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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20222023
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 NumberRegistrant; State of Incorporation; Address; and Telephone NumberIRS Employer Identification No.
1-9513CMS ENERGY CORPORATION38-2726431
(A Michigan Corporation)
One Energy Plaza, Jackson, Michigan 49201
(517) 788‑0550
1-5611CONSUMERS 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
CMS Energy Corporation Depositary Shares, each representing a 1/1,000th interest in a share of 4.200% Cumulative Redeemable Perpetual Preferred Stock, Series CCMS PRCNew York Stock Exchange
Consumers Energy Company Cumulative Preferred Stock, $100 par value: $4.50 SeriesCMS-PBNew York Stock Exchange
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:Yesx☒No☐Consumers Energy Company:Yesx☒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:Yesx☒No☐Consumers Energy Company:Yesx☒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 filerx☒Large accelerated filer☐
Non‑accelerated filer☐Non‑accelerated filerx☒
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 is a shell company (as defined in Rule 12b‑2 of the Exchange Act).
CMS Energy Corporation:Yes☐Nox☒Consumers Energy Company:Yes☐Nox☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock at OctoberJuly 10, 2022:2023:
CMS Energy Corporation:
CMS Energy Corporation Common Stock, $0.01 par value290,251,602291,726,672
Consumers Energy Company:
Consumers Common Stock, $10 par value, privately held by CMS Energy Corporation84,108,789


