs in these two cases, of the actual amount CMS Energy would have to pay in any settlement, or, incase is now complete. In the Wisconsin case, a settlement agreement was approved in August 2020 and that the Wisconsin court would approve any such settlement. If settlement does not occur and the outcome after appealscase is unfavorable to CMS Energy, these cases could negatively affect CMS Energy’s liquidity, financial condition, and results of operations.now complete.


200
192

3:    Guarantees
3:Guarantees
CMS Energy has issued guarantees with a maximum potential obligation of $430$596 million on behalf of some of its wholly owned subsidiaries and related parties. CMS Energy’s maximum potential obligation consists primarily of potential payments:
•to third parties under certain commodity purchase and swap agreements entered into with CMS ERM
•
to third parties under certain agreements entered into with Grand River Wind, LLC, a wholly owned subsidiary of CMS Enterprises
to third parties in supportunder certain agreements entered into with Grand River Wind, LLC, a wholly owned subsidiary of non‑recourse revenue bonds issued by GeneseeCMS Enterprises
•to EGLE on behalf of CMS Land and CMS Capital, for environmental remediation obligations at Bay Harbor
•to the U.S. Department of Energy on behalf of Consumers, in connection with Consumers’ 2011 settlement agreement with the U.S. Department of Energy regarding damages resulting from the department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by Consumers
•to a tax equity investor under certain agreements in connection with the purchase of a VIE
The expiry dates of these guarantees vary, depending upon contractual provisions or upon the statute of limitations under the relevant governing law.
4:
4:    Note Payable—Intercompany
In July 2018, CMS Energy issued a demand note payable to the DB SERP rabbi trust, of which $124 million was attributable to CMS Energy’s subsidiaries. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028. This note payable is not recorded at fair value; however, its carrying value approximates fair value at December 31, 2019.2020. This fair value measurement is classified in Level 3 within the fair value hierarchy.


201
193

Schedule II — Valuation and Qualifying Accounts and Reserves
CMS Energy Corporation
Years Ended December 31, 2020, 2019, 2018, and 20172018
In Millions
DescriptionBalance at Beginning of PeriodCharged to Expense
Charged to Other Accounts2
DeductionsBalance at End of Period
Allowance for uncollectible accounts1
2020$20 $33 $0 $24 $29 
201920 29 0 29 20 
201820 29 0 29 20 
Deferred tax valuation allowance
2020$2 $0 $0 $1 $1 
20198 0 0 6 2 
201815 2 0 9 8 
Allowance for notes receivable1
2020$33 $60 $62 $32 $123 
201924 38 0 29 33 
201820 25 0 21 24 
In Millions 
DescriptionBalance at Beginning of Period Charged to Expense Charged to Other Accounts Deductions Balance at End of Period 
Allowance for uncollectible accounts1
          
2019 $20
 $29
 $—
 $29
 $20
2018 20
 29
 —
 29
 20
2017 24
 29
 —
 33
 20
Deferred tax valuation allowance          
2019 $8
 $—
 $—
 $6
 $2
2018 15
 2
 —
 9
 8
2017 5
 10
 —
 —
 15
Allowance for notes receivable1
          
2019 $24
 $38
 $—
 $29
 $33
2018 20
 25
 —
 21
 24
2017 16
 20
 —
 16
 20
1Deductions represent write-offs of uncollectible accounts, net of recoveries.
1
2On January 1, 2020, in accordance with ASU 2016‑13, Measurement of Credit Losses on Financial Instruments, CMS Energy adjusted the allowance for loan losses associated with its notes receivable, recording an offsetting adjustment to retained earnings. For further details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2, New Accounting Standards and Note 8, Notes Receivable.
Deductions represent write-offs of uncollectible accounts, net of recoveries.
Consumers Energy Company
Years Ended December 31, 2020, 2019, 2018, and 20172018
In Millions
DescriptionBalance at Beginning of PeriodCharged to ExpenseCharged to Other AccountsDeductionsBalance at End of Period
Allowance for uncollectible accounts1
2020$20 $33 $0 $24 $29 
201920 29 0 29 20 
201820 29 0 29 20 
1Deductions represent write-offs of uncollectible accounts, net of recoveries.
202
In Millions 
DescriptionBalance at Beginning of Period Charged to Expense Charged to Other Accounts Deductions Balance at End of Period 
Allowance for uncollectible accounts1
          
2019 $20
 $29
 $—
 $29
 $20
2018 20
 29
 —
 29
 20
2017 24
 29
 —
 33
 20
1
Deductions represent write-offs of uncollectible accounts, net of recoveries.