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CMS Energy Corporation
Consumers Energy Company
Quarterly Report on Form 10-Q10‑Q to the Securities and Exchange Commission for the Quarterly Period Ended SeptemberJune 30, 20222023
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Forward-LookingForward-looking Statements and Information
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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
20212022 Form 10‑K
Each of CMS Energy’s and Consumers’ Annual Report on Form 10‑K for the year ended December 31, 20212022
3G
Third generation technology
4G
Fourth generation technology
ABATE
Association of Businesses Advocating Tariff Equity
ARO
Asset retirement obligation
Aviator Wind
Aviator Wind Holdings, 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 NorthStar Clean Energy, 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
CCR
Coal combustion residual
CEO
Chief Executive Officer
CERCLA
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended
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CFO
Chief Financial Officer
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Clean Air Act
Federal Clean Air Act of 1963, as amended
Clean Energy Plan
Consumers’ long-term strategy for delivering clean, reliable, resilient, and affordable energy to its customerscustomers; this plan was originally outlined and approved in Consumers’ 2018 integrated resource plan and subsequently updated and approved through the increased use of energy efficiency and customer demand management programs, additional renewable energy generation, and conservation voltage reductionits 2021 integrated resource plan
Clean Water Act
Federal Water Pollution Control Act of 1972, as amended
CMS Energy
CMS Energy Corporation and its consolidated subsidiaries, unless otherwise noted; the parent of Consumers NorthStar Clean Energy, and until October 1, 2021, EnerBank
CMS ERM
CMS Energy Resource Management Company, a wholly owned subsidiary of NorthStar Clean Energy
CMS Generation Michigan Power
CMS Generation Michigan Power L.L.C., a wholly owned subsidiary of HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of NorthStar Clean Energy
CMS Land
CMS Land Company, a wholly owned subsidiary of CMS Capital, L.L.C., a wholly owned subsidiary of CMS Energy
Consumers
Consumers Energy Company and its consolidated subsidiaries, unless otherwise noted; a wholly owned subsidiary of CMS Energy
COVID‑19Covert Generating Facility
Coronavirus disease 2019, a respiratory illnessA 1,200-MW natural gas-fueled generating unit that was declaredacquired by Consumers in May 2023 from New Covert Generating Company, LLC, a pandemic in March 2020 and to which public and private agencies initially responded by instituting social-distancing and other measures designed to slow the spread of the diseasenon-affiliated company
Craven
Craven County Wood Energy Limited Partnership, a VIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of NorthStar Clean Energy, has a 50-percent interest
CSAPR
Cross-State Air Pollution Rule of 2011, as amended
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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 Plans
Defined benefit pension plans of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries
DB SERP
Defined Benefit 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 NorthStar Clean Energy
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
DTE Electric
DTE Electric Company, a non‑affiliated company
EGLE
Michigan Department of Environment, Great Lakes, and Energy
EnerBankEndangered Species Act
EnerBank USA, until October 1, 2021, a wholly owned subsidiaryEndangered Species Act of CMS Capital, L.L.C., a wholly owned subsidiary of CMS Energy; on October 1, 2021, EnerBank was acquired by Regions Bank1973
energy waste reduction
The reduction of energy consumption through energy efficiency and demand-side energy conservation, as established under the 2016 Energy Law
EPA
U.S. Environmental Protection Agency
EPS
Earnings per share
Exchange Act
Securities Exchange Act of 1934
Federal Power Act
Federal Power Act of 1920
FERC
Federal Energy Regulatory Commission
FTR
Financial transmission right
GAAP
U.S. Generally Accepted Accounting Principles
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FTR
Financial transmission right
GAAP
U.S. Generally Accepted Accounting Principles
GCR
Gas cost recovery
Genesee
Genesee Power Station Limited Partnership, a VIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of NorthStar Clean Energy, has a 50-percent interest
Grayling
Grayling Generating Station Limited Partnership, a VIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of NorthStar Clean Energy, has a 50-percent interest
IRP
Integrated resource plan
IRS
Internal Revenue Service
kWh
Kilowatt-hour, a unit of energy equal to one thousand watt-hours
LIBOR
London Interbank Offered Rate
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
MD&A
Management’s Discussion and Analysis of Financial Condition and Results of Operations
MGP
Manufactured gas plant
Migratory Bird Treaty Act
Migratory Bird Treaty Act of 1918
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MISO
Midcontinent Independent System Operator, Inc.
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
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MPSC
Michigan Public Service Commission
MW
Megawatt, a unit of power equal to one million watts
NAAQS
National Ambient Air Quality Standards
Natural Gas Act
Natural Gas Act of 1938
Newport Solar Holdings
Newport Solar Holdings III, LLC, a wholly owned subsidiary of Grand River Solar, LLC, a wholly owned subsidiary of NorthStar Clean Energy
NorthStar Clean Energy
NorthStar Clean Energy Company, a wholly owned subsidiary of CMS Energy, formerly known as CMS Enterprises Company
NOx
Nitrogen oxides
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
NWO Holdco
NWO Holdco, L.L.C., a VIE in which NWO Holdco I, LLC, a wholly owned subsidiary of Grand River Wind, LLC, a wholly owned subsidiary of NorthStar Clean Energy, holds a Class B membership interest
OPEB
Other Post-Employment Benefitspost-employment benefits
OPEB Plan
Postretirement health care and life insurance plans of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries
PCB
Polychlorinated biphenyl
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PPA
Power purchase agreement
PSCR
Power supply cost recovery
RCRA
Federal Resource Conservation and Recovery Act of 1976
REC
Renewable energy credit
Regions Bank
A subsidiary of Regions Financial Corporation, a non-affiliated company
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
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
SOFR
Secured overnight financing rate calculated and published by the Federal Reserve Bank of New York and selected as the recommended alternative to replace LIBOR for dollar-denominated financial contracts by the Alternative Reference Rates Committee
TAES
Toshiba America Energy Systems Corporation, a non-affiliated company
TCJA
Tax Cuts and Jobs Act of 2017
Term SOFR
The rate per annum that is a forward-looking term rate based on SOFR
T.E.S. Filer City
T.E.S. Filer City Station Limited Partnership, a VIE in which HYDRA‑CO Enterprises, Inc., a wholly owned subsidiary of NorthStar Clean Energy, has a 50-percent interest
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VIE
Variable interest entity
Wolverine Power
Wolverine Power Supply Cooperative, Inc., a non-affiliated company
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Filing Format
This combined Form 10-Q10‑Q is separately filed by CMS Energy and Consumers. Information in this combined Form 10-Q10‑Q 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.
CMS Energy is the parent holding company of several subsidiaries, including Consumers and NorthStar Clean Energy (formerly known as CMS Enterprises Company).Energy. None of CMS Energy, NorthStar Clean Energy, 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 securities should not consider the financial resources or results of operations of CMS Energy, NorthStar Clean Energy, 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 or preferred stock. Similarly, neither Consumers nor any other subsidiary of CMS Energy has any obligation in respect of securities of CMS Energy.
This report should be read in its entirety. No one section of this report deals with all aspects of the subject matter of this report. This report should be read in conjunction with the consolidated financial statements and related notes and with MD&A included in the 20212022 Form 10-K.10‑K.
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 for material information. Information contained on CMS Energy’s website is not incorporated herein.
Forward-LookingForward-looking Statements and Information
This Form 10-Q10‑Q 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 and effect of recent events, such as the war in Ukraine, the COVID-19 pandemic,worsening trade relations and geopolitical tensions with China, and the responses to these events, and related economic disruptions including, but not limited to, labor shortages, inflation, and supply chain disruptions all of which could impact CMS Energy’s and Consumers’ workforce, operations, revenues, expenses, uncollectible accounts, energy efficiency programs, postretirement benefits funding, PSCR and GCR costs, capital investment programs, cash flows, liquidity, maintenance of existing assets, and other operating expenses
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•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
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•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, Michigan Electric Transmission Company, LLC (a non‑affiliated company), 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 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, the Public Utility Regulatory Policies Act of 1978, infrastructure integrity or security, cybersecurity, 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, the Dodd-Frank Wall Street Reform and Consumer Protection Act, of 2010, and other business issues that could have an impact on CMS Energy’s, Consumers’, or any of their affiliates’ businesses or financial results
•factors affecting, disrupting, interrupting, or otherwise impacting facilities, utility infrastructure, operations, or backup systems, such as costs and availability of personnel, equipment, and materials; weather conditions;and climate, including catastrophic weather-related damage and extreme temperatures; natural disasters; catastrophic weather-related damage;fires; smoke; scheduled or unscheduled equipment outages; maintenance or repairs; contractor performance; environmental incidents; failures of 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 regulationsregulations; accidents; explosions; physical disasters; global pandemics; cyber incidents; vandalism; war or terrorism; and the ability to obtain or maintain insurance coverage for these events
•the ability of CMS Energy and Consumers to execute 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 agencies such as EGLE, the EPA, FERC, 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’ coal ash management or routine maintenance, repair, and replacement classification under New Source Review, a construction-permitting program under the Clean Air Act
•changes in energy markets, including availability, price, and priceseasonality 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, gasoline, diesel fuel, 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 on the credit and capital markets of the future transition from LIBOR to an alternative reference interest rate, including SOFR, which may perform differently than LIBOR and could result in increased interest rate expense
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•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, andor energy storage
•loss of customer demand for natural gas due to alternative technologies or fuels
•restricted ability to construct natural gas infrastructure due to environmental regulations or other governmental action
•ability of Consumers to meet increased renewable energy demand due to customers seeking to meet their own sustainability goals in a timely and cost-efficient manner
•the reputational or other impact on CMS Energy and Consumers of the failure to achieve ambitionsgreenhouse gas reduction goals related to reducing their impact on climate change
•adverse consequences of employee, director, or third-partythird‑party fraud or non‑compliance with codes of conduct or with laws or regulations
•federal regulation of electric sales, including periodic re‑examination by federal regulators of CMS Energy’s and Consumers’ market-based sales authorizations
•any event, change, development, occurrence, or circumstance that could impact the implementation of the 2021 IRP,Clean Energy Plan, including any action by a regulatory authority or other third party to prohibit, delay, or impair the implementation of the 2021 IRPClean Energy Plan
•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, gas transmission, and gas and electric 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, community opposition, 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
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•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 cyberattack or other cyber incident
•potential disruption to, interruption or failure of, or other impacts on information technology 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
•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
•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-regulatednon‑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 Part I—Item 1. Financial Statements—MD&A—Outlook and Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments; and Part I—Item 1A. Risk Factors in the 20212022 Form 10-K.
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Part I—Financial Information
Item 1.    Financial Statements
Index to Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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4844
Consolidated Statements of Income (Unaudited)
4844
Consolidated Statements of Comprehensive Income (Unaudited)
5046
Consolidated Statements of Cash Flows (Unaudited)
5147
Consolidated Balance Sheets (Unaudited)
5248
Consolidated Statements of Changes in Equity (Unaudited)
5450
Consumers Consolidated Financial Statements (Unaudited)
5652
Consolidated Statements of Income (Unaudited)
5652
Consolidated Statements of Comprehensive Income (Unaudited)
5753
Consolidated Statements of Cash Flows (Unaudited)
5955
Consolidated Balance Sheets (Unaudited)
6056
Consolidated Statements of Changes in Equity (Unaudited)
6258
Notes to the Unaudited Consolidated Financial Statements
6359
1:
6359
2:
Contingencies and Commitments
6560
3:
7065
4:
Fair Value Measurements
7268
5:
Financial Instruments
7470
6:
Asset Retirement ObligationsBenefits
7571
7:
Retirement BenefitsIncome Taxes
7572
8:
Income Taxes
77
9:
Earnings Per Share—CMS Energy
7873
9:
74
10:
79
11:
Cash and Cash EquivalentsVariable Interest Entities
8481
12:
84
13:
Variable Interest Entities
87
14:
8983
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CMS Energy Corporation
Consumers Energy Company
Management’s Discussion and Analysis of Financial Condition and Results of Operations
This MD&A 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, and NorthStar Clean Energy, (formerly known as CMS Enterprises Company), primarily a domestic independent power producer and marketer. Consumers’ electric utility operations include the generation, purchase, 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. NorthStar Clean Energy, 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. CMS Energy was also the parent holding company of EnerBank, an industrial bank located in Utah, until October 1, 2021 when EnerBank was acquired by Regions Bank.
CMS Energy and Consumers manage their businesses by the nature of services each provides. CMS Energy operates principally in three business segments: electric utility; gas utility; and NorthStar Clean Energy, its non‑utility operations and investments. 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
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, CMS Energy and Consumers employ the “CE Way,” a lean operating model designed to improve safety, quality, cost, delivery, and employee morale.
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 CMS Energy and Consumers create for customers and investors, but also their responsibility to social and environmental goals. The triple bottom line balances the interests of employees, customers, suppliers, regulators, creditors, Michigan’s residents,
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the investment community, and other stakeholders, and it reflects the broader societal impacts of CMS Energy’s and Consumers’ activities.
cms.jpg
CMS Energy’s Environmental, Social, Governance and Sustainability Report, which is available to the public, describes CMS Energy’s and Consumers’ 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 they 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. Since 2010,Over the last ten years, Consumers’ Occupational Safety and Health Administration recordable incident rate has decreased by 4034 percent.
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, less-costly dispatchable generation sources, and energy waste reduction and demand response programs
•targeted infrastructure investment to reduce maintenance costs and improve reliability and safety
•supply chain optimization
•economic development to increase sales and reduce overall rates
•information and control system efficiencies
•employee and retiree health care cost sharing
•workforce productivity enhancements
While CMS Energy and Consumers have experienced some supply chain disruptions and inflationary pressures, they continuehave taken steps to mitigate the impact on their ability to provide safe and reliable service 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
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and federal environmental, health, and safety laws and regulations. Management considers climate change
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and other environmental risks in 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 through 2021,2022, CMS Energy and Consumers have:
•decreased their combined percentage of electric supply (self-generated and purchased) from coal by 1317 percentage points since 2015
•reduced carbon dioxide emissions by over 30 percent since 2005
•reduced the amount of water used to generate electricity by nearly 30over 35 percent since 2012
•reduced landfill waste disposal by over 1.61.7 million tons since 1992
•reduced methane emissions by nearlymore than 20 percent since 2012
Since 2005, Consumers has reduced its sulfur dioxide and particulate matter emissions by over 90 percent and its nitrogen oxidesNOx emissions by over 80 percent. Consumers began tracking mercury emissions in 2007; since that time, it has reduced such emissions by nearly 90 percent.
The 2016 Energy Law:
•raised the renewable energyportfolio standard to 15 percent in 2021; Consumers has met the 15‑percent requirement in 2021 and expects to meetcontinue meeting the requirement in future yearsgoing forward 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 achieved 30 33‑percent combined renewable energy and energy waste reduction through 20212022
•authorized incentives for demand response programs and energy efficiency programs, referring to the combined initiatives as energy waste reduction programs
•established an integrated planning process for new electric capacity and energy resources
Consumers’ Clean Energy Plan details its strategy to meet customers’ long-term energy needs. The Clean Energy Plan was originally outlined in Consumers’ 2018 IRP, which wasmost recently revised and approved by the MPSC in 2019.June 2022. 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.
In June 2021, Consumers filed its 2021 IRP with the MPSC, proposing updates to theThe Clean Energy Plan. In April 2022, Consumers and a broad coalition of key stakeholders, including customer groups, environmental organizations, the MPSC Staff, energy industry representatives, and the Michigan Attorney General, filed a settlement agreement with the MPSC resolving Consumers’ 2021 IRP. The MPSC approved that settlement agreement in June 2022.
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The 2021 IRPPlan outlines Consumers’ long-term strategy for delivering clean, reliable, resilient, and affordable energy to its customers, including plans to:
•end the use of coal-fueled generation in 2025, 15 years sooner than initially planned
•purchase an existingthe Covert Generating Facility, a natural gas-fueled generating unit providing an additional 1,176with 1,200 MW of nameplate capacity, and allowing Consumers to continue providingto provide controllable sources of electricity to customerscustomers; this purchase was completed in May 2023
•solicit approximatelyup to 700 MW of capacity through PPAs from sources inable to deliver to Michigan’s Lower Peninsula beginning in 2025
•expand its investment in renewable energy, adding nearly 8,000 MW of solar generation by 2040
Under the 2021 IRP,Clean Energy Plan, Consumers will continue to earnearns a return equal to its weighted-average cost of capital on payments made under new competitively bid PPAs with non‑affiliated entities approved by the MPSC.
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The 2021 IRPClean Energy Plan will allow Consumers to exceed its breakthrough goal of at least 50‑percent combined renewable energy and energy waste reduction by 2030.
Presented in the following illustration is Consumers’ 2021 capacity portfolio and its future capacity portfolio under its 2021 IRP.Clean Energy Plan. This illustration includes the effects of purchased capacity and energy waste reduction and uses the nameplate capacity for all energy sources:
7636
1    Does not include RECs.
2    These amounts and fuel sources will vary and are dependent on a one-timeone‑time competitive solicitation to acquire approximatelyup to 700 MW of capacity through PPAs from sources inable to deliver to Michigan’s Lower Peninsula beginning in 2025.
In addition to itsConsumers’ plan to eliminate its use of coal-fueled generation in 2025, CMS Energy and Consumers hashave set the net‑zero emissions goals discussed below.
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Net-zero methane emissions from 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 outdated infrastructure, and adopting new technologies and practices. The remaining emissions will likely be offset by purchasing and/or producing renewable natural gas.
Net-zero carbon emissions from 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 meet 90 percent of its customers’ needs with clean energy sources by 2040 through execution of its Clean Energy Plan. New technologies and carbon offset measures including, but not limited to, carbon sequestration, methane emission capture, forest preservation, and reforestation may be used to close the gap to achieving net-zero carbon emissions.
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Net-zero greenhouse gas emissions target for the entire natural gas systembusiness by 2050: This goal, announced in March 2022, includesincorporates greenhouse gas emissions from Consumers’ natural gas delivery system, including suppliers and customers, and has an interim goal of reducing customer emissions by 20 percent by 2030. Consumers expects to meet this goal through carbon offset measures, renewable natural gas, energy efficiency and demand response programs, and adoptingthe adoption of cost-effective emerging technologies.technologies once proven and commercially available.
Additionally, to advance its environmental stewardship in Michigan and to minimize the impact of future regulations, Consumers announcedset the following targets in 2022:
•to enhance, restore, or protect 6,500 acres of land by 20262026; in 2022, Consumers enhanced, restored, or protected over 700 acres of land
•to reduce water usage by 1.5 billion gallons by 2026; in 2022, Consumers reduced water usage by more than 750 million gallons
•to increase the rate of waste diverted from landfills (through waste reduction, recycling, and reuse) to 90 percent from a baseline of 88 percent through 2023; in 2022, Consumers’ rate of waste diverted from landfills was 92 percent
CMS Energy and Consumers are monitoring numerous legislative, policy, and regulatory initiatives, including those to regulate and report greenhouse gases, and related litigation. While CMS Energy and Consumers cannot predict the outcome of these matters, which could affect them materially, 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 preserveattract and create jobs,retain talent, and to reinvest in the communities they serve.
For the ninesix months ended SeptemberJune 30, 2022,2023, CMS Energy’s net income available to common stockholders was $659$397 million, and diluted EPS were $2.27.$1.36. This compares with net income available to common stockholders of $711$496 million and diluted EPS of $2.46$1.71 for the ninesix months ended SeptemberJune 30, 2021.2022. In 2022, higher2023, lower gas and electric sales due primarily to favorableunfavorable weather and higher service restoration costs, were more thanpartially offset by gas and electric rate increases and a gain on the absenceextinguishment of 2021 earnings from discontinued operations and by higher maintenance and other operating expenses.debt. 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.
Over the next five years, Consumers expects weather-normalized electric and gas deliveries to remain relatively stable relativecompared to 2021.2022. 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 and positively impacting the triple bottom line of people, planet, and profit. During 2022, CMS Energy and Consumers:
•settled and received approval of Consumers’ Clean Energy Plan, gas rate case, and electric rate case, demonstrating the constructive nature of Michigan’s regulatory environment
•partnered with state and federal agencies to secure over $100 million of customer assistance to help keep customer bills affordable
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•committed to power over 1,200 Michigan public buildings with 100‑percent clean energy
•reached an agreement with General Motors Company, a non-affiliatednon‑affiliated company, to power all of its auto plants within Consumers’ electric service territoryserved by Consumers with 100‑percent clean energy
•announced the “Clean Air” program for residential and business customers who want to offset carbon emissions from their natural gas use and help protect the planet’s atmosphere
•installed five new units at the Freedom Compressor Station, continuing progress toward achieving Consumers’ Natural Gas Delivery Plan, making its gas system even more safe, reliable, affordable, and clean
•participated in the state’s economic development efforts that resulted in Gotion, Inc., a non-affiliatednon‑affiliated global battery components producer, committing to construct a manufacturing facility in Big Rapids, Michigan
•received recognition by Forbes®as the #1 utility company in the U.S. for America’s Best Employers for Women, andas well as a top company for America’s Best Employers for Diversity by Forbes®
CMS Energy and Consumers will continue to utilize the CE 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, and replacements, and electric supply projects.clean generation. 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 eightover seven percent. This rate-base growth, together with cost-control measures, should allow Consumers to maintain affordable customer prices.
Presented in the following illustration are planned capital expenditures of $15.5 billion that Consumers expects to make from 2023 through 2027:
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The 2021 IRP will potentially add nearly $1.0 billion of capital expenditures to the $14.3 billion that Consumers already expects to make from 2022 through 2026, which are presented in the following illustration:
cms-20220930_g3.jpg
Of this amount, Consumers plans to spend $10.8$12.4 billion over the next five years to primarily maintain and upgrade its gas infrastructure and electric distribution systems in order to enhance safety and reliability, improve customer satisfaction, reduce energy waste on those systems, and facilitate its clean energy transformation. The gas infrastructure projects comprise $6.4$6.3 billion to sustain deliverability, enhance pipeline integrity and safety, and reduce methane emissions. The electricElectric distribution and other projects comprise $4.4$6.1 billion primarily to strengthen circuits and substations, replace poles, and interconnect clean energy resources. Consumers also expects to spend $2.8$3.1 billion on new clean generation, which includes investments in wind, solar, and hydro electrichydroelectric generation resources, and $0.7 billion on other electric supply projects.resources.
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.
2022 ElectricGas Rate Case: In AprilDecember 2022, Consumers filed an application with the MPSC seeking an annual rate increase of $212 million, based on a 10.25‑percent authorized return on equity for the projected 12‑month period ending September 30, 2024. In June 2023, Consumers reduced its requested annual rate increase to $175 million, based on a 10.25‑percent authorized return on equity. In July 2023, Consumers filed a settlement agreement reflecting an annual rate increase of $95 million, based on a 9.9‑percent authorized return on equity, effective October 1, 2023.
2023 Electric Rate Case: In May 2023, Consumers filed an application with the MPSC seeking a rate increase of $272$216 million, made up of two components. First, Consumers requested a $266$207 million annual rate increase, based on a 10.25‑percent authorized return on equity for the projected twelve-month12‑month period ending December 31, 2023.February 28, 2025. The filing requested authority to recover future investments associated withcosts related to new infrastructure investment primarily in distribution system reliability solar generation, environmental compliance, and enhanced technology.cleaner energy resources. Second, Consumers requested approval of a surcharge for the recovery of $9 million of distribution investments made in 2022 that exceeded the rates authorized in accordance with the December 2021 electric rate order.
2022 Electric Rate Case: In January 2023, the MPSC approved a settlement agreement authorizing an annual rate increase of $155 million, based on a 9.9‑percent authorized return on equity. The MPSC also approved a surcharge for the recovery of $6 million of depreciation, property tax, and interest expense related to distribution investments made in 2021 that exceeded what was authorized in rates in accordance with the December 2020 electric rate order. In September 2022, Consumers revised its requested increase to $292 million.The new rates became effective January 20, 2023.
2021 Gas Rate Case: In December 2021, Consumers filed an application with the MPSC seeking an annual rate increase of$278 million, based on a 10.5-percent authorized return on equity and a projected
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twelve-month period ending September 30, 2023. In July 2022, the MPSCapproved a settlement agreement authorizing an annual rate increase of $170 million, based on a 9.9-percent authorized return on equity, effective October 1, 2022. 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.
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 CE 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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Results of Operations
CMS Energy Consolidated Results of Operations
In Millions, Except Per Share AmountsIn Millions, Except Per Share AmountsIn Millions, Except Per Share Amounts
Three Months EndedNine Months EndedThree Months EndedSix Months Ended
September 3020222021Change20222021Change
June 30June 3020232022Change20232022Change
Net Income Available to Common StockholdersNet Income Available to Common Stockholders$163 $186 $(23)$659 $711 $(52)Net Income Available to Common Stockholders$195 $145 $50 $397 $496 $(99)
Basic Earnings Per Average Common ShareBasic Earnings Per Average Common Share$0.56 $0.64 $(0.08)$2.27 $2.46 $(0.19)Basic Earnings Per Average Common Share$0.67 $0.50 $0.17 $1.36 $1.71 $(0.35)
Diluted Earnings Per Average Common ShareDiluted Earnings Per Average Common Share$0.56 $0.64 $(0.08)$2.27 $2.46 $(0.19)Diluted Earnings Per Average Common Share$0.67 $0.50 $0.17 $1.36 $1.71 $(0.35)
In MillionsIn MillionsIn Millions
Three Months EndedNine Months EndedThree Months EndedSix Months Ended
September 3020222021Change20222021Change
June 30June 3020232022Change20232022Change
Electric utilityElectric utility$194 $195 $(1)$501 $504 $(3)Electric utility$147 $140 $7 $217 $307 $(90)
Gas utilityGas utility(13)(9)(4)239 208 31 Gas utility23 36 (13)177 252 (75)
NorthStar Clean EnergyNorthStar Clean Energy11 7 4 26 26 — NorthStar Clean Energy3 7 (4)10 15 (5)
Corporate interest and otherCorporate interest and other(29)(37)8 (111)(109)(2)Corporate interest and other22 (38)60 (7)(78)71 
Discontinued operations— 30 (30)4 82 (78)
Net Income Available to Common StockholdersNet Income Available to Common Stockholders$163 $186 $(23)$659 $711 $(52)Net Income Available to Common Stockholders$195 $145 $50 $397 $496 $(99)
Amounts in the following tables are presented pre-tax, with the exception of income tax changes.
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Presented in the following table is a summary of after-tax changes to net income available to common stockholders for the three and ninesix months ended SeptemberJune 30, 20222023 versus 2021:2022:
In Millions
Three Months EndedNine Months Ended
September 30, 2021$186 $711 
Reasons for the change
Consumers electric utility and gas utility
Electric sales$(19)$(14)
Gas sales3 61 
Electric rate increase4 13 
Lower non-operating retirement benefits expenses10 23 
Lower income tax expense3 20 
Gain on sale of radio tower assets, net of voluntary gain sharing1
— 5 
Lower (higher) maintenance and other operating expenses3 (28)
Higher property taxes, reflecting higher capital spending(5)(14)
Voluntary separation plan expenses— (8)
Ray Compressor Station impairment2
— (7)
Higher interest charges(4)(6)
Other— (17)
$(5)$28 
NorthStar Clean Energy4 — 
Corporate interest and other8 (2)
Discontinued operations(30)(78)
September 30, 2022$163 $659 
1See Note 1, Regulatory Matters.
2See Note 2, Contingencies and Commitments.
In Millions
Three Months EndedSix Months Ended
June 30, 2022$145 $496 
Reasons for the change
Consumers electric utility and gas utility
Electric sales$(26)$(80)
Gas sales(24)(100)
Electric rate increase55 73 
Gas rate increase29 98 
Higher other income, net of expenses12 17 
Lower other maintenance and operating expenses19 6 
Lower (higher) service restoration costs9 (58)
Higher interest charges(32)(55)
2023 voluntary separation program expenses(28)(28)
Higher depreciation and amortization(12)(20)
Higher property taxes, reflecting higher capital spending, and other(8)(18)
$(6)$(165)
NorthStar Clean Energy(4)(5)
Corporate interest and other60 71 
June 30, 2023$195 $397 
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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 the three and ninesix months ended SeptemberJune 30, 20222023 versus 2021 (amounts are presented pre-tax, with the exception of income tax changes):2022:
In Millions
Three Months EndedNine Months Ended
September 30, 2021$195 $504 
Reasons for the change
Electric deliveries1 and rate increases
Rate increase, including return on higher renewable capital spending$6 $18 
Lower revenue due primarily to weather and sales mix(21)(6)
Lower other revenues(4)(18)
$(19)$(6)
Maintenance and other operating expenses
Lower service restoration costs36 28 
Gain on sale of radio tower assets, net of voluntary gain sharing2
— 5 
Higher forestry costs(5)(11)
Higher distribution, transmission, and generation expenses(1)(8)
Higher uncollectible accounts expense(4)(7)
Higher demand response costs(1)(6)
Voluntary separation plan expenses— (6)
Higher maintenance and other operating expenses(24)(17)
1 (22)
Depreciation and amortization
Lower expense from depreciation rate case settlement, offset by higher capital spending12 20 
General taxes
Higher property taxes, reflecting higher capital spending, and other(5)(11)
Other income, net of expenses
Lower non-operating retirement benefits expenses9 21 
Lower other income, net of expenses(1)(10)
8 11 
Interest charges(3)(3)
Income taxes5 8 
September 30, 2022$194 $501 
In Millions
Three Months EndedSix Months Ended
June 30, 2022$140 $307 
Reasons for the change
Electric deliveries1 and rate increases
Rate increase, including return on higher renewable capital spending$55 $73 
Higher energy waste reduction program revenues6 18 
Lower revenue due primarily to unfavorable weather and sales mix(26)(73)
Lower other revenues— (7)
$35 $11 
Maintenance and other operating expenses
Lower distribution, transmission, and generation expenses5 11 
Lower (higher) service restoration costs9 (58)
Higher energy waste reduction program costs(6)(18)
2023 voluntary separation program expenses(17)(17)
Lower mutual insurance distribution— (9)
Higher other maintenance and operating expenses(4)(12)
(13)(103)
Depreciation and amortization
Increased plant in service, reflecting higher capital spending(9)(9)
General taxes
Higher property taxes, reflecting higher capital spending, and other(4)(9)
Other income, net of expenses
Higher PSCR interest due primarily to 2022 underrecovery6 8 
Higher other income, net of expenses6 9 
12 17 
Interest charges(20)(32)
Income taxes
Lower (higher) electric utility pre-tax earnings(1)32 
Deferred tax liability reversal2
— 9 
Higher (lower) production tax credits2 (6)
Lower other income taxes5 — 
6 35 
June 30, 2023$147 $217 
1For the three months ended SeptemberJune 30, deliveries to end-use customers were 10.28.9 billion kWh in 20222023 and 10.19.1 billion kWh in 2021.2022. For the ninesix months ended SeptemberJune 30, deliveries to end-use customers were 28.517.7 billion kWh in 20222023 and 27.518.3 billion kWh in 2021.2022.
2See Note 1, Regulatory Matters.7, Income Taxes.
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Consumers Gas Utility Results of Operations
Presented in the following table are the detailed changes to the gas utility’s net income available to common stockholders for the three and ninesix months ended SeptemberJune 30, 20222023 versus 2021 (amounts are presented pre-tax, with the exception of income tax changes):2022:
In Millions
Three Months EndedNine Months Ended
September 30, 2021$(9)$208 
Reasons for the change
Gas deliveries1 and rate increases
Higher revenue due primarily to favorable weather and sales mix$4 $83 
Higher other revenues3 1 
$7 $84 
Maintenance and other operating expenses
Gain on sale of radio tower assets, net of voluntary gain sharing2
— 2 
Ray Compressor Station impairment3
— (10)
Higher uncollectible accounts expense(3)(6)
Lower (higher) distribution, transmission, and compression expenses3 (5)
Voluntary separation plan expenses— (4)
Higher maintenance and other operating expenses(4)(10)
(4)(33)
Depreciation and amortization
Increased plant in service, reflecting higher capital spending(3)(17)
General taxes
Higher property taxes, reflecting higher capital spending(3)(12)
Other income, net of expenses
Lower non-operating retirement benefits expenses5 11 
Lower other income, net of expenses(1)(5)
4 6 
Interest charges(3)(5)
Income taxes
Lower (higher) income tax expense due primarily to accelerated amortization of excess deferred income taxes4
(1)8 
Lower (higher) income tax expense due primarily to acceleration of tax benefits associated with cost of removal4
(1)6 
Higher gas utility pre-tax earnings— (6)
(2)8 
September 30, 2022$(13)$239 
In Millions
Three Months EndedSix Months Ended
June 30, 2022$36 $252 
Reasons for the change
Gas deliveries1 and rate increases
Rate increase$29 $98 
Higher energy waste reduction program revenues4 8 
Lower revenue due primarily to unfavorable weather(25)(103)
Higher other revenues1 3 
$9 $6 
Maintenance and other operating expenses
Absence of 2022 Ray Compressor Station impairment10 10 
Lower distribution, transmission, and compression expenses6 9 
2023 voluntary separation program expenses(11)(11)
Higher energy waste reduction program costs(4)(8)
Lower (higher) other maintenance and operating expenses2 (3)
3 (3)
Depreciation and amortization
Increased plant in service, reflecting higher capital spending(3)(11)
General taxes
Higher property taxes, reflecting higher capital spending, and other(4)(9)
Other income, net of expenses
Higher non-operating retirement benefits expenses(4)(6)
Higher other income, net of expenses4 6 
— — 
Interest charges(12)(23)
Income taxes
Lower gas utility pre-tax earnings2 10 
Deferred tax liability reversal2
— 4 
Absence of 2022 accelerated tax amortizations2
(8)(49)
(6)(35)
June 30, 2023$23 $177 
1For the three months ended SeptemberJune 30, deliveries to end-use customers were 3149 bcf in 20222023 and 2651 bcf in 2021.2022. For the ninesix months ended SeptemberJune 30, deliveries to end-use customers were 222168 bcf in 20222023 and 195191 bcf in 2021.2022.
2See Note 1, Regulatory Matters.7, Income Taxes.
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3See Note 2, Contingencies and Commitments.
4See Note 8, Income Taxes.
NorthStar Clean Energy Results of Operations
Presented in the following table are the detailed after-tax changes to NorthStar Clean Energy’s net income available to common stockholders for the three and ninesix months ended SeptemberJune 30, 20222023 versus 2021:2022:
In Millions
Three Months EndedNine Months Ended
September 30, 2021$7 $26 
Reason for the change
Higher earnings from renewable wind projects$2 $6 
Higher (lower) earnings at DIG and equity method investees2 (6)
September 30, 2022$11 $26 
In Millions
Three Months EndedSix Months Ended
June 30, 2022$7 $15 
Reason for the change
Higher earnings from renewable projects$— $3 
Lower earnings at DIG due primarily to higher maintenance(4)(4)
Lower production tax credits— (4)
June 30, 2023$3 $10 
Corporate Interest and Other Results of Operations
Presented in the following table are the detailed after-tax changes to corporate interest and other results for the three and ninesix months ended SeptemberJune 30, 20222023 versus 2021:2022:
In Millions
Three Months EndedNine Months Ended
September 30, 2021$(37)$(109)
Reasons for the change
Preferred stock dividends$1 $(4)
Consolidated tax adjustment6 (1)
Other1 3 
September 30, 2022$(29)$(111)
In Millions
Three Months EndedSix Months Ended
June 30, 2022$(38)$(78)
Reasons for the change
Gain on extinguishment of debt1
$84 $84 
Higher interest earnings4 6 
Higher income tax expense due to higher pre-tax earnings(24)(11)
Higher interest charges(5)(5)
Higher (lower) discontinued operations1 (3)
June 30, 2023$22 $(7)
1See Note 3, Financings and Capitalization.
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Results of Discontinued Operations
In October 2021, EnerBank was acquired by Regions Bank. As a result, EnerBank’s results of operations through the date of the sale are presented as income from discontinued operations on CMS Energy’s consolidated statements of income for the three and nine months ended September 30, 2021. For additional details see, Note 14, Exit Activities and Discontinued Operations.
Presented in the following table are the detailed after-tax changes to discontinued operations for the three and nine months ended September 30, 2022 versus 2021:
In Millions
Three Months EndedNine Months Ended
September 30, 2021$30 $82 
Reason for the change
Additional EnerBank sale proceeds, net of tax and transaction costs$— $4 
Absence of 2021 earnings from discontinued operations(30)(82)
September 30, 2022$— $4 
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Cash Position, Investing, and Financing
At SeptemberJune 30, 2022,2023, CMS Energy had $195$406 million of consolidated cash and cash equivalents, which included $27$17 million of restricted cash and cash equivalents. At SeptemberJune 30, 2022,2023, Consumers had $110$116 million of consolidated cash and cash equivalents, which included $27$17 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 the ninesix months ended SeptemberJune 30, 20222023 versus 2021:2022:
In Millions
CMS Energy, including Consumers
NineSix Months Ended SeptemberJune 30, 20212022$1,4831,059 
Reasons for the change
Lower net income$(46)(103)
Non‑cash transactions1
(43)(31)
Gain from post-closing adjustment to 2021 sale of EnerBank2
(5)
Absence of cash used in discontinued operations in 20212
111 
UnfavorableFavorable impact of changes in core working capital,32 due primarily to higher collections, higher prices on gas sold to customers, and lower prices on gas purchased at higher prices and underrecovery of power supply costs4in 2023
(897)727 
Favorable impact of changes in other assets and liabilities, due primarily to higher energy waste reduction collections and lower deposits for electric marginsrecovery in 2023 of 2022 power supply costs3
6453 
NineSix Months Ended SeptemberJune 30, 20222023$6671,705 
Consumers
NineSix Months Ended SeptemberJune 30, 20212022$1,5831,159 
Reasons for the change
HigherLower net income$33 (157)
Non‑cash transactions1
(44)36 
UnfavorableFavorable impact of changes in core working capital,32 due primarily to higher collections, higher prices on gas sold to customers, and lower prices on gas purchased at higher prices and underrecovery of power supply costs4in 2023
(891)713 
Favorable impact of changes in other assets and liabilities, due primarily to recovery in 2023 of 2022 power supply costs3, offset partially by higher energy waste reduction collections and lower deposits for electric marginsincome tax payments to CMS Energy
808 
NineSix Months Ended SeptemberJune 30, 20222023$7611,759 
1Non‑cash transactions comprise depreciation and amortization, changes in deferred income taxes and investment tax credits, and other non‑cash operating activities and reconciling adjustments.
2For information regarding the sale of EnerBank, see Note 14, Exit Activities and Discontinued Operations.
3Core working capital comprises accounts receivable, accrued revenue, inventories, accounts payable, and accrued rate refunds.
43For information regarding the underrecovery of power supply costs, see Note 1, Regulatory Matters.
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Investing Activities
Presented in the following table are specific components of net cash used in investing activities for the ninesix months ended SeptemberJune 30, 20222023 versus 2021:2022:
In Millions
CMS Energy, including Consumers
NineSix Months Ended SeptemberJune 30, 20212022$(1,460)(1,139)
Reasons for the change
Higher capital expenditures$(296)(99)
Purchase of Covert Generating Facility1
(810)
Additional proceeds from post-closing adjustment related to 2021 sale of EnerBank and the absence of associated transaction costs in 20211
13 
Absence of cash provided by discontinued operations in 20211
(78)
Other investing activities, primarily higherabsence of proceeds from the sale of assets offset partially by higher costs to retire propertyin 202213 (31)
NineSix Months Ended SeptemberJune 30, 20222023$(1,808)(2,079)
Consumers
NineSix Months Ended SeptemberJune 30, 20212022$(1,519)(1,094)
Reasons for the change
Higher capital expenditures$(209)(41)
Purchase of Covert Generating Facility1
(810)
Other investing activities, primarily higherabsence of proceeds from the sale of assets offset partially by higher costs to retire propertyin 202213 (26)
NineSix Months Ended SeptemberJune 30, 20222023$(1,715)(1,971)
1For information regarding the sale of EnerBank, seeSee Note 14, Exit Activities and Discontinued Operations.12, Transition Activities.
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Financing Activities
Presented in the following table are specific components of net cash provided by (used in) financing activities for the ninesix months ended SeptemberJune 30, 20222023 versus 2021:2022:
In Millions
CMS Energy, including Consumers
NineSix Months Ended SeptemberJune 30, 20212022$28 (300)
Reasons for the change
Higher debt issuances$1,0492,405 
Higher debt retirements(74)(1,373)
Higher repayments of notes payable(65)
Lower issuances of common stock(13)
Issuance of preferred stock in 2021(224)
Higher payments of dividends on common and preferred stock(30)(17)
ProceedsAbsence of proceeds from the sale of membership interest in VIE to tax equity investor in 20221
49(49)
Higher contributions from noncontrolling interest4 
Absence of cash used in discontinued operations in 20212
84 
Other financing activities, primarily higher debt issuance costs, offset partially by the absence of a payment of a long-term contract liability offset partially by the collection of customer advances for construction(9)(7)
NineSix Months Ended SeptemberJune 30, 20222023$860598 
Consumers
NineSix Months Ended SeptemberJune 30, 20212022$(44)(83)
Reasons for the change
Higher debt issuances$1,0491,520 
Higher debt retirements(1)(1,300)
Higher repayments of notes payable(65)
Lower repayments of borrowings from CMS Energy(85)291 
HigherLower stockholder contribution from CMS Energy110 (210)
HigherLower payments of dividends on common stock(23)128 
Other financing activities, primarily the collection of customer advances for constructionhigher debt issuance costs14 (13)
NineSix Months Ended SeptemberJune 30, 20222023$1,020268 
1For information regarding the sale of a membership interest to a tax equity investor, see Note 13, Variable Interest Entities.
2For information regarding the sale of EnerBank, see Note 14, Exit Activities and Discontinued Operations.
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Capital Resources and Liquidity
CMS Energy and Consumers expect to have sufficient liquidity to fund their present and future commitments. 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 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 Notes to the Unaudited Consolidated Financial Statements—Note 3, Financings and Capitalization—Dividend Restrictions. During the ninesix months ended SeptemberJune 30, 2022,2023, Consumers paid $593$305 million in dividends on its common stock to CMS Energy.
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, and fund its other obligations. Consumers also uses these sources of funding to contribute to its employee benefit plans.
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Financing and Capital Resources: CMS Energy and Consumers rely on the capital markets to fund their robust capital plan. 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.
In 2020, CMS Energy entered into an equity offering program under which it may sell shares of its common stock having an aggregate sales price of up to $500 million in privately negotiated transactions, in “at the market” offerings, through forward sales transactions, or otherwise.
CMS Energy has entered into forward sales transactions under this program, which allow CMS Energy tothat it may either physically settle the contractsphysically by issuing shares of its common stock at the then-applicable forward sale price specified by the agreement or settle net settle the contracts through the deliveryby delivering or receipt ofreceiving 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. As of SeptemberJune 30, 2022,2023, these contracts have an aggregate sales price of $493$441 million, maturing through February 26,December 2024. For more information on these forward sale contracts, see Notes to the Unaudited Consolidated Financial Statements—Note 3, Financings and Capitalization—Issuance of Common Stock.
At SeptemberJune 30, 2022,2023, CMS Energy had $536$529 million of its revolving credit facility available and Consumers had $1.0$1.3 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 more placements, up to $500 million in aggregate principal amount of 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 SeptemberJune 30, 2022,2023, there were no commercial paper notes outstanding under this program.
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In July 2022, Consumers entered into a delayed-draw $1.0 billion unsecured term loan credit agreement with an interest rate of SOFR plus 0.650 percent. At September 30, 2022, there was $550 million outstanding under the term loan credit facility. Consumers may draw on the remaining capacity under the term loan credit agreement before November 30, 2022. The proceeds of the loan will be used to fund working capital and for general corporate purposes. The term loan matures in January 2024.
For additional details on CMS Energy’s and Consumers’ secured revolving credit facilities theand commercial paper program, and the term loan, see Notes to the Unaudited Consolidated Financial Statements—Note 3, Financings and Capitalization.
Certain of CMS Energy’s and Consumers’ credit agreements contain covenants that require CMS Energy and Consumers to maintain certain financial ratios, as defined therein. At SeptemberJune 30, 2022,2023, no default had occurred with respect to any financial covenants contained in CMS Energy’s and Consumers’ credit agreements. CMS Energy and Consumers were each in compliance with these covenants as of SeptemberJune 30, 2022,2023, as presented in the following table:
Limit Actual 
CMS Energy, parent only
Debt to Capital1
< 0.70 to 1.0
0.570.59 to 1.0
Consumers
Debt to Capital2
< 0.65 to 1.0
0.49 to 1.0
1Applies to CMS Energy’s revolving credit agreement and letter of credit reimbursement agreement.agreement, and a term loan agreement of a subsidiary of NorthStar Clean Energy.
2Applies to Consumers’ revolving credit agreements and term loan.agreements.
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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-LookingForward-looking Statements and Information; Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments; and Part II—Item 1A. Risk Factors.
Consumers Electric Utility Outlook and Uncertainties
Clean Energy Plan: Consumers’ Clean Energy Plan details its strategy to meet customers’ long-term energy needs and provides the foundation for its 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. Additionally, through its Clean Energy Plan, Consumers continues to make progress on expanding its customer programs, namely its demand response, energy efficiency, and conservation voltage reduction programs, as well as increasing its renewable energy and pumped storage generation.
The Clean Energy Plan was originally outlined in Consumers’ 2018 IRP, which wasmost recently revised and approved by the MPSC in 2019. In June 2021, Consumers filed its 2021 IRP with the MPSC, proposing updates to the Clean Energy Plan. In April 2022, Consumers and a broad coalition of key stakeholders, including customer groups, environmental organizations, the MPSC Staff, energy industry representatives, and the Michigan Attorney General, filed a settlement agreement with the MPSC resolving Consumers’ 2021 IRP. The MPSC approved that settlement agreement in June 2022.
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Under its 2021 IRP,this plan, Consumers will eliminate the use of coal-fueled generation in 2025 and expects to meet 90 percent of its customers’ needs with clean energy sources by 2040. Specifically, the 2021 IRPClean Energy Plan provides for:
•the retirement of the D.E. Karn coal-fueled generating units, totaling 515 MW of nameplate capacity,capacity; these units closed in June 2023
•the retirement of the J.H. Campbell coal-fueled generating units, totaling 1,407 MW of nameplate capacity, in 2025
•the retirement of the D.E. Karn oil and gas-fueled generating units, totaling 1,219 MW of nameplate capacity, in 2031, the units’ original retirement date
The MPSC has authorized Consumers to issue securitization bonds to finance the recovery of and return on the D.E. Karn coal-fueled generating units. UnderAdditionally, the 2021 IRP, Consumers will receiveMPSC has authorized regulatory asset treatment for Consumers to recover the remaining book value of the J.H. Campbell coal-fueled generating units, as well as a 9.0‑percent return on equity, commencing in 2025.
Under the 2021 IRP, Consumers will bridge the transition away from coal generation with:Clean Energy Plan, Consumers:
•purchased the purchase of the New Covert Generating Facility, a natural gas-fueled generating unit with 1,1761,200 MW of nameplate capacity in Van Buren County, Michigan, for $815$810 million subject to certain adjustments, in 2023; the purchase is subject to FERC approvalMay 2023
•conducted a one-timeone‑time competitive solicitation for and is evaluating the acquisition of up to acquire approximately 700 MW of capacity through PPAs from sources inable to deliver to Michigan’s Lower Peninsula beginning in 2025; of this amount, up to 500 MW wouldcould be from dispatchable sources
These actions are expected to allowhelp Consumers continue to continue providingprovide controllable sources of electricity to customers while expanding its investment in renewable energy. The 2021 IRPClean Energy Plan forecasts renewable energy capacity levels of 30 percent in 2025, 43 percent in 2030, and 61 percent in 2040, including the addition of nearly 8,000 MW of solar generation. Additionally, the 2021 IRP will accelerate Consumers’ deployment ofConsumers plans to deploy battery storage from 2030 tobeginning in 2024, with 75 MW of energy storage by 2027 and an additional 475 MW by 2040.
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Under its 2021 IRP,Clean Energy Plan, Consumers will continue to bidbids new capacity competitively and will own and operate approximately 50 percent of new capacity, with the remainder being built and owned by third parties. Additionally, Consumers will continue to earnearns a return equal to its weighted-average cost of capital on payments made under new competitively bid PPAs with non‑affiliated entities approved by the MPSC.
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As a result of requests for proposals, Consumers has entered into PPAs to purchase renewable capacity, energy, and RECs from solar generating facilities and build transfer agreements to purchase solar generating facilities, as presentedfacilities. Presented in the following table:
Type of AgreementCapacity (MW)Location of Facility
Targeted Commercial Operation1
Date of AgreementDate of MPSC Approval
2019 request
PPA (25 years)140Calhoun County, Michigan2022December 2020April 2021
Build transfer agreement150Southeastern Michigan2024January 2021April 2021
PPA (20 years)10Ingham County, Michigan2023May 2022October 2022
2020 request
PPA (20 years)30  Manistee, Michigan2022May 2021September 2021
PPA (25 years)2
100Calhoun County, Michigan2023October 2021November 2021
PPA (20 years)2
125Jackson County, Michigan2025October 2021November 2021
Build transfer agreement150Southeastern Michigan2024October 2021November 2021
2021 request
PPA (25 years)3
150Hillsdale County, Michigan2024March 2022October 2022
1    For build transfer agreements, representsillustration is the dateaggregate renewable capacity that Consumers expects to take full ownership and begin commercial operation.
2    This agreement provides Consumers the optionadd to purchase the associated solar generating facility after ten years.
3    This agreement provides Consumers a right of first refusal option to purchase the associated solar generating facility.
Asits portfolio as a result of the 2021 request for proposals, Consumers had entered into a PPA to purchase renewable capacity, energy, and RECs from a 150-MW solar generating facility to be constructed in Genesee and Saginaw Counties. However, in October 2022, the PPA was terminated because the developer of the facility was unable to obtain the appropriate land use permits.these agreements:
The 2021 request for proposals also resulted in the selection of a solar generation project that Consumers will develop and construct in Muskegon, Michigan, with capacity of up to 250 MW. The facility is expected to be operational in 2025.3397
In support of its 2021 IRP,Clean Energy Plan, Consumers issued a request for proposals in September 2022 to acquire approximatelyup to 700 MW of capacity through PPAs from sources inable to deliver to Michigan’s Lower Peninsula beginning in 2025. Specifically, Consumers solicited offers to acquire 500 MW of capacity from dispatchable sources and 200 MW of capacity from intermittent resources and dispatchable, non-intermittentnon‑intermittent clean capacity resources (including battery storage resources).
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In March 2022, the U.S. Department of Commerce announced it is opening inquiries into whether manufacturers of solar modules that are produced in certain countries using supplies obtained from China are circumventing antidumping and countervailing duties which apply to Chinese modules. The U.S. Department of Commerce’sCommerce has made an initial determination that four manufacturers have circumvented tariffs. The remainder of this inquiry process is continuing, with a final ruling expected to last until at least earlyin August 2023. In June 2022, the Biden Administration paused for two years the imposition of duties that might result from the U.S. Department of Commerce’s pending inquiries. In addition, the Uyghur Forced Labor Prevention Act, which was enacted in December 2021 and became effective in June 2022, along with an earlier withhold release order that U.S. Customs and Border Protection issued in mid-2021,2021, restrict the importation of goods sourced from the Xinjiang region of China. Solar modules whose raw materials come from the Xinjiang region are a key focus of these import laws. Consumers continues to closely monitor these matters and their potential impacts on availability of solar modules and timing associated with pending and planned solar projects.
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Renewable Energy Plan: The 2016 Energy Law raised theMichigan has established a 15‑percent renewable energyportfolio standard. Under this standard, to 15 percent in 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 percentage15 percent of Consumers’ electric sales volume each year. Under its renewable energy plan, Consumers has met the 15‑percent requirement in 2021 and expects to meetcontinue meeting the requirement in future yearsgoing forward with a combination of newly generated RECs and previously generated RECs carried over from prior years.
Under Consumers’ renewable energy plan, the MPSC has approved the acquisition of up to 525 MW of new wind generation projects and authorized Consumers to earn a 10.7‑percent return on equity on any projects approved by the MPSC. Specifically, the MPSC has approved the following:
•purchase and construction of a 150‑MW wind generation project in Gratiot County, Michigan; the project became operational and Consumers took full ownership in 2020
•purchase of a 166‑MW wind generation project in Hillsdale, Michigan; the project became operational and Consumers took full ownership in February 2021
•purchase of a wind generation project under development, with capacity of up to 201 MW, in Gratiot County, Michigan; Consumers expects to take full ownership and begin commercial operation of the project in the fourth quarter of 2023
The MPSC also approved the execution of a 20-year PPA under which Consumers will purchase 100 MW of renewable capacity, energy, and RECs from a 149‑MW solar generating facility to be constructed in Calhoun County, Michigan; the facility is targeted to be operational in 2022.2024.
Voluntary Large Customer Renewable Energy Program: Consumers provides service under a program that provides large full-service electric customers with the opportunity to advance the development of renewable energy beyond the requirements of the 2016 Energy Law. In September 2021, the MPSC approved Consumers’ request to amend its renewable energy plan to remove the annual subscription limit associated with this program. The MPSC also approved up to 1,000 MW of new wind and solar generation projects between 2024 and 2027 to meet customer demand for the program. Consumers will competitively solicit for additional renewable energy assets based on customer applications and will construct the assets based on customer subscriptions to the program.
As part of this program, in March 2023, Consumers entered into a build transfer agreement for a 309‑MW solar generating facility to be constructed in Calhoun County, Michigan; the facility is targeted to be operational in 2025. The build transfer agreement is subject to MPSC approval.
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. Each year in June, electric residential customers transition to a summer peak time-of-use rate that allows them to take advantage of lower-cost energy during off-peak times during the summer months. Thus, customers can reduce their electric bills by shifting their consumption from on‑peak to off‑peak times.
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Over the next five years, Consumers expects weather-normalized electric deliveries to remain relatively stable relativecompared to 2021.2022. This outlook reflects the effects of energy waste reduction programs 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, electric vehicle adoption, 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 SeptemberJune 30, 2022,2023, electric deliveries under the ROA program were at the ten‑percent limit. Of Consumers’ 1.9 million electric 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 law also authorized the MPSC to ensure that alternative electric suppliers have procured enough capacity to cover their anticipated capacity requirements for the four-yearfour‑year forward period. In 2017, the MPSC issued an order establishing a state reliability mechanism for Consumers. Under this mechanism, if an alternative electric supplier does not demonstrate that it has procured its capacity requirements for the four-yearfour‑year forward period, its customers will pay a set charge to the utility for capacity that is not provided by the alternative electric supplier.
During 2017, the MPSC issued orders 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 procuredused to serve customers during peak demand times is located in the MISO footprint in Michigan’s Lower Peninsula. In 2020, the Michigan Supreme Court affirmed the MPSC’s statutory authority to implement a local clearing requirement on individual electric providers.
In 2020, ABATE and another intervenor filed a complaint against the MPSC in the 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. ConsumersIn February 2023, the U.S. District Court for the Eastern District of Michigan dismissed the complaint. In March 2023, ABATE and the other intervenor filed a motion to intervene and defendclaim of appeal of the local clearing requirement in that federal litigation; this motion was granted in January 2021Eastern District Court’s decision with the U.S. Court of Appeals for the Sixth Circuit. In April 2023, Consumers and the complaint is pending decision by the court after a non-jury trial.MPSC filed appearances and also filed cross-appeals.
Electric Rate Matters: Rate matters are critical to Consumers’ electric utility business. For additional details on rate matters, see Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments.
MPSC Reliability Report andDistribution System Audit: In October 2022, the MPSC ordered the state’s two largest electric utilities, including Consumers, to report on their compliance with regulations and past MPSC orders governing the utilities’ response to outages and downed lines. Also, the MPSC Staff was directed to engage a third-partythird‑party auditor to review all equipment and operations of the two utilities’ distribution systems.
Consumers is in the process of respondinghas responded to the MPSC’s order and awaits further action by the MPSC. Consumers is committed to working with other state utilities, the third-partythird‑party auditor, and the MPSC to continue improving electric reliability and safety in Michigan.
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2022improving electric reliability and safety in Michigan. In March 2023, the MPSC Staff issued a request for proposal to engage a third‑party auditor and is expected to execute a contract by September 2023.
2023 Electric Rate Case: In April 2022,May 2023, Consumers filed an application with the MPSC seeking a rate increase of $272$216 million, made up of two components. First, Consumers requested a $266$207 million annual rate increase, based on a 10.25‑percent authorized return on equity for the projected twelve-month12‑month period ending December 31, 2023.February 28, 2025. The filing requested authority to recover future investments associated withcosts related to new infrastructure investment primarily in distribution system reliability solar generation, environmental compliance, and enhanced technology.cleaner energy resources. Second, Consumers requested approval of a surcharge for the recovery of $6$9 million of distribution investments made in 20212022 that exceeded what wasthe rates authorized in rates in accordance with the December 20202021 electric rate order. In its application, Consumers provided extensive cost/benefit analysis and other information to support the prudence of certain categories of capital expenditures, as requested by the MPSC in its final order in Consumers’ 2021 electric rate case. For additional details on the 2021 electric rate case, see Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters.
In September 2022, Consumers revised its requested increase to $292 million. Presented in the following table are the components of the requested increase in revenue:
In Millions
Projected Twelve-Month12-Month Period Ending December 31February 2820232025
Components of the requested rate increase
Investment in rate base$118 
Operating and maintenance costs77 
Cost of capital4214 
Sales and other revenue49(2)
Cost of capital77 
Subtotal$286207 
Surcharge69 
Total$292216 
Retention Incentive Program: Under its Clean Energy Plan, Consumers plans to retireretired the D.E. Karn coal-fueled electric generating units in 2023. In 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 generating units. Based on the number of employees that have chosen to participate, the aggregate cost of the program throughJune 2023 is estimated to be $35 million. In its order in Consumers’ 2020 electric rate case, the MPSC approved deferred accounting treatment for these costs. Consumers expects to recognize $5 million of retention benefit costs in 2022; this expense will be deferred as a regulatory asset.
Under the 2021 IRP, Consumersand will retire the J.H. Campbell coal-fueled generating units in 2025. Similar to the D.E. Karn program, Consumers is providing aimplemented retention incentive programprograms to ensure necessary staffing at the J.H. Campbell generating complexboth locations through retirement. Based on the number of employees that have chosen to participate, theThe aggregate cost of the D.E. Karn program, which is now complete, was $32 million. The aggregate cost of the J.H. Campbell program through 2025 is estimated to be $50 million.million; Consumers expects to recognize $20$16 million of retention benefit costs in 2022.2023. The 2021 IRP providesMPSC has approved deferred accounting treatment for retention costs recognized during 2022; deferral of costs beyond 2022 will be addressed in future rate cases.these costs; these expenses are deferred as a regulatory asset. For additional details on these programs, see Notes to the Unaudited Consolidated Financial Statements—Note 14, Exit Activities and Discontinued Operations.12, Transition Activities.
Electric Environmental Outlook: Consumers’ electric operations are subject to various federal, state, and federallocal environmental laws and regulations. Consumers estimates that it will incur capital expenditures of $255$210 million from 20222023 through 20262027 to continue to comply with RCRA, the Clean Water Act, the Clean Air Act, and numerous state and federalother environmental regulations. Consumers expects to recover these
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costs in customer rates, but cannot guarantee this result. Multiple environmental laws and regulations are subject to litigation. Consumers’ primary environmental compliance focus includes, but is not limited to, the following matters.
Air Quality: Multiple air quality regulations apply, or may apply, to Consumers’ electric utility.
In 2012, the EPA published emission standards for electric generating units, known as MATS, based on Section 112 of the Clean Air Act. Consumers has complied, and continues to comply, with the MATS regulation, and does not expect MATS to materially impact its environmental strategy.
CSAPR which initially became effective in 2015, requires Michigan and many other states to improve air quality by reducing power plant emissions that, according to EPA modeling, contribute to ground-level ozone and fine particle pollution in other downwind states. Since its 2015 effective date, CSAPR has been revised several times. In 2016,June 2023, the EPA finalized ozone season standardspublished the
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“Good Neighbor Plan,” a revision to CSAPR. This regulation establishes allowance budgets for CSAPR. In 2020, the EPA proposed a revised CSAPR rule to reflect updated emission reductions from electric generating units in 1222 states, including Michigan. The EPA finalized this revised rule in March 2021, with continued emission reductions through 2024. Consumers believes the impact of this rule on its operations should be minimal.
In March 2022, the EPA proposed another revision to CSAPR that affects Michigan. If finalized, this revision would replace the 2020 CSAPR rule requirement for theMichigan, between 2023 ozone season. The EPA is proposing to reduce allowance budgets from those provided under the 2020 rule and to change2029 and changes the mechanism for allocating such nitrogen oxides allowances on a year-over-year basis. While prior CSAPR regulationsbasis beginning in 2026. Consumers’ initial evaluation of this regulation indicates that it will have primarily focused on electric generating units,minimal financial and operational impact in the near term. Additionally, Consumers does not expect any major financial and operational impact in the long term. However, due to the dynamic nature of this latest proposal also includes other nitrogen oxides emission sources. Ifregulation, it is difficult to forecast the EPA finalizes the proposed CSAPR revision in its current form, Consumers may incur significant costs in allowance purchases and equipment retrofits. Consumers will continue to monitor this rulemaking and its impact on Consumers’ electric operations.long-term impact.
In 2015, the EPA lowered the NAAQS for ozone. The 2015 ozone NAAQSand made it more difficult to construct or modify power plants and other emission sources in areas of the country that havedo not metmeet the 2015 ozone standard. In 2018, the EPAAs of May 2023, three counties in western Michigan have been designated certain areas of Michigan as not meeting the ozone standard. None of Consumers’ fossil-fuel-fired generating units are located in these areas. Additionally, in January 2023, the EPA proposed lowering the NAAQS for particulate matter. Consumers will continue to monitor NAAQS rulemakings and evaluate potential impacts to its generating assets.
Consumers’ strategy to comply with air quality statutes and regulations 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 actions. 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 operated
•the retirement, mothballing, or repowering with an alternative fuel of some of Consumers’ generating units
•changes in Consumers’ environmental compliance costs
•the purchase or sale of allowances
Greenhouse Gases: There have been numerous legislative and regulatory initiatives at the state, regional, national, and international levels that involve the potential regulation and reporting of greenhouse gases. Consumers continues to monitor and comment on these initiatives, as appropriate.
In June 2022,May 2023, the EPA announcedreleased its plan to propose a newproposed rule to address greenhouse gas emissions from existing fossil-fueledfossil-fuel-fired electric generating units. Under its 2021 IRP,Clean Energy Plan, Consumers will eliminate the use
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of coal-fueled generation in 2025. Therefore, it is unlikely that thethis proposed rule will not materially impact Consumers over the remaining operating lives of these coal-fueled facilities. However, Consumers cannot predict the form and extent of such potential regulation on itsThe proposed rule has requirements for existing natural gas-fueled generation until thisfacilities, however, that could have a material impact on Consumers’ natural gas-fueled facilities. The EPA is scheduled to finalize the rule is released.in April 2024.
In 2015, a group of 195 countries, including the U.S., finalizedUnder the Paris Agreement, which addresses carbon dioxide reduction measures beginning in 2020. The commitment made byan international agreement addressing greenhouse gas emissions, the U.S. ishas committed to reduce greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. Under its 2021 IRP,Clean Energy Plan, Consumers plans to reduce carbon emissions from its electric business by 60 percent from 2005 levels in 2025. At this time, Consumers does not expect any adverse changes to its environmental strategy as a result of these events,this event, as its plans exceed the nationally-committednationally committed reduction. The commitment made by the U.S. is not binding without new Congressional legislation.
In 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 goals are aspirational in nature and any changes in law or regulation to achieve these goals would need to be approved by the Michigan Legislature or the relevant regulatory agency. Additionally, Consumers has already surpassed the 28‑percent reduction milestone for
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its owned electric generation and previously announced a goal of achieving net-zero carbon emissions from its electric business by 2040. Consumers does not expect any adverse changes to its environmental strategy as a result of these events.this event.
Increased frequency or intensity of severe or extreme weather events, including those due to climate change, could materially impact Consumers’ facilities, energy sales, and results of operations. Consumers is unable to predict these events or their financial impact; however, Consumers evaluates the potential physical impacts of climate change on its operations, including increased temperature,frequency or intensity of storm activity; increased storm activity,precipitation; increased precipitation,temperature; and changes in lake and river levels. Consumers released a report addressing the physical risks of climate change on its infrastructure in February 2022. Consumers is taking steps to mitigate these risks as appropriate.
While Consumers cannot predict the outcome of changes in U.S. policy or of other legislative, executive, or regulatory initiatives involving the potential regulation or reporting of greenhouse gases, it intends to move forward with its Clean Energy Plan, its present net-zero goals, and its emphasis on reliable and resilient supply. 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 impact Consumers. Consumers may be required to to:
•replace equipment; equipment
•install additional emission control equipment; equipment
•purchase emission allowances or credits (including potential greenhouse gas offset credits);
•curtail operations; operations
•arrange for alternative sources of supply; supply
•purchase or build facilities that generate fewer emissions; emissions
•mothball or retire facilities that generate certain emissions; emissions
•pursue energy efficiency or demand response measures more swiftly; or swiftly
•take other steps to manage or lower the emission of greenhouse gases. 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 in rates consistent with the recovery of other reasonable costs of complying with environmental laws and regulations.
CCRs: In 2015, the EPA published a rule regulating CCRs under RCRA. This 2015 rule adopts minimum standards for beneficially using and disposing of non‑hazardous CCRs. The ruleCCRs and establishes new minimumtechnical requirements for CCR unit location, design, structural stability, groundwater monitoringlandfills and correction action, flood protection, fugitive dust control, recordkeeping, and public disclosure of certain records, including any groundwater protection standard exceedances.surface impoundments. The 2015 rule also sets out conditions under which some CCR units would be forced to cease receiving CCR and non‑CCR wastewater and initiate closure based on the inabilityclosure. Due to achieve minimum safety standards, meet a location standard, or meet minimum groundwater standards. Due tocontinued litigation, many aspects of the
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2015 CCR rule have been remanded to the EPA, which has resultedresulting in numerousmore proposed rules and three final rules. One of
Separately, Congress passed legislation in 2016 allowing participating states to develop permitting programs for CCRs under RCRA Subtitle D. In 2020, EGLE submitted a regulatory package for Michigan’s permit program to the final rulesEPA for its review, which is in litigation. Anticipated litigation related to remanded aspects that have not been addressed will add uncertainty around requirements for compliance and state permit programs.still pending.
The EPA amended the conditions of forced closure in a rule published in 2020. The 2020 rule required all unlined CCR units to initiate closure by mid-April 2021, unless conditions that satisfied an alternate closure schedule were approved by the EPA. Consumers, with agreement from EGLE, completed the work necessary to initiate closure by excavating CCRs or placing a final cover over each of its relevant CCR units prior to the April 2021 closure initiation deadline.
Separate from the 2015 and 2020 rules, Congress passed legislation in 2016 allowing participating states to develop permitting programs for CCRs under RCRA Subtitle D. In 2018, the Michigan Legislature adopted standards for 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 2020, EGLE submitted a regulatory package for Michigan’s permit program to the EPA for its review, which is still pending. Federal rulemaking challenges may delay EPA approval of the Michigan permitting program.
Consumers has historically been authorized to recover in electric rates costs related to coal ash disposal sites.