194

Exhibit Index
The agreements included as exhibits to this Form 10-K filing are included solely to provide information regarding the terms of the agreements and are not intended to provide any other factual or disclosure information about CMS Energy, Consumers, or other parties to the agreements. The agreements may contain representations and warranties made by each of the parties to each of the agreements that were made exclusively for the benefit of the parties involved in each of the agreements and should not be treated as statements of fact. The representations and warranties were made as a way to allocate risk if one or more of those statements prove to be incorrect. The statements were qualified by disclosures of the parties to each of the agreements that may not be reflected in each of the agreements. The agreements may apply standards of materiality that are different than standards applied to other investors. Additionally, the statements were made as of the date of the agreements or as specified in the agreements and have not been updated.
The representations and warranties may not describe the actual state of affairs of the parties to each agreement. Additional information about CMS Energy and Consumers may be found in this filing, at www.cmsenergy.com, at www.consumersenergy.com, and through the SEC’s website at www.sec.gov.
Previously Filed
Exhibits
With File
Number
As
Exhibit
Number
Description
3.11
1-9513(3)(a)—
3.21
1-95133.2—
3.31-56113(c)—
3.41-56113.2—
4.12-65973(b)(1)–4—Indenture dated as of September 1, 1945 between Consumers and Chemical Bank (successor to Manufacturers Hanover Trust Company), as Trustee, including therein indentures supplemental thereto through the Forty-third Supplemental Indenture dated as of May 1, 1979 (Form S-16 filed November 13, 1979)
Indentures Supplemental thereto:
4.1.a1-56114.2—
4.1.b1-56114.1—
4.1.c1-56114.1—
4.1.d1-56114.1—
4.1.e1-56114.1—
4.1.f1-56114.1—
4.1.g1-56114.1—
4.1.h1-56114.1—
4.1.i1-56114.1—
 Previously Filed  
Exhibits
With File
Number
As
Exhibit
Number
 Description
3.11
1-9513(3)(a)—
Restated Articles of Incorporation of CMS Energy, effective June 1, 2004, as amended May 22, 2009 (Form 10‑Q for the quarterly period ended June 30, 2009)
3.21
1-95133.2—
CMS Energy Bylaws, amended and restated effective February 8, 2016 (Form 8‑K filed February 8, 2016)
3.31-56113(c)—
Restated Articles of Incorporation of Consumers effective June 7, 2000 (Form 10‑K for the fiscal year ended December 31, 2000)
3.41-56113.2—
Consumers Bylaws, amended and restated as of January 24, 2013 (Form 8-K filed January 29, 2013)
4.12-65973(b)(1)–4—Indenture dated as of September 1, 1945 between Consumers and Chemical Bank (successor to Manufacturers Hanover Trust Company), as Trustee, including therein indentures supplemental thereto through the Forty-third Supplemental Indenture dated as of May 1, 1979 (Form S-16 filed November 13, 1979)
    Indentures Supplemental thereto:
4.1.a1-56114.2—
104th dated as of 8/11/05 (Form 8-K filed August 11, 2005)
4.1.b1-56114.1—
112th dated as of 9/1/10 (Form 8-K filed September 7, 2010)
4.1.c1-56114.1—
113th dated as of 10/15/10 (Form 8-K filed October 20, 2010)
4.1.d1-56114.1—
114th dated as of 3/31/11 (Form 8-K filed April 6, 2011)
4.1.e1-56114.1—
116th dated as of 9/1/11 (Form 10-Q for the quarterly period ended September 30, 2011)
4.1.f1-56114.1—
117th dated as of 5/8/12 (Form 8-K filed May 8, 2012)
4.1.g1-56114.1—
119th dated as of 8/3/12 (Form 10-Q for the quarterly period ended September 30, 2012)
4.1.h1-56114.1—
120th dated as of 12/17/12 (Form 8-K filed December 20, 2012)