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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. The rules seek to reduce alleged harmful impacts on aquatic organisms, such as fish. In 2018, Consumers submitted to EGLE for approval all required studies and recommended plans to comply with Section 316(b), for its coal-fueled units, but has not yet received final approval.
In 2015,The EPA also regulates the EPA releaseddischarge of wastewater through its final effluent limitation guidelines for steam electric generating plants. These guidelines, which are presently being litigated, set stringent new requirements forIn 2020, the discharge from electric generating units into surface waters. The EPA published a final rule in October 2020, revising the 2015revised previous guidelines related to the discharge of certain wastewater, streams from electric generating units. The rule also allowsbut allowed for extension of the compliance deadline from the end of 2023 to the end of 2025, upon approval by EGLE through the NPDES permitting process. Consumers received such an extension to 2025 for its J.H. Campbell generating facility, which it plans to retire in 2021.2025. In March 2023, the EPA released a proposed rule seeking to replace its 2020 rule and corresponding effluent limitation guidelines. Consumers does not expect any adverse changes tois evaluating the proposed effluent limitation guidelines for its environmental strategy as a result of these revisions to the rule or any litigation of the guidelines.potential impacts on its generating facilities.
In 2020,recent years, the EPA and the U.S. Army Corps of Engineers finalized a rule under the Clean Water Act that repealed a 2015 definition of “Waters of the United States,” narrowedhave proposed changes to the scope of federal jurisdiction over bodies of water and reducedto the frequency of dual jurisdiction in states with authority to regulate the same waters; Michigan is one such state. In November 2021,A 2022 rule changed the EPA and the U.S. Army Corpsdefinition of Engineers proposed to revise the 2020 “Waters of the United States” definition to revert toStates,” which defines the 2015scope of waters protected under the Clean Water Act. Additionally, in May 2023, the U.S. Supreme Court issued a decision reducing the scope of “Waters of the United States” definition, with changes reflecting the EPA’s interpretation of intervening U.S. Supreme Court decisions. The proposed November 2021 rulemaking may change how Consumers interacts with federal jurisdictional waters within Michigan, which may add additional requirements to existing compliance programs or may require additional permitting for infrastructure projects. However,States.” Consumers does not expect adverse changes to its environmental strategy as a result of the current interpretations.interpretations and court decision.
Many of Consumers’ facilities maintain NPDES permits, which are renewed every five years and are vital to the facilities’ operations. Consumers applies for renewal of these permits every five years. Failure of EGLE to renew any NPDES permit, a successful appeal against a
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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.
Protected Wildlife: Multiple regulations apply, or may apply, to Consumers relating to protected species and habitats.
Statutes like the federal Endangered Species Act, the Migratory Bird Treaty Act, and the Bald and Golden Eagle Protection Act of 1940 may impact operations at Consumers’ facilities. In May 2021, the U.S. Fish and Wildlife Service proposed to repeal a January 2021 rule related to incidental take of migratory birds. In November 2021, the U.S. Fish and Wildlife Service published an advanced notice of proposed rulemaking outliningannounced its intent to regulate incidental take under the Migratory Bird Treaty Act. PermittingAny resulting permitting and monitoring fees andand/or restrictions on operations associated with these rules, if finalized, could impact Consumers’ existing and future operations, including wind and solar generation facilities.
Additionally, Consumers is monitoring proposed changes to the listing status of several species within its operational area due to an increase in wildlife-related regulatory activity at federal and state levels. A change in species listed under the Endangered Species Act may impact Consumers’ costs to mitigate its impact on protected species and habitats at certain existing facilities as well as siting choices for new facilities.
Other Matters: Other electric environmental matters could have a material impact on Consumers’ outlook. For additional details on other electric environmental matters, see Notes to the Unaudited Consolidated Financial Statements—Note 2, Contingencies and Commitments—Consumers Electric Utility Contingencies—Electric Environmental Matters.
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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.
Over the next five years, Consumers expects weather-normalized gas deliveries to remain stable relative to 2021.2022. This outlook reflects the effects of energy waste reduction programs offset largely by modest growth in gas demand. Actual delivery levels will depend on:
•weather fluctuations
•use by power producers
•availability and development of renewable energy sources
•gas price changes
•Michigan’s economic conditions, including population trends and housing activity
•the price or demand 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 Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments.
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20212022 Gas Rate Case:In December 2021,2022, Consumers filed an application with the MPSC seeking an annual rate increase of$278 $212 million, based on a 10.5-percent10.25‑percent authorized return on equity and afor the projected twelve-month12‑month period ending September 30, 2023.2024. In April 2022,June 2023, Consumers reduced its requested annual rate increase to $233$175 million, based on a 10.25-percent10.25‑percent authorized return on equity. In July 2022, the MPSCapproved2023, Consumers filed a settlement agreement authorizingreflecting an annual rate increase of $170$95 million, based on a 9.9-percent9.9‑percent authorized return on equity, effective October 1, 2022. 2023.
The MPSCsettlement agreement also approvedauthorizes the continuationuse of a revenue decouplingcost deferral mechanism which annually reconciles Consumers’ actual weather-normalized non-fuel revenuesthat will allow Consumers to defer for future recovery or refund pension and OPEB expense above the amounts used to set existing rates.
Postretirement Benefits Expense Accounting Application: In January 2023, Consumers filed an application with the revenues approved.
Depreciation Rate Case: In December 2021, Consumers filed a depreciation case relatedMPSC, requesting authority to its gas utility plant property. In this case,defer the future recovery or refund of pension and OPEB expenses above or below the amounts used to set existing rates, respectively. Consumers requested a decreasethis accounting treatment to begin in depreciation expense of $1 million annually based on December 31, 2020 balances.2023 and to continue until rates are reset in the 2022 gas rate case. In September 2022,March 2023, the MPSC approved a settlement agreement authorizing a decrease in depreciation expensedenied Consumers’ application, instead recommending that this would be more appropriately considered as part of $29 million annually. The decrease in depreciation expense will become effective concurrent with Consumers’ nextcurrent gas rate case.
Gas Pipeline and Storage Integrity and Safety: The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration has published various rules that expand federal safety standards for gas transmission pipelines and underground storage facilities. Initial requirements took effect in 2020, with future regulation phases to be released over numerous years. To comply with these rules, Consumers will incur increased capital and operating and maintenance costs to install and remediate pipelines and to expand inspections, maintenance, and monitoring of its existing pipelines and storage facilities. The initial requirements in the regulation took effect in 2020, with future regulation phases to be released over numerous years.
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 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 continue implementation
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Table of the American Petroleum Institute’s Recommended Practice 1173, Pipeline Safety Management Systems. This program minimizes 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.Contents
Gas Environmental Outlook: Consumers expects to incur response activity costs at a number of sites, including 23 former MGP sites. For additional details, see Notes to the Unaudited Consolidated Financial Statements—Note 2, Contingencies and Commitments—Consumers Gas Utility Contingencies—Gas Environmental Matters.
Consumers’ gas operations are subject to various federal, state, and federallocal environmental laws and regulations. Multiple environmental laws and regulations are subject to litigation. Consumers’ primary environmental compliance focus includes, but is not limited to, the following matters.
Air Quality: Multiple air quality regulations apply, or may apply, to Consumers’gasConsumers’ gas utility.
In June 2023, the EPA published the “Good Neighbor Plan,” a revision to CSAPR that impacts Michigan. This regulation will reduce interstate air pollution transport issues that EPA modeling suggests contribute to downwind states attaining or maintaining compliance with the NAAQS for ozone. While prior CSAPR regulations focused only on electric generating units, this latest rule includes other emission sources, including engines at natural gas compressor stations. Compliance with new NOx emission limits is required by May 2026, unless the EPA approves an extension. Consumers expects to incur costs to retrofit or replace equipment at some of its compressor stations.
In 2015, the EPA lowered the NAAQS for ozone. The 2015 ozone NAAQSand made it more difficult to construct or modify natural gas compressor stations and other emission sources in areas of the country that havedo not metmeet the 2015 ozone standard. In 2018, the EPAAs of May 2023, three counties in western Michigan have been designated certain areas of Michigan as not meeting the ozone standard. Seven counties in southeastern Michigan were not in attainment with the 2015 ozone standard by an August 2021 regulatory deadline, and thus may have their ozone nonattainment designations increased from marginal to moderate. The EPA also recently elevated the nonattainment status of three counties in western Michigan from marginal to moderate. SomeOne of Consumers’ compressor stations areis located in these areas.an ozone nonattainment area. Consequently, Consumers may incur costshas initiated plans to retrofit equipment at this compressor station in order to lower NOx emissions at some ofand comply with this standard. Additionally, in January 2023, the EPA proposed lowering the NAAQS for particulate matter. Consumers will continue to monitor NAAQS rulemakings and evaluate potential impacts to its compressor stations in 2023 and 2024. In addition,
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due to their age, some stations may eventually need to be retrofitted or replaced with lower-emitting stations.
In March 2022, the EPA proposed a revision to CSAPR that affects Michigan. This proposed rule seeks to reduce interstate transport issues that EPA modeling suggests contribute to downwind states attaining or maintaining compliance with the 2015 NAAQS for ozone. While prior CSAPR regulations have primarily focused on electric generating units, the proposed rule includes other nitrogen oxides emission sources, includingapplicable natural gas compressor stations. If the EPA finalizes the proposed CSAPR revision in its current form, Consumers may incur costs to retrofit or replace equipment at some compressor stations.storage and delivery assets.
Greenhouse Gases: There is increasing interest at the federal, state, and local levels in potential regulation of greenhouse gases or their sources. Such regulation, if adopted, may involve requirements to reduce methane emissions from Consumers’ gas utility operations and carbon dioxide emissions from customer use of natural gas. No such measures apply to Consumers at this time.
In 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. For additional details on the executive order, see Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook.
Under the Paris Agreement, an international agreement addressing greenhouse gas emissions, the U.S. has committed to reduce greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. The commitment made by the U.S. is not binding without new Congressional legislation. 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 is making voluntary efforts to reduce its gas utility’s methane emissions. In 2019, Consumers releasedUnder its Methane Reduction Plan, whichConsumers has 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 likely be offset by purchasing and/or
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producing renewable natural gas. To date, Consumers has reduced methane emissions by more than 20 percent from a 2012 baseline.
In March 2022, Consumers also announced a net-zero greenhouse gas emissions target for its entire natural gas system by 2050. This includes suppliers and customers, and has an interim goal of reducing customer emissions by 20 percent by 2030.
In November 2021, the EPA released Consumers’ Natural Gas Delivery Plan, a proposed rule to regulate methane emissions for the oil and gas sector. This proposed rule is not expected to have a material adverse impact on Consumers’ gas storage, compressor stations, and distribution systems, as it applies upstream of Consumers’ facilities.
In 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 2810‑percent reduction below 2005 levels of greenhouseyear strategic investment plan to deliver safe, reliable, clean, and affordable natural gas emissions by 2025. These newto customers, outlines ways in which Consumers can make early progress toward these goals could impact Consumers’ gas business over the long term. Consumers is evaluating decarbonization options for its gas businessin a cost-effective manner, including energy waste reduction or energy efficiency, carbon offsets, and renewable natural gas carbon offsets, and other decarbonization methods. As one strategy, which was approved by the MPSC, supply.
Consumers launchedhas already initiated work in these key areas, continuing to expand its energy waste reduction targets, launching a program allowing gas customers to purchase carbon offset credits on a voluntary basis. Similarly, in December 2021, Consumers announcedbasis, and announcing plans to begin development of a renewable natural gas facility that will capture methane from manure generated at a Michigan-based farm and convert it into renewable natural gas. For additional details on the executive order, see Consumers Electric Utility Outlookis evaluating and Uncertainties—Electric Environmental Outlook.
In 2015, a group of 195 countries,monitoring newer technologies to determine their role in achieving Consumers’ interim and long-term net-zero goals, including the U.S., finalized the Paris Agreement, which addresseshydrogen, biofuels, and synthetic methane; carbon dioxide reduction measures beginning in 2020. The commitment made by the U.S. is to reduce greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030. Under its 2021 IRP, Consumers plans to reduce carbon emissions by 60 percent from 2005 levels in 2025. At this time, Consumers does not expect any adverse changes to its environmental strategy as a result of these events, as its plans exceed the nationally-committed reduction. The commitment made by the U.S. is not binding without new Congressional legislation.
There is increasing interest at the federal, state, and local levels involving potential regulation of greenhouse gases or their sources. Such regulation, if adopted, may involve requirements to reduce methane emissions from Consumers’ gas utility operations and carbon dioxide emissions from customer use of natural gas. 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.
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Consumers Electric Utility and Gas Utility Outlook and Uncertainties
Energy Waste Reduction Plan: The 2016 Energy Law authorized incentives for demand response programs and energy efficiency programs, referring to the combined initiatives as energy waste reduction programs. The law also set a 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 and established a goal of 35 percent combined renewable energy and energy waste reduction by 2025. Consumers achieved 30 percent combined renewable energy and energy waste reduction through 2021.
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;capture sequestration systems; and other incentives and programs.innovative technologies.
NorthStar Clean Energy Outlook and Uncertainties
CMS Energy’s primary focus with respect to its NorthStar Clean Energy businesses is to maximize the value of generating assets, its share of which represents 1,4831,478 MW of capacity, and to pursue opportunities for the development of renewable generation projects.
In June 2021, DIG, CMS Generation Michigan Power, and CMS ERM entered into an agreement with ConsumersMay 2023, NorthStar Clean Energy executed agreements to sell a Class A membership interest in Newport Solar Holdings to tax equity investors for $515 million, subject$86 million. This transaction will close upon the commercial operation of Newport Solar, LLC, a 180‑MW solar generation project located in Jackson County, Arkansas, which will be owned by Newport Solar Holdings. The project is expected to certain adjustments,become operational in the third quarter of 2023. All of the project’s nameplate capacity has been committed under a 15‑year PPA. NorthStar Clean Energy’s three natural gas-fueled generating units, totaling 1,001 MW of nameplate capacity:
•Energy will retain a Class B membership interest in Newport Solar Holdings. Earnings, tax attributes, and cash flows generated by Newport Solar Holdings will be allocated among and distributed to the 770‑MW DIG plant located in Dearborn, Michigan
•a 156‑MW peaking generating unit located in Gaylord, Michigan
•a 75‑MW peaking generating unit located in Comstock, Michigan
Consumers had proposed purchasing these generating units as part of its 2021 IRP. However,membership classes in accordance with the termsratios specified in the associated limited liability company operating agreement; these ratios change over time and are not representative of the settlement agreementownership interest percentages of its 2021 IRP, which was approved by the MPSC in June 2022, Consumers will not purchase these generating units.each membership class.
NorthStar Clean Energy’s assetsoperations may be affected bysubject to various federal, state, and local environmental laws and regulations. TheMultiple environmental laws and regulations are subject to litigation. NorthStar Clean Energy’s primary environmental compliance focus includes, but is not limited to, the following matters.
CSAPR requires Michigan and many other states to improve air quality by reducing power plant emissions that, according to EPA modeling, contribute to ground-level ozone in other downwind states. Since its 2015 effective date, CSAPR has been revised several times. In June 2023, the EPA published the “Good Neighbor Plan,” a revision to CSAPR. This regulation establishes allowance budgets for electric generating units in 22 states, including Michigan, between 2023 and 2029 and changes the mechanism for allocating such allowances on a year-over-year basis beginning in 2026. NorthStar Clean Energy is evaluating this rule and its impact on NorthStar Clean Energy’s emission sources and may incur costs in allowance purchases or equipment retrofits.
In 2015, the EPA lowered the NAAQS for ozone NAAQSand made it more difficult to construct or modify power plants and other emission sources in areas of the country that havedo not metmeet the 2015 ozone standard. In 2018, the EPAAs of
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May 2023, three counties in western Michigan have been designated certain areas of Michigan as not meeting the ozone standard. The DIG plant is in one such area and, as a result, would be subject to additional permitting restrictionsNone of NorthStar Clean Energy’s facilities are located in the event of any future modifications.nonattainment counties.
In March 2022,May 2023, the EPA released its proposed a revisionrule to CSAPR that affects Michigan.address greenhouse gas emissions from existing fossil-fuel-fired and natural gas-fueled electric generating units. This proposed rule seeks to reduce interstate transport issues that EPA modeling suggests contribute to downwind states attaining or maintaining compliance with the 2015 NAAQS for ozone. If the EPA finalizes the proposed CSAPR revision in its current form,regulation could have a material financial and operational impact on NorthStar Clean Energy, may incur significant costsif the regulation ultimately applies to its facilities. The EPA is scheduled to finalize the rule in allowance purchases and equipment retrofits.April 2024.
Many of NorthStar Clean Energy’s facilities maintain NPDES permits, which are vital to the facilities’ operations. NorthStar Clean Energy will continueapplies for renewal of these permits every five years. Failure of EGLE to monitor this rulemaking and its impactrenew 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 its emission sources.the operations of a facility.
For additional details regarding the new ozone NAAQS or CSAPR rule, see Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook.
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Trends, uncertainties, and other matters related to NorthStar Clean Energy 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
•changes in commodity prices 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
•indemnity obligations assumed in connection with the purchase or ownership of an interestinterests in one or more facilities that involve tax equity financing
•representations, warranties, and indemnities provided by CMS Energy in connection with previous sales of assets
•delays or difficulties in obtaining environmental permits for facilities located in areas associated with environmental justice concerns
In March 2022, the U.S. Department of Commerce announced it is opening inquiries into whether manufacturers of solar modules that are produced in certain countries using supplies obtained from China are circumventing antidumping and countervailing duties which apply to Chinese modules. The U.S. Department of Commerce’sCommerce has made an initial determination that four manufacturers have circumvented tariffs. The remainder of this inquiry process is continuing, with a final ruling expected to last until at least earlyin August 2023. In June 2022, the Biden Administration paused for two years the imposition of duties that might result from the U.S. Department of Commerce’s pending inquiries. In addition, the Uyghur Forced Labor Prevention Act, which was enacted in December 2021 and became effective in June 2022, along with an earlier withhold release order that U.S. Customs and Border Protection issued in mid-2021,2021, restrict the importation of goods sourced from the Xinjiang region of China. Solar modules whose raw materials come from the Xinjiang region are a key focus of these import laws. CMS Energy continues to closely monitor these matters and their potential impacts on availability of solar modules and timing associated with pending and planned solar projects.
For additional details regarding NorthStar Clean Energy’s uncertainties, see Notes to the Unaudited Consolidated Financial Statements—Note 2, Contingencies and Commitments—Guarantees.
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Other Outlook and Uncertainties
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 Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments.
Employee Separation Program: In April 2022,2023, CMS Energy and Consumers announced a voluntary separation program for salaried non-unionnon‑union employees. For the ninethree months ended SeptemberJune 30, 2022,2023, CMS Energy and Consumers recorded an after-taxa pre-tax charge of $8$28 million related to the program, under which more than 170400 employees accepted and were approved for and accepted early separation. As a result of the program, 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.
As a resultrecord an additional pre-tax charge of this announcement, CMS Energy and Consumers determined it was probable that 2022 lump-sum payments to participants 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 it is probable such settlements will meet the service and interest cost threshold, recognition in earnings is required. As a result, in accordance with GAAP, CMS Energy,
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including Consumers, performed a remeasurement of DB Pension Plan A as of March 31, 2022, June 30, 2022, and September 30, 2022. For additional details on the pension settlement, see Notes to the Unaudited Consolidated Financial Statements—Note 7, Retirement Benefits.
Presented in the following table are estimates of credits and cash contributions through 2024 for the DB Pension Plans and OPEB Plan. Actual future costs, credits, and contributions will depend on future investment performance, discount rates, and various factors$6 million related to the participantsprogram in the third quarter of the DB Pension Plans and OPEB Plan. CMS Energy and Consumers will, at a minimum, contribute to the plans as needed to comply with federal funding requirements.
In Millions
DB Pension PlansOPEB Plan
CreditContributionCreditContribution
CMS Energy, including Consumers
2022$(33)$— $(120)$— 
2023(31)— (53)— 
2024(30)— (47)— 
Consumers1
2022$(30)$— $(113)$— 
2023(28)— (51)— 
2024(28)— (44)— 
1Consumers’ pension and OPEB costs are recoverable through its general ratemaking process.2023.
Tax Legislation: CMS Energy and Consumers are subject to changing tax laws. In August 2022, President Biden signed the Inflation Reduction Act. Among other things, this Act expands production tax credits and investment tax credits, allows for the transferability of such credits, and implements a 15‑percent corporate alternative minimum tax on companies with an average adjusted financial statement income of more than $1.0 billion. While CMS Energy and Consumers are still assessing the overall impacts of the bill, they do not believe the corporate alternative minimum tax will have a material impact on their business.
New Accounting Standards
There are no new accounting standards issued but not yet effective that are expected to have a material impact on CMS Energy’s or Consumers’ consolidated financial statements.
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CMS Energy Corporation
Consolidated Statements of Income (Unaudited)
In Millions, Except Per Share Amounts
Three Months EndedSix Months Ended
June 302023202220232022
Operating Revenue$1,555 $1,920 $3,839 $4,294 
Operating Expenses
Fuel for electric generation110 241 247 408 
Purchased and interchange power342 483 683 938 
Purchased power – related parties17 18 36 35 
Cost of gas sold84 216 631 684 
Maintenance and other operating expenses406 392 837 726 
Depreciation and amortization255 242 608 587 
General taxes97 89 239 221 
Total operating expenses1,311 