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Table of Contents

Previously Filed
Exhibits
With File
Number
As
Exhibit
Number
Description
4.1.i1-56114.1—
121st dated as of 5/17/13 (Form 8-K filed May 17, 2013)
4.1.j1-56114.1—
4.1.k1-56114.1—
123rd dated as of 12/20/13 (Form 8-K filed December 27, 2013)
4.1.l1-56114.1—
124th dated as of 8/18/2014 (Form 8-K filed August 18, 2014)
4.1.m4.1.k1-56114.1—
4.1.n4.1.l1-56114.1—
4.1.o4.1.m1-56114.1—
4.1.p4.1.n1-56114.1—
4.1.q4.1.o1-56114.1—
4.1.r4.1.p1-56114.1—
4.1.s4.1.q1-56114.1—
4.1.t4.1.r1-56114.1—
4.1.u4.1.s1-56114.1—
4.1.v4.1.t1-56114.1—
4.1.w4.1.u1-56114.1—
4.1.x4.1.v1-56114.1—
4.1.y4.1.w1-56114.1—
4.1.z4.1.x1-56114.3—
4.1.y1-56114.1—
4.1.z1-56114.1—
4.1.aa1-56114.1—
4.1.bb1-56114.1—
4.1.cc1-56114.1—
4.21-5611(4)(b)—
4.31-5611(4)(c)—
4.41
33-47629(4)(a)—Indenture dated as of September 15, 1992 between CMS Energy and NBD Bank, as Trustee (Form S-3 filed May 1, 1992)
Indentures Supplemental thereto:
4.4.a1
1-95134.1—
4.4.b1
1-95134.1—
29th dated as of 3/22/13 (Form 8-K filed March 22, 2013)
4.4.c4.4.b1
1-95134.1—
4.4.d4.4.c1
1-95134.2—
4.4.e4.4.d1
1-95134.1—
4.4.f4.4.e1
1-95134.1—
4.4.g4.4.f1
1-95134.1—
4.4.h4.4.g1
1-95134.1—


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Table of Contents

Previously Filed
Exhibits
With File
Number
As
Exhibit
Number
Description
4.51
1-9513(4a)—
Indentures Supplemental thereto:
4.5.a1
1-95134.5.a—
4.5.b1
1-95134.1—
4.5.c1
1-95134.1—
4.5.d1
1-95134.1—
4.5.e1
1-95134.1—
4.5.f1
1-95134.1—
4.61
1-95134.6—
4.71-56114.7—
10.12
1-951310.1—
10.22
1-951310.3—
10.32
1-951310.5—
10.42
1-951310.6—
10.52
1-951310.7—
10.62
1-951310.6—
10.71
1-9513(10)(y)—Environmental Agreement dated as of June 1, 1990 made by CMS Energy to The Connecticut National Bank and Others (Form 10-K for the fiscal year ended December 31, 1990)
10.81,2
1-9513(10)(a)—
10.92
1-5611(10)(b)—
205
Table of Contents
Previously Filed
Exhibits
With File
Number
As
Exhibit
Number
Description
10.102
1-951310.2—
10.112
1-951310.1—
10.122
1-561110.12—
10.131,2
1-951310.3—
10.141
1-951310.1—
10.14.a1
1-951310.2—
10.151-561110.2—
10.161-561110.1—
10.16.a1-561110.1—
10.16.b1-561110.1—
10.172
1-951310.1—
10.181-561110.1—
21.1—
23.1—
23.2—
206
Table of Contents
Previously Filed
Exhibits
With File
Number
As
Exhibit
Number
Description
4.51
31.1		1-9513(4a)—
31.2—Indentures Supplemental thereto:
31.3—
1-951331.44.5.a—
32.1—
32.2—
4.5.b99.11
1-9513333-2496434.199.1—
4.5.c1
1-95134.1—
7th dated as of 9/26/18 (Form 8-K filed September 26, 2018)
4.5.d1
1-95134.1—
8th dated as of 2/20/19 (Form 8-K filed February 20, 2019)
4.61
—
Description of CMS Energy Securities
4.7—
Description of Consumers Securities
10.12
1-951310.1—
CMS Energy Performance Incentive Stock Plan, effective March 12, 2018 (Form 8-K filed March 14, 2018)
10.22
1-951310.3—
CMS Energy’s Deferred Salary SavingsPurchase Plan, as amended and restated effective January 1, 2019October 23, 2020 (Form 10‑K for the fiscal year ended December 31, 2018)S-3ASR filed October 23, 2020)
10.32
1-951310.5—
CMS Energy and Consumers Director’s Deferred Compensation Plan, effective as of November 30, 2007 (Form 10-K for the fiscal year ended December 31, 2014)
10.42
1-951310.6—
Supplemental Executive Retirement Plan for Employees of CMS Energy/Consumers effective on January 1, 1982 and as amended effective April 1, 2011 (Form 10-Q for the quarterly period ended March 31, 2011)
10.52
1-951310.7—
Defined Contribution Supplemental Executive Retirement Plan, as amended and restated, effective May 1, 2019 (Form 10-K for the fiscal year ended December 31, 2018)
10.62
—
Form of Officer Separation Agreement as of January 2020
10.71
1-9513(10)(y)—Environmental Agreement dated as of June 1, 1990 made by CMS Energy to The Connecticut National Bank and Others (Form 10-K for the fiscal year ended December 31, 1990)
10.81,2
1-9513(10)(a)—
Form of Indemnification Agreement between CMS Energy and its Directors, effective as of November 1, 2007 (Form 10-Q for the quarterly period ended September 30, 2007)
10.92
1-5611(10)(b)—
Form of Indemnification Agreement between Consumers and its Directors, effective as of November 1, 2007 (Form 10-Q for the quarterly period ended September 30, 2007)
10.102
—
CMS Incentive Compensation Plan for CMS Energy and Consumers Officers as amended, effective as of January 16, 2020
10.112
1-951310.1—
2016 Form of Change in Control Agreement (Form 8-K filed June 23, 2016)
10.122
—
Annual Employee Incentive Compensation Plan for Consumers as amended, effective as of December 1, 2019