1,681 3,281 

3,599 
Operating Income244 

239 558 

695 
Other Income (Expense)
Non-operating retirement benefits, net45 52 90 100 
Other income103 2 118 6 
Other expense(2)(11)(6)(15)
Total other income146 

43 202 

91 
Interest Charges
Interest on long-term debt152 122 296 243 
Interest expense – related parties3 3 6 6 
Other interest expense6 1 6 2 
Allowance for borrowed funds used during construction(1)— (1)(1)
Total interest charges160 

126 307 

250 
Income Before Income Taxes230 156 453 536 
Income Tax Expense41 14 70 53 
Income From Continuing Operations189 142 383 483 
Income From Discontinued Operations, Net of Tax of $—, $—, $—, and $11 — 1 4 
Net Income190 142 384 487 
Loss Attributable to Noncontrolling Interests(8)(6)(18)(14)
Net Income Attributable to CMS Energy198 148 402 501 
Preferred Stock Dividends3 3 5 5 
Net Income Available to Common Stockholders$195 $145 $397 $496 
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In Millions, Except Per Share Amounts
Three Months EndedSix Months Ended
June 302023202220232022
Basic Earnings Per Average Common Share
Income from continuing operations per average common share available to common stockholders$0.67 $0.50 $1.36 $1.70 
Income from discontinued operations per average common share available to common stockholders— — — 0.01 
Basic earnings per average common share$0.67 $0.50 $1.36 $1.71 
Diluted Earnings Per Average Common Share
Income from continuing operations per average common share available to common stockholders$0.67 $0.50 $1.36 $1.70 
Income from discontinued operations per average common share available to common stockholders— — — 0.01 
Diluted earnings per average common share$0.67 $0.50 $1.36 $1.71 
The accompanying notes are an integral part of these statements.
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CMS Energy Corporation
Consolidated Statements of Comprehensive Income (Unaudited)
In Millions
Three Months EndedSix Months Ended
June 302023202220232022
Net Income$190 $142 $384 $487 
Retirement Benefits Liability
Net gain arising during the period, net of tax of $—, $—, $—, and $1— — 1 2 
Amortization of net actuarial loss, net of tax of $—, $1, $—, and $11 1 1 2 
Amortization of prior service credit, net of tax of $— for all periods(1)— (1)— 
Derivatives
Unrealized gain on derivative instruments, net of tax of $—, $—, $—, and $1— — — 2 
Reclassification adjustments included in net income, net of tax of $— for all periods— 1 — 1 
Other Comprehensive Income— 2 1 7 
Comprehensive Income190 144 385 494 
Comprehensive Loss Attributable to Noncontrolling Interests(8)(6)(18)(14)
Comprehensive Income Attributable to CMS Energy$198 $150 $403 $508 
The accompanying notes are an integral part of these statements.
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CMS Energy Corporation
Consolidated Statements of Cash Flows (Unaudited)
In Millions
Six Months Ended June 3020232022
Cash Flows from Operating Activities
Net income$384 $487 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization608 587 
Deferred income taxes and investment tax credits71 39 
Other non‑cash operating activities and reconciling adjustments(122)(38)
Changes in assets and liabilities
Accounts receivable and accrued revenue474 (80)
Inventories236 (179)
Accounts payable and accrued rate refunds(189)53 
Other current assets and liabilities92 117 
Other non‑current assets and liabilities151 73 
Net cash provided by operating activities1,705 

1,059 
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under finance lease)(1,187)(1,088)
Covert Generating Facility acquisition(810)— 
Cost to retire property and other investing activities(82)(51)
Net cash used in investing activities(2,079)

(1,139)
Cash Flows from Financing Activities
Proceeds from issuance of debt2,405 — 
Retirement of debt(1,465)(92)
Increase (decrease) in notes payable(20)45 
Issuance of common stock7 7 
Payment of dividends on common and preferred stock(290)(273)
Proceeds from the sale of membership interest in VIE to tax equity investor— 49 
Contribution from noncontrolling interest6 2 
Other financing costs(45)(38)
Net cash provided by (used in) financing activities598 

(300)
Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts224 (380)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period182 476 
Cash and Cash Equivalents, Including Restricted Amounts, End of Period$406 

$96 
Other Non‑cash Investing and Financing Activities
Non‑cash transactions
Capital expenditures not paid$241 $162 
The accompanying notes are an integral part of these statements.
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CMS Energy Corporation
Consolidated Statements of IncomeBalance Sheets (Unaudited)
In Millions, Except Per Share Amounts
Three Months EndedNine Months Ended
September 302022202120222021
Operating Revenue$2,024 $1,725 $6,318 $5,296 
Operating Expenses
Fuel for electric generation312 184 720 438 
Purchased and interchange power572 462 1,510 1,230 
Purchased power – related parties21 21 56 56 
Cost of gas sold118 57 802 432 
Maintenance and other operating expenses413 410 1,139 1,076 
Depreciation and amortization243 250 830 832 
General taxes87 81 308 290 
Total operating expenses1,766 

1,465 5,365 

4,354 
Operating Income258 

260 953 

942 
Other Income (Expense)
Interest income1 — 3 2 
Allowance for equity funds used during construction1 2 4 5 
Income from equity method investees1 4 1 8 
Non-operating retirement benefits, net54 40 154 121 
Other income2 1 3 7 
Other expense(5)(3)(20)(7)
Total other income54 

44 145 

136 
Interest Charges
Interest on long-term debt127 120 370 359 
Interest expense – related parties3 3 9 9 
Other interest expense— 3 2 8 
Allowance for borrowed funds used during construction— (1)(1)(2)
Total interest charges130 

125 380 

374 
Income Before Income Taxes182 179 718 704 
Income Tax Expense19 26 72 90 
Income From Continuing Operations163 153 646 614 
Income From Discontinued Operations, Net of Tax of $—, $9, $1, and $25— 30 4 82 
Net Income163 183 650 696 
Loss Attributable to Noncontrolling Interests(2)(6)(16)(18)
Net Income Attributable to CMS Energy165 189 666 714 
Preferred Stock Dividends2 3 7 3 
Net Income Available to Common Stockholders$163 $186 $659 $711 
ASSETS
In Millions
June 30
2023		December 31
2022
Current Assets
Cash and cash equivalents$389 $164 
Restricted cash and cash equivalents17 18 
Accounts receivable and accrued revenue, less allowance of $27 in both periods708 1,564 
Accounts receivable – related parties13 16 
Inventories at average cost
Gas in underground storage570 840 
Materials and supplies244 212 
Generating plant fuel stock73 65 
Deferred property taxes282 384 
Regulatory assets182 57 
Prepayments and other current assets125 113 
Total current assets2,603 

3,433 
Plant, Property, and Equipment
Plant, property, and equipment, gross31,592 30,491 
Less accumulated depreciation and amortization8,736 8,960 
Plant, property, and equipment, net22,856 

21,531 
Construction work in progress1,408 1,182 
Total plant, property, and equipment24,264 

22,713 
Other Non‑current Assets
Regulatory assets3,807 3,595 
Accounts receivable24 23 
Investments72 71 
Postretirement benefits1,274 1,208 
Other221 310 
Total other non‑current assets5,398 

5,207 
Total Assets$32,265 

$31,353 
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In Millions, Except Per Share Amounts
Three Months EndedNine Months Ended
September 302022202120222021
Basic Earnings Per Average Common Share
Income from continuing operations per average common share available to common stockholders$0.56 $0.54 $2.26 $2.18 
Income from discontinued operations per average common share available to common stockholders— 0.10 0.01 0.28 
Basic earnings per average common share$0.56 $0.64 $2.27 $2.46 
Diluted Earnings Per Average Common Share
Income from continuing operations per average common share available to common stockholders$0.56 $0.54 $2.26 $2.18 
Income from discontinued operations per average common share available to common stockholders— 0.10 0.01 0.28 
Diluted earnings per average common share$0.56 $0.64 $2.27 $2.46 


LIABILITIES AND EQUITY
In Millions
June 30
2023		December 31
2022
Current Liabilities
Current portion of long-term debt and finance leases$1,132 $1,099 
Notes payable— 20 
Accounts payable752 928 
Accounts payable – related parties7 8 
Accrued rate refunds21 — 
Accrued interest145 122 
Accrued taxes405 538 
Regulatory liabilities88 104 
Other current liabilities187 166 
Total current liabilities2,737 

2,985 
Non‑current Liabilities
Long-term debt13,925 13,122 
Non-current portion of finance leases65 68 
Regulatory liabilities3,922 3,796 
Postretirement benefits106 108 
Asset retirement obligations759 746 
Deferred investment tax credit127 129 
Deferred income taxes2,503 2,407 
Other non‑current liabilities415 397 
Total non‑current liabilities21,822 

20,773 
Commitments and Contingencies (Notes 1 and 2)
Equity
Common stockholders’ equity
Common stock, authorized 350.0 shares; outstanding 291.7 shares in 2023 and 291.3 shares in 20223 3 
Other paid-in capital5,506 5,490 
Accumulated other comprehensive loss(51)(52)
Retained earnings1,463 1,350 
Total common stockholders’ equity6,921 6,791 
Cumulative redeemable perpetual preferred stock, Series C, authorized 9.2 depositary shares; outstanding 9.2 depositary shares in both periods224 224 
Total stockholders’ equity7,145 7,015 
Noncontrolling interests561 580 
Total equity7,706 

7,595 
Total Liabilities and Equity$32,265 

$31,353 
The accompanying notes are an integral part of these statements.
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CMS Energy Corporation
Consolidated Statements of Comprehensive IncomeChanges in Equity (Unaudited)
In Millions
Three Months EndedNine Months Ended
September 302022202120222021
Net Income$163 $183 $650 $696 
Retirement Benefits Liability
Net gain (loss) arising during the period, net of tax of $(1), $—, $—, and $—(1)— 1 — 
Amortization of net actuarial loss, net of tax of $—, $—, $1, and $11 1 3 5 
Amortization of prior service credit, net of tax of $— for all periods— — — (1)
Derivatives
Unrealized gain on derivative instruments, net of tax of $—, $—, $1, and $—— — 2 1 
Reclassification adjustments included in net income, net of tax of $—, $—, $—, and $1— — 1 — 
Other Comprehensive Income— 1 7 5 
Comprehensive Income163 184 657 701 
Comprehensive Loss Attributable to Noncontrolling Interests(2)(6)(16)(18)
Comprehensive Income Attributable to CMS Energy$165 $190 $673 $719 
The accompanying notes are an integral part of these statements.
In Millions, Except Per Share Amounts
Three Months EndedSix Months Ended
June 302023202220232022
Total Equity at Beginning of Period$7,652 $7,405 $7,595 $7,188 
Common Stock
At beginning and end of period3 3 3 3 
Other Paid-in Capital
At beginning of period5,494 5,406 5,490 5,406 
Common stock issued12 11 23 21 
Common stock repurchased— — (7)(10)
At end of period

5,506 5,417 5,506 5,417 
Accumulated Other Comprehensive Loss
At beginning of period(51)(54)(52)(59)
Retirement benefits liability
At beginning of period(51)(53)(52)(56)
Net gain arising during the period— — 1 2 
Amortization of net actuarial loss1 1 1 2 
Amortization of prior service credit(1)— (1)— 
At end of period(51)(52)(51)(52)
Derivative instruments





At beginning of period

— (1)

— (3)
Unrealized gain on derivative instruments

— — 

— 2 
Reclassification adjustments included in net income— 1 — 1 
At end of period

— — 

— — 
At end of period(51)(52)(51)(52)
Retained Earnings
At beginning of period1,410 1,275 1,350 1,057 
Net income attributable to CMS Energy198 148 402 501 
Dividends declared on common stock(142)(134)(284)(267)
Dividends declared on preferred stock(3)(3)(5)(5)
At end of period1,463 1,286 1,463 1,286 
Cumulative Redeemable Perpetual Preferred Stock, Series C
At beginning and end of period224 224 224 224 
Noncontrolling Interests
At beginning of period572 551 580 557 
Sale of membership interest in VIE to tax equity investor— 49 — 49 
Contribution from noncontrolling interest— — 6 2 
Loss attributable to noncontrolling interests(8)(6)(18)(14)
Distributions and other changes in noncontrolling interests(3)(1)(7)(1)
At end of period561 593 561 593 
Total Equity at End of Period$7,706 $7,471 $7,706 $7,471 
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CMS Energy Corporation
Consolidated Statements of Cash Flows (Unaudited)
In Millions
Nine Months Ended September 3020222021
Cash Flows from Operating Activities
Net income$650 $696 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization830 832 
Deferred income taxes and investment tax credits58 110 
Gain from sale of EnerBank(5)— 
Other non‑cash operating activities and reconciling adjustments(60)(71)
Net cash used in discontinued operations— (111)
Changes in assets and liabilities
Accounts receivable and accrued revenue(257)129 
Inventories(637)(185)
Accounts payable and accrued rate refunds25 84 
Other current assets and liabilities18 (30)
Other non‑current assets and liabilities45 29 
Net cash provided by operating activities667 

1,483 
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under finance lease)(1,738)(1,442)
Net proceeds from sale of EnerBank5 (8)
Net cash provided by discontinued operations— 78 
Cost to retire property and other investing activities(75)(88)
Net cash used in investing activities(1,808)

(1,460)
Cash Flows from Financing Activities
Proceeds from issuance of debt1,349 300 
Retirement of debt(92)(18)
Issuance of common stock10 23 
Issuance of preferred stock, net of issuance costs— 224 
Payment of dividends on common and preferred stock(410)(380)
Proceeds from the sale of membership interest in VIE to tax equity investor49 — 
Net cash used in discontinued operations— (84)
Other financing costs(46)(37)
Net cash provided by financing activities860 

28 
Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts(281)51 
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period476 185 
Cash and Cash Equivalents, Including Restricted Amounts, End of Period$195 

$236 
Other Non‑cash Investing and Financing Activities
Non‑cash transactions
Capital expenditures not paid$227 $172 
In Millions, Except Per Share Amounts
Three Months EndedSix Months Ended
June 302023202220232022
Dividends declared per common share$0.4875 $0.4600 $0.9750 $0.9200 
Dividends declared per preferred stock Series C depositary share$0.2625 $0.2625 $0.5250 $0.5250 
The accompanying notes are an integral part of these statements.
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CMSConsumers Energy CorporationCompany
Consolidated Balance SheetsStatements of Income (Unaudited)
ASSETS
In Millions
September 30
2022		December 31
2021
Current Assets
Cash and cash equivalents$168 $452 
Restricted cash and cash equivalents27 24 
Accounts receivable and accrued revenue, less allowance of $26 in 2022 and $20 in 20211,161 931 
Accounts receivable – related parties14 12 
Inventories at average cost
Gas in underground storage1,057 462 
Materials and supplies196 168 
Generating plant fuel stock51 37 
Deferred property taxes234 356 
Regulatory assets15 46 
Prepayments and other current assets103 139 
Total current assets3,026 

2,627 
Plant, Property, and Equipment
Plant, property, and equipment, gross30,125 29,893 
Less accumulated depreciation and amortization8,863 8,502 
Plant, property, and equipment, net21,262 

21,391 
Construction work in progress1,078 961 
Total plant, property, and equipment22,340 

22,352 
Other Non‑current Assets
Regulatory assets3,427 2,259 
Accounts receivable28 30 
Investments70 71 
Other1,481 1,414 
Total other non‑current assets5,006 

3,774 
Total Assets$30,372 

$28,753 
In Millions
Three Months EndedSix Months Ended
June 302023202220232022
Operating Revenue$1,485 $1,802 $3,695 $4,085 
Operating Expenses
Fuel for electric generation85 173 183 297 
Purchased and interchange power326 468 660 905 
Purchased power – related parties17 18 36 35 
Cost of gas sold83 213 629 678 
Maintenance and other operating expenses380 370 789 683 
Depreciation and amortization245 233 589 569 
General taxes94 86 233 215 
Total operating expenses1,230 1,561 3,119 

3,382 
Operating Income255 241 576 

703 
Other Income (Expense)
Non-operating retirement benefits, net42 49 85 94 
Other income15 4 27 8 
Other expense(1)(11)(5)(14)
Total other income56 42 107 

88 
Interest Charges
Interest on long-term debt101 75 200 150 
Interest expense – related parties4 3 7 6 
Other interest expense6 — 6 1 
Allowance for borrowed funds used during construction(1)— (1)(1)
Total interest charges110 78 212 

156 
Income Before Income Taxes201 205 471 635 
Income Tax Expense34 32 72 79 
Net Income167 173 399 

556 
Preferred Stock Dividends1 1 1 1 
Net Income Available to Common Stockholder$166 $172 $398 $555 
The accompanying notes are an integral part of these statements.
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Consumers Energy Company

Consolidated Statements of Comprehensive Income (Unaudited)
LIABILITIES AND EQUITY
In Millions
September 30
2022		December 31
2021
Current Liabilities
Current portion of long-term debt, finance leases, and other financing$1,000 $382 
Accounts payable949 875 
Accounts payable – related parties7 11 
Accrued rate refunds— 12 
Accrued interest117 107 
Accrued taxes178 515 
Regulatory liabilities67 146 
Other current liabilities170 156 
Total current liabilities2,488 

2,204 
Non‑current Liabilities
Long-term debt12,685 12,046 
Non-current portion of finance leases and other financing70 46 
Regulatory liabilities3,862 3,802 
Postretirement benefits136 142 
Asset retirement obligations747 628 
Deferred investment tax credit130 112 
Deferred income taxes2,367 2,210 
Other non‑current liabilities383 375 
Total non‑current liabilities20,380 

19,361 
Commitments and Contingencies (Notes 1, 2, and 14)
Equity
Common stockholders’ equity
Common stock, authorized 350.0 shares; outstanding 290.3 shares in 2022 and 289.8 shares in 20213 3 
Other paid-in capital5,423 5,406 
Accumulated other comprehensive loss(52)(59)
Retained earnings1,315 1,057 
Total common stockholders’ equity6,689 6,407 
Cumulative redeemable perpetual preferred stock, Series C, authorized 9.2 depositary shares; outstanding 9.2 depositary shares in both periods224 224 
Total stockholders’ equity6,913 6,631 
Noncontrolling interests591 557 
Total equity7,504 

7,188 
Total Liabilities and Equity$30,372 

$28,753 
In Millions
Three Months EndedSix Months Ended
June 302023202220232022
Net Income$167 $173 $399 $556 
Retirement Benefits Liability 
Amortization of net actuarial loss, net of tax of $— for all periods— — — 1 
Other Comprehensive Income— — — 1 
Comprehensive Income$167 $173 $399 $557 
The accompanying notes are an integral part of these statements.
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CMSConsumers Energy CorporationCompany
Consolidated Statements of Changes in EquityCash Flows (Unaudited)
In Millions, Except Per Share Amounts
Three Months EndedNine Months Ended
September 302022202120222021
Total Equity at Beginning of Period$7,471 $6,366 $7,188 $6,077 
Common Stock
At beginning and end of period3 3 3 3 
Other Paid-in Capital
At beginning of period5,417 5,389 5,406 5,365 
Common stock issued6 8 27 41 
Common stock repurchased— — (10)(9)
At end of period

5,423 5,397 5,423 5,397 
Accumulated Other Comprehensive Loss
At beginning of period(52)(82)(59)(86)
Retirement benefits liability
At beginning of period(52)(77)(56)(80)
Net gain (loss) arising during the period(1)— 1 — 
Amortization of net actuarial loss1 1 3 5 
Amortization of prior service credit— — — (1)
At end of period(52)(76)(52)(76)
Derivative instruments





At beginning of period

— (5)

(3)(6)
Unrealized gain on derivative instruments

— — 

2 1 
Reclassification adjustments included in net income— — 1 — 
At end of period

— (5)

— (5)
At end of period(52)(81)(52)(81)
Retained Earnings
At beginning of period1,286 487 1,057 214 
Net income attributable to CMS Energy165 189 666 714 
Dividends declared on common stock(134)(126)(401)(378)
Dividends declared on preferred stock(2)(3)(7)(3)
At end of period1,315 547 1,315 547 
Cumulative Redeemable Perpetual Preferred Stock, Series C
At beginning of period224 — 224 — 
Preferred stock issued, net of issuance costs— 224 — 224 
At end of period224 224 224 224 
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In Millions, Except Per Share Amounts
Three Months EndedNine Months Ended
September 302022202120222021
Noncontrolling Interests
At beginning of period593 569 557 581 
Sale of membership interest in VIE to tax equity investor— — 49 — 
Contribution from noncontrolling interest— — 2 1 
Loss attributable to noncontrolling interests(2)(6)(16)(18)
Distributions and other changes in noncontrolling interests— — (1)(1)
At end of period591 563 591 563 
Total Equity at End of Period$7,504 $6,653 $7,504 $6,653 
Dividends declared per common share$0.4600 $0.4350 $1.3800 $1.3050 
Dividends declared per preferred stock Series C depositary share$0.2625 $0.3063 $0.7875 $0.3063 
In Millions
Six Months Ended June 3020232022
Cash Flows from Operating Activities
Net income$399 $556 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization589 569 
Deferred income taxes and investment tax credits73 55 
Other non‑cash operating activities and reconciling adjustments(35)(33)
Changes in assets and liabilities
Accounts and notes receivable and accrued revenue453 (60)
Inventories236 (178)
Accounts payable and accrued rate refunds(170)44 
Other current assets and liabilities75 146 
Other non-current assets and liabilities139 60 
Net cash provided by operating activities1,759 

1,159 
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under finance lease)(1,081)(1,040)
Covert Generating Facility acquisition(810)— 
Cost to retire property and other investing activities(80)(54)
Net cash used in investing activities(1,971)

(1,094)
Cash Flows from Financing Activities
Proceeds from issuance of debt1,520 — 
Retirement of debt(1,314)(14)
Increase (decrease) in notes payable(20)45 
Decrease in notes payable – related parties(69)(360)
Stockholder contribution475 685 
Payment of dividends on common and preferred stock(306)(434)
Other financing costs(18)(5)
Net cash provided by (used in) financing activities268 

(83)
Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts56 (18)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period60 44 
Cash and Cash Equivalents, Including Restricted Amounts, End of Period$116 

$26 
Other Non‑cash Investing and Financing Activities
Non‑cash transactions
Capital expenditures not paid$228 $155 
The accompanying notes are an integral part of these statements.
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Consumers Energy Company
Consolidated Statements of Income (Unaudited)
In Millions
Three Months EndedNine Months Ended
September 302022202120222021
Operating Revenue$1,886 $1,644 $5,971 $5,074 
Operating Expenses
Fuel for electric generation233 147 530 340 
Purchased and interchange power556 450 1,461 1,200 
Purchased power – related parties21 21 56 56 
Cost of gas sold114 53 792 425 
Maintenance and other operating expenses393 390 1,076 1,021 
Depreciation and amortization233 241 802 804 
General taxes84 77 299 277 
Total operating expenses1,634 1,379 5,016 

4,123 
Operating Income252 265 955 

951 
Other Income (Expense)
Interest income1 1 2 2 
Interest and dividend income – related parties1 1 4 4 
Allowance for equity funds used during construction1 2 4 5 
Non-operating retirement benefits, net52 37 146 113 
Other income1 1 2 7 
Other expense(5)(3)(19)(7)
Total other income51 39 139 

124 
Interest Charges
Interest on long-term debt81 74 231 220 
Interest expense – related parties3 3 9 9 
Other interest expense1 2 2 6 
Allowance for borrowed funds used during construction— (1)(1)(2)
Total interest charges85 78 241 

233 
Income Before Income Taxes218 226 853 842 
Income Tax Expense29 40 108 130 
Net Income189 186 745 

712 
Preferred Stock Dividends— — 1 1 
Net Income Available to Common Stockholder$189 $186 $744 $711 
The accompanying notes are an integral part of these statements.
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Consumers Energy Company
Consolidated Statements of Comprehensive Income (Unaudited)
In Millions
Three Months EndedNine Months Ended
September 302022202120222021
Net Income$189 $186 $745 $712 
Retirement Benefits Liability 
Amortization of net actuarial loss, net of tax of $— for all periods1 1 2 2 
Other Comprehensive Income1 1 2 2 
Comprehensive Income$190 $187 $747 $714 
The accompanying notes are an integral part of these statements.
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Consumers Energy Company
Consolidated Statements of Cash Flows (Unaudited)
In Millions
Nine Months Ended September 3020222021
Cash Flows from Operating Activities
Net income$745��$712 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization802 804 
Deferred income taxes and investment tax credits79 129 
Other non‑cash operating activities and reconciling adjustments(57)(65)
Changes in assets and liabilities
Accounts and notes receivable and accrued revenue(242)137 
Inventories(636)(186)
Accounts payable and accrued rate refunds(2)60 
Other current assets and liabilities38 (24)
Other non-current assets and liabilities34 16 
Net cash provided by operating activities761 

1,583 
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under finance lease)(1,642)(1,433)
Cost to retire property and other investing activities(73)(86)
Net cash used in investing activities(1,715)

(1,519)
Cash Flows from Financing Activities
Proceeds from issuance of debt1,349 300 
Retirement of debt(14)(13)
Decrease in notes payable – related parties(392)(307)
Stockholder contribution685 575 
Payment of dividends on common and preferred stock(594)(571)
Other financing costs(14)(28)
Net cash provided by (used in) financing activities1,020 

(44)
Net Increase in Cash and Cash Equivalents, Including Restricted Amounts66 20 
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period44 35 
Cash and Cash Equivalents, Including Restricted Amounts, End of Period$110 

$55 
Other Non‑cash Investing and Financing Activities
Non‑cash transactions
Capital expenditures not paid$216 $168 
The accompanying notes are an integral part of these statements.
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Consolidated Balance Sheets (Unaudited)
ASSETSASSETSASSETS
In MillionsIn MillionsIn Millions
September 30
2022		December 31
2021		June 30
2023		December 31
2022
Current AssetsCurrent Assets  Current Assets  
Cash and cash equivalentsCash and cash equivalents$83 $22 Cash and cash equivalents$99 $43 
Restricted cash and cash equivalentsRestricted cash and cash equivalents27 22 Restricted cash and cash equivalents17 17 
Accounts receivable and accrued revenue, less allowance of $26 in 2022 and $20 in 20211,121 905 
Accounts receivable and accrued revenue, less allowance of $27 in both periodsAccounts receivable and accrued revenue, less allowance of $27 in both periods686 1,524 
Accounts and notes receivable – related partiesAccounts and notes receivable – related parties9 9 Accounts and notes receivable – related parties8 10 
Inventories at average costInventories at average costInventories at average cost
Gas in underground storageGas in underground storage1,057 462 Gas in underground storage570 840 
Materials and suppliesMaterials and supplies190 163 Materials and supplies235 206 
Generating plant fuel stockGenerating plant fuel stock46 33 Generating plant fuel stock70 59 
Deferred property taxesDeferred property taxes234 356 Deferred property taxes282 384 
Regulatory assetsRegulatory assets15 46 Regulatory assets182 57 
Prepayments and other current assetsPrepayments and other current assets85 103 Prepayments and other current assets107 96 
Total current assetsTotal current assets2,867 

2,121 Total current assets2,256 

3,236 
Plant, Property, and EquipmentPlant, Property, and Equipment  Plant, Property, and Equipment  
Plant, property, and equipment, grossPlant, property, and equipment, gross28,978 28,771 Plant, property, and equipment, gross30,445 29,342 
Less accumulated depreciation and amortizationLess accumulated depreciation and amortization8,704 8,371 Less accumulated depreciation and amortization8,550 8,791 
Plant, property, and equipment, netPlant, property, and equipment, net20,274 

20,400 Plant, property, and equipment, net21,895 

20,551 
Construction work in progressConstruction work in progress939 915 Construction work in progress1,126 994 
Total plant, property, and equipmentTotal plant, property, and equipment21,213 

21,315 Total plant, property, and equipment23,021 

21,545 
Other Non-current AssetsOther Non-current Assets  Other Non-current Assets  
Regulatory assetsRegulatory assets3,427 2,259 Regulatory assets3,807 3,595 
Accounts receivableAccounts receivable34 36 Accounts receivable30 29 
Accounts and notes receivable – related partiesAccounts and notes receivable – related parties99 102 Accounts and notes receivable – related parties97 99 
Postretirement benefitsPostretirement benefits1,187 1,126 
OtherOther1,352 1,307 Other190 286 
Total other non-current assetsTotal other non-current assets4,912 

3,704 Total other non-current assets5,311 

5,135 
Total AssetsTotal Assets$28,992 

$27,140 Total Assets$30,588 

$29,916 
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LIABILITIES AND EQUITYLIABILITIES AND EQUITYLIABILITIES AND EQUITY
In MillionsIn MillionsIn Millions
September 30
2022		December 31
2021		June 30
2023		December 31
2022
Current LiabilitiesCurrent LiabilitiesCurrent Liabilities
Current portion of long-term debt, finance leases, and other financing$1,000 $374 
Current portion of long-term debt and finance leasesCurrent portion of long-term debt and finance leases$697 $1,000 
Notes payableNotes payable— 20 
Notes payable – related partiesNotes payable – related parties— 392 Notes payable – related parties6 75 
Accounts payableAccounts payable881 835 Accounts payable712 864 
Accounts payable – related partiesAccounts payable – related parties12 16 Accounts payable – related parties15 15 
Accrued rate refundsAccrued rate refunds— 12 Accrued rate refunds21 — 
Accrued interestAccrued interest86 75 Accrued interest111 90 
Accrued taxesAccrued taxes218 529 Accrued taxes413 556 
Regulatory liabilitiesRegulatory liabilities67 146 Regulatory liabilities88 104 
Other current liabilitiesOther current liabilities147 109 Other current liabilities161 147 
Total current liabilitiesTotal current liabilities2,411 

2,488 Total current liabilities2,224 

2,871 
Non-current LiabilitiesNon-current LiabilitiesNon-current Liabilities
Long-term debtLong-term debt8,756 8,050 Long-term debt9,456 9,192 
Non-current portion of finance leases and other financing47 46 
Long-term debt – related partiesLong-term debt – related parties235 — 
Non-current portion of finance leasesNon-current portion of finance leases42 45 
Regulatory liabilitiesRegulatory liabilities3,862 3,802 Regulatory liabilities3,922 3,796 
Postretirement benefitsPostretirement benefits100 104 Postretirement benefits78 79 
Asset retirement obligationsAsset retirement obligations723 605 Asset retirement obligations735 722 
Deferred investment tax creditDeferred investment tax credit130 112 Deferred investment tax credit127 129 
Deferred income taxesDeferred income taxes2,516 2,340 Deferred income taxes2,682 2,585 
Other non-current liabilitiesOther non-current liabilities330 314 Other non-current liabilities364 342 
Total non-current liabilitiesTotal non-current liabilities16,464 