197

 Previously Filed  
Exhibits
With File
Number
As
Exhibit
Number
 Description
10.132
  —
Annual CMS Enterprises Employee Incentive Compensation for CMS Enterprises as amended, effective as of December 1, 2019
10.141
1-951310.1—
$550 million Fourth Amended and Restated Revolving Credit Agreement dated as of June 5, 2018 among CMS Energy, the Banks, as defined therein, and Barclays, as Agent (Form 8‑K filed June 5, 2018)
10.151-561110.2—
$850 million Fifth Amended and Restated Revolving Credit Agreement dated as of June 5, 2018 among Consumers, the Banks, as defined therein, and JPMorgan, as Agent (Form 8-K filed June 5, 2018)
10.161-561110.1—
$250 million Amended and Restated Revolving Credit Agreement dated as of November 19, 2018 among Consumers, the Banks, as defined therein, and The Bank of Nova Scotia, as Agent (Form 8‑K filed November 20, 2018)
10.16.a1-561110.1—
Description of the Extension to the Amended and Restated $250 million Secured Revolving Credit Agreement (Form 8‑K filed November 19, 2019)
10.172
1-951310.1—
Consumers and other CMS Energy Companies Retired Executives Survivor Benefit Plan for Management/ Executive Employees, distributed July 1, 2011 (Form 10-Q for the quarterly period ended September 30, 2011)
10.181-561110.1—
Form of Commercial Paper Dealer Agreement between Consumers, as Issuer, and the Dealer party thereto (Form 10-Q for the quarterly period ended September 30, 2014)
21.1  —
Subsidiaries of CMS Energy and Consumers
23.1  —
Consent of PricewaterhouseCoopers LLP for CMS Energy
23.2  —
Consent of PricewaterhouseCoopers LLP for Consumers
31.1  —
CMS Energy’s certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2  —
CMS Energy’s certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3  —
Consumers’ certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.4  —
Consumers’ certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1  —
CMS Energy’s certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2  —
Consumers’ certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.11
333-22113499.1—
CMS Energy Stock Purchase Plan, as amended and restated October 26, 2017 (Form S-3ASR filed October 26, 2017)


198

Previously Filed
Exhibits
With File
Number
As
Exhibit
Number
Description
101.INS—Inline XBRL Instance Document
101.SCH—Inline XBRL Taxonomy Extension Schema
101.CAL—Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF—Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB—Inline XBRL Taxonomy Extension Labels Linkbase
101.PRE—Inline XBRL Taxonomy Extension Presentation Linkbase
104—Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document)
1
1Obligations of CMS Energy or its subsidiaries, but not of Consumers.
2Management contract or compensatory plan or arrangement.
Obligations of CMS Energy or its subsidiaries, but not of Consumers.
2
Management contract or compensatory plan or arrangement.
Exhibits that have been previously filed with the SEC, designated above, are incorporated herein by reference and made a part hereof.
Item 16.     Form 10-K Summary
None.


207
199

Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, CMS Energy Corporation has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
/s/ Patricia K. PoppeGarrick J. Rochow
Name:Patricia K. PoppeGarrick J. Rochow
Title:
President and Chief Executive Officer
Date:February 6, 202011, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of CMS Energy Corporation and in the capacities indicated and on February 6, 2020.
11, 2021.
/s/ Garrick J. Rochow/s/ Kurt L. Darrow
Garrick J. RochowKurt L. Darrow, Director
President, Chief Executive Officer, and Director
(Principal Executive Officer)/s/ William D. Harvey
William D. Harvey, Director
/s/ Patricia K. Poppe/s/ Kurt L. Darrow
Patricia K. PoppeKurt L. Darrow, Director
President and Chief Executive Officer, and Director
/s/ Stephen E. Ewing
(Principal Executive Officer)Stephen E. Ewing, Director
/s/ William D. Harvey
/s/ Rejji P. HayesWilliam D. Harvey, Director/s/ John G. Russell
Rejji P. HayesJohn G. Russell, Director
Executive Vice President and Chief Financial Officer/s/ John G. Russell
John G. Russell, Director
(Principal Financial Officer)
/s/ Suzanne F. Shank
(Principal Financial Officer)Suzanne F. Shank, Director
/s/ Myrna M. Soto
/s/ Glenn P. BarbaMyrna M. Soto, Director
Glenn P. Barba/s/ Myrna M. Soto
Vice President, Controller, and Chief Accounting OfficerMyrna M. Soto, Director
(Controller)/s/ John G. Sznewajs
John G. Sznewajs, Director
(Controller)
/s/ Ronald J. Tanski
Ronald J. Tanski, Director
/s/ Jon E. Barfield/s/ Ronald J. TanskiLaura H. Wright
Jon E. Barfield, DirectorRonald J. Tanski,Laura H. Wright, Director
/s/ Deborah H. Butler/s/ Laura H. Wright
Deborah H. Butler, DirectorLaura H. Wright, Director


208
200

Table of Contents

Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Consumers Energy Company has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
/s/ Patricia K. PoppeGarrick J. Rochow
Name:Patricia K. PoppeGarrick J. Rochow
Title:
President and Chief Executive Officer
Date:February 6, 202011, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of Consumers Energy Company and in the capacities indicated and on February 6, 2020.
11, 2021.
/s/ Garrick J. Rochow/s/ Kurt L. Darrow
Garrick J. RochowKurt L. Darrow, Director
President, Chief Executive Officer, and Director
(Principal Executive Officer)/s/ William D. Harvey
William D. Harvey, Director
/s/ Patricia K. Poppe/s/ Kurt L. Darrow
Patricia K. PoppeKurt L. Darrow, Director
President and Chief Executive Officer, and Director
/s/ Stephen E. Ewing
(Principal Executive Officer)Stephen E. Ewing, Director
/s/ William D. Harvey
/s/ Rejji P. HayesWilliam D. Harvey, Director/s/ John G. Russell
Rejji P. HayesJohn G. Russell, Director
Executive Vice President and Chief Financial Officer/s/ John G. Russell
John G. Russell, Director
(Principal Financial Officer)
/s/ Suzanne F. Shank
(Principal Financial Officer)Suzanne F. Shank, Director
/s/ Myrna M. Soto
/s/ Glenn P. BarbaMyrna M. Soto, Director
Glenn P. Barba/s/ Myrna M. Soto
Vice President, Controller, and Chief Accounting OfficerMyrna M. Soto, Director
(Controller)/s/ John G. Sznewajs
John G. Sznewajs, Director
(Controller)
/s/ Ronald J. Tanski
Ronald J. Tanski, Director
/s/ Jon E. Barfield/s/ Ronald J. TanskiLaura H. Wright
Jon E. Barfield, DirectorRonald J. Tanski,Laura H. Wright, Director
/s/ Deborah H. Butler/s/ Laura H. Wright
Deborah H. Butler, DirectorLaura H. Wright, Director


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