15,373 Total non-current liabilities17,641 

16,890 
Commitments and Contingencies (Notes 1 and 2)
Commitments and Contingencies (Notes 1 and 2)
Commitments and Contingencies (Notes 1 and 2)
EquityEquityEquity
Common stockholder’s equityCommon stockholder’s equityCommon stockholder’s equity
Common stock, authorized 125.0 shares; outstanding 84.1 shares in both periodsCommon stock, authorized 125.0 shares; outstanding 84.1 shares in both periods841 841 Common stock, authorized 125.0 shares; outstanding 84.1 shares in both periods841 841 
Other paid-in capitalOther paid-in capital7,284 6,599 Other paid-in capital7,759 7,284 
Accumulated other comprehensive lossAccumulated other comprehensive loss(30)(32)Accumulated other comprehensive loss(15)(15)
Retained earningsRetained earnings1,985 1,834 Retained earnings2,101 2,008 
Total common stockholder’s equityTotal common stockholder’s equity10,080 

9,242 Total common stockholder’s equity10,686 

10,118 
Cumulative preferred stock, $4.50 series, authorized 7.5 shares; outstanding 0.4 shares in both periodsCumulative preferred stock, $4.50 series, authorized 7.5 shares; outstanding 0.4 shares in both periods37 37 Cumulative preferred stock, $4.50 series, authorized 7.5 shares; outstanding 0.4 shares in both periods37 37 
Total equityTotal equity10,117 

9,279 Total equity10,723 

10,155 
Total Liabilities and EquityTotal Liabilities and Equity$28,992 

$27,140 Total Liabilities and Equity$30,588 

$29,916 
The accompanying notes are an integral part of these statements.
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Consumers Energy Company
Consolidated Statements of Changes in Equity (Unaudited)
In MillionsIn MillionsIn Millions
Three Months EndedNine Months EndedThree Months EndedSix Months Ended
September 302022202120222021
June 30June 302023202220232022
Total Equity at Beginning of PeriodTotal Equity at Beginning of Period$10,087 $8,977 $9,279 $8,556 Total Equity at Beginning of Period$10,175 $9,838 $10,155 $9,279 
Common StockCommon StockCommon Stock
At beginning and end of periodAt beginning and end of period841 841 841 841 At beginning and end of period841 841 841 841 
Other Paid-in CapitalOther Paid-in CapitalOther Paid-in Capital
At beginning of periodAt beginning of period7,284 6,299 6,599 6,024 At beginning of period7,359 7,049 7,284 6,599 
Stockholder contributionStockholder contribution— 300 685 575 Stockholder contribution400 235 475 685 
At end of periodAt end of period7,284 6,599 7,284 6,599 At end of period7,759 7,284 7,759 7,284 
Accumulated Other Comprehensive LossAccumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
At beginning of period(31)(35)(32)(36)
Retirement benefits liabilityRetirement benefits liabilityRetirement benefits liability
At beginning of periodAt beginning of period(31)(35)(32)(36)At beginning of period(15)(31)(15)(32)
Amortization of net actuarial lossAmortization of net actuarial loss1 1 2 2 Amortization of net actuarial loss— — — 1 
At end of period(30)(34)(30)(34)
At end of periodAt end of period(30)(34)(30)(34)At end of period(15)(31)(15)(31)
Retained EarningsRetained EarningsRetained Earnings
At beginning of periodAt beginning of period1,956 1,835 1,834 1,690 At beginning of period1,953 1,942 2,008 1,834 
Net incomeNet income189 186 745 712 Net income167 173 399 556 
Dividends declared on common stockDividends declared on common stock(160)(190)(593)(570)Dividends declared on common stock(18)(158)(305)(433)
Dividends declared on preferred stockDividends declared on preferred stock— — (1)(1)Dividends declared on preferred stock(1)(1)(1)(1)
At end of periodAt end of period1,985 1,831 1,985 1,831 At end of period2,101 1,956 2,101 1,956 
Cumulative Preferred StockCumulative Preferred StockCumulative Preferred Stock
At beginning and end of periodAt beginning and end of period37 37 37 37 At beginning and end of period37 37 37 37 
Total Equity at End of PeriodTotal Equity at End of Period$10,117 $9,274 $10,117 $9,274 Total Equity at End of Period$10,723 $10,087 $10,723 $10,087 
The accompanying notes are an integral part of these statements.
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CMS Energy Corporation
Consumers Energy Company
Notes to the Unaudited Consolidated Financial Statements
These interim consolidated financial statements have been prepared by CMS Energy and Consumers in accordance with GAAP for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S‑X. As a result, CMS Energy and Consumers have condensed or omitted certain information and note disclosures normally included in consolidated financial statements prepared in accordance with GAAP. CMS Energy and Consumers have reclassified certain prior period amounts to conform to the presentation in the present period.
CMS Energy and Consumers are required to make estimates using assumptions that may affect reported amounts and disclosures; actual results could differ from these estimates. In management’s opinion, the unaudited information contained in this report reflects all adjustments of a normal recurring nature necessary to ensure that CMS Energy’s and Consumers’ financial position, results of operations, and cash flows for the periods presented are fairly stated. The notes to the unaudited consolidated financial statements and the related unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the 20212022 Form 10‑K. Due to the seasonal nature of CMS Energy’s and Consumers’ operations, the results presented for this interim period are not necessarily indicative of results to be achieved for the fiscal year.
1:    Regulatory Matters
Regulatory matters are critical to Consumers. The Michigan Attorney General, ABATE, the MPSC Staff, the Residential Customer Group,residential customer advocacy groups, environmental organizations, and certain other parties typically participate in MPSC proceedings concerning Consumers, such as Consumers’ rate cases and PSCR and GCRgas cost recovery processes. These parties often challenge various aspects of those proceedings, including the prudence of Consumers’ policies and practices, and seek cost disallowances and other relief. The parties also have appealed significant MPSC orders. Depending upon the specific issues, the outcomes of rate cases and proceedings, including judicial proceedings challenging MPSC orders or other actions, could negatively affect CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. Consumers cannot predict the outcome of these proceedings.
There are multiple appeals pending that involve various issues concerning cost recovery from customers, the MPSC’s authority to approve voluntary revenue refunds, and other matters. Consumers is unable to predict the outcome of these appeals.
2022 Electric Rate Case Proceedings:Case: In Consumers’ recentJanuary 2023, the MPSC approved a settlement agreement authorizing an annual rate increase of $155 million, based on a 9.9-percent authorized return on equity. The MPSC also approved a surcharge for the recovery of $6 million of depreciation, property tax, and interest expense related to distribution investments made in 2021 that exceeded what was authorized in rates in accordance with the December 2020 electric rate proceedings, the MPSC and the MPSC Staff have recommended that Consumers be disallowed recovery of certain categories of capital expenditures.order. The new rates became effective January 20, 2023.
Voluntary Refund Mechanism: In December 2021,2022, the MPSC issued a finalan order in Consumers’ 2021 general electric rate case, disallowing cost recovery for fleet assets and certain other categories of recently completed capital expenditures incurred by Consumers. As a result,authorizing Consumers impaired a portion of these capital expenditures in 2021.
For other categories of capital expenditures,to refund $22 million voluntarily to utility customers. In April 2023, the MPSC ordered Consumersapproved the refund of $5 million in the form of contributions to provide additional cost/benefit analysis and other informationprograms that assist vulnerable gas customers. In May 2023, the MPSC approved the refund of $9 million in the form of bill assistance to support cost recovery. Consumers believes it has provided such analysisvulnerable electric customers and informationthe refund of $8 million in its 2022 electric rate case. In August 2022, the MPSC Staff recommendedform of incremental vegetation management.
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disallowance of additional categories of capital expenditures incurred by Consumers during 2022. Further, some of these are joint (or common) projects undertaken by both the electric and gas business units. Consumers has incurred $19 million related to these programs as of September 30, 2022 and, for certain ongoing projects, expects to incur additional capital expenditures during the remainder of 2022 and beyond.
While Consumers has provided the additional analysis and information requested by the MPSC as supporting evidence of the prudency of such capital expenditures in its pending electric rate case proceeding, it is reasonably possible that the MPSC will disallow some or all of these capital expenditures. Any material disallowance of incurred capital costs could negatively affect CMS Energy’s and Consumers’ future results of operations. Consumers expects the MPSC to issue a final order in its pending electric rate case by March 2023. Consumers cannot predict the outcome of this proceeding.
In January 2022, Consumers filed a petition for rehearing that, among other things, requested that the MPSC reconsider its disallowance in the 2021 electric rate case of $11 million in capital expenditures for which the MPSC had already approved recovery in a previous rate order. In March 2022, the MPSC approved Consumers’ rehearing petition in full and authorized that the $11 million of capital expenditures be included in rate base, which resulted an additional annual rate increase of $5 million prospectively.
Energy Waste Reduction Plan Incentive: Consumers filed its 2021 energy waste reduction reconciliation in May 2022, requesting the MPSC’s approval to collect from customers the maximum performance incentive of $46 million for exceeding statutory savings targets in 2021. Consumers recognized incentive revenue under this program of $46 million in 2021.
Costs of Coal-fueled Electric Generating Units to be Retired: In June 2022, the MPSC approved the settlement agreement reached in Consumers’ 2021 IRP, under which Consumers plans to retire the J.H. Campbell coal-fueled generating units in 2025. Under the 2021 IRP, upon the units’ retirement, Consumers will receive regulatory asset treatment to recover their remaining book value, as well as a 9.0‑percent return on equity, over their original design lives. Until retirement, the book value of the generating units will remain in rate base and receive full regulatory returns in general rate cases.
In June 2022, Consumers removed from total plant, property, and equipment an amount of $1.3 billion, representing the projected remaining book value of the electric generating units upon their retirement, and recorded it as a non-current regulatory asset on its consolidated balance sheets.
Voluntary Radio Tower Asset Sale Gain Share: In May 2022, Consumers completed a sale of various radio tower assets. In June 2022, Consumers filed an application with the MPSC requesting approval to share voluntarily half of the gain from the sale with its electric and gas utility customers. Of the amount to be shared with customers, Consumers proposes to share two-thirds with electric customers through additional spending for tree trimming in 2022 and one-third with gas customers through a donation to nonprofit agencies that provide customer energy bill assistance. As a result, Consumers deferred $7 million of the gain in June 2022, and recorded it as a non-current regulatory liability on its consolidated balance sheets.
GCR and PSCR:PSCR Underrecovery: Due to rising natural gas prices, Consumers’ gas fuel costs for the nine months ended September 30, 2022 were higher than those projected in its 2022-2023 GCR plan. As a result, Consumers had recorded a $45 million underrecovery in accounts receivable and accrued revenue on its consolidated balance sheets at September 30, 2022. Consumers expects that higher gas fuel costs will continue into the 2022-2023 GCR plan year. Consequently, in June 2022, Consumers filed with the MPSC a revised GCR plan requesting an increase to the GCR factor and self-implemented that increased factor in October 2022.
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The recent spikes in fuel prices also increasedduring 2022, the cost of electric generation and resultedincreased, resulting in higher market prices for electricity. As a result,Accordingly, Consumers’ power supply costs for the nine months ended September 30, 2022 were significantly higher than those projected in theits 2022 PSCR plan it submitted to the MPSC in September 2021. Consequently, Consumers had recorded a $375 million underrecovery in accounts receivable and accrued revenue on its consolidated balance sheets at September 30, 2022.plan. Consumers included a projection of its full-year 2022 underrecovery in itsthe 2023 PSCR plan filed with the MPSC in September 2022.
In January 2023, Consumers filed a motion for a temporary order in its 2023 PSCR plan, requesting that the MPSC approve only a third of the 2022 underrecovery amount for recovery in 2023, with the remaining amount to be recovered equally during 2024 and 2025. The MPSC approved Consumers’ motion in February 2023. Recovering the 2022 underrecovery over three years will provide immediate relief to electric customers, and the financial impact will be neutral to Consumers’ earnings.
Meter Investigation: In July 2023, the MPSC issued an order initiating an investigation into Consumers’ handling of malfunctioning meters and meters requiring transition from 3G to 4G technology, estimated billing, and new service installations. The order directed Consumers to provide information on such meters and their replacement, meter-reading performance, communications with customers and the MPSC regarding these issues, and other information. The MPSC directed the MPSC Staff to analyze this information and make recommendations by the end of September 2023. Consumers cannot predict the outcome of this matter, but it could be subject to regulatory penalties that have an adverse effect on Consumers’ results of operations, financial condition, or liquidity, and Consumers could be subject to increased regulatory scrutiny.
2:    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 statestating that CMS Energy or Consumers cannot predict the outcome of a matter indicate that they are unable to estimate a possible loss or range of loss for the matter.
CMS Energy Contingencies
Bay Harbor: CMS Land retained environmental remediation obligations for the collection and treatment of leachate at Bay Harbor after selling its interests in the development in 2002. Leachate is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site. In 2012, CMS Land and EGLE finalized an agreement that establishedestablishing the final remedies and the future water quality criteria at the site. CMS Land completed all construction necessary to implement the remedies required by the agreement and will continue to maintain and operate a system to discharge treated leachate into Little Traverse Bay under an NPDES permit, which was renewed in January 2022 and is valid through 2025.
At SeptemberJune 30, 2022,2023, CMS Energy had a recorded liability of $44 million for its remaining obligations for environmental remediation. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.34 percent and an inflation rate of one percent on annual operating and maintenance costs. The undiscounted amount of the remaining obligation is $54$55 million. CMS Energy
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expects to pay the following amounts for long-term leachate disposal and operating and maintenance costs during the remainder of 20222023 and in each of the next five years:
In MillionsIn MillionsIn Millions
202220232024202520262027202320242025202620272028
CMS EnergyCMS EnergyCMS Energy
Long-term leachate disposal and operating and maintenance costsLong-term leachate disposal and operating and maintenance costs$1 $4 $4 $4 $4 $4 Long-term leachate disposal and operating and maintenance costs$2 $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.
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Consumers Electric Utility Contingencies
Electric Environmental Matters: Consumers’ operations are subject to environmental laws and regulations. Historically, Consumers has generally been able to recover, in customer rates, the costs to operate its facilities in compliance with these laws and regulations.
Cleanup and Solid Waste: Consumers expects to incur remediation and other response activity costs at a number of sites under NREPA. Consumers believes that these costs should be recoverable in rates, but cannot guarantee that outcome. Consumers estimates that its liability for NREPA sites for which it can estimate a range of loss willto be between $2 million and $4 million. At SeptemberJune 30, 2022,2023, Consumers had a recorded liability of $2 million, the minimum amount in the range of its estimated probable NREPA liability, as no amount in the range was considered a better estimate than any other amount.
Consumers is a potentially responsible party at a number of contaminated sites administered under CERCLA. CERCLA liability is joint and several. In 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party for cleanup of PCBs at the Kalamazoo River CERCLA site. The notification claimed that the EPA hashad 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, including Consumers, 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 willto 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 SeptemberJune 30, 2022,2023, 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.
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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 partTable 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.Contents
Ludington Plant Overhaul Contract Dispute: Consumers and DTE Electric, co-owners of Ludington, are parties to a 2010 engineering, procurement, and construction contractagreement with TAES, under which TAES is charged with performingcontracted to perform a major overhaul and upgrade of Ludington. The overhauled Ludington units are operational, but TAES’ performancework has been unsatisfactorydefective and resulted in overhaul project delays.non‑conforming. Consumers and DTE Electric have demanded that TAES provide a comprehensive plan to resolve quality control concerns, including adherence to its warranty commitments and other contractual obligations. Consumers and DTE Electric have taken extensive efforts to resolve these issues with TAES, including a formal demand to TAES’ parent, Toshiba Corporation, a non‑affiliated company, under a parent guaranty it provided in the contract. TAES has not provided a comprehensive plan or otherwise met its performance obligations.
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In order to enforce the contract, Consumers and DTE Electric filed a complaint against TAES and Toshiba Corporation in the U.S. District Court for the Eastern District of Michigan in April 2022. In June 2022, TAES and Toshiba Corporation filed a motion to dismiss the complaint, along with an answer and counterclaims seeking approximately $15 million in damages related to payments allegedly owed under the parties’ contract. As a co-owner of Ludington, Consumers would be liable for 51 percent of any such damages. In September 2022, the court denied the motion to dismiss filed by TAES and Toshiba Corporation. Consumers believes the counterclaims are without merit, but cannot predict the financial impact or outcome of this matter. An unfavorable outcome could have a material adverse effect on CMS Energy’s and Consumers’ financial condition, results of operations, or liquidity.
In May 2023, the MPSC approved Consumers’ and DTE Electric’s jointly-filed request for authority to defer as a regulatory asset the costs associated with repairing or replacing the defective work performed by TAES while the litigation with TAES and Toshiba Corporation moves forward; such costs will be offset by potential future litigation proceeds received from TAES or Toshiba Corporation. Consumers and DTE Electric will have the opportunity to seek appropriate recovery and ratemaking treatment for amounts recorded as a regulatory asset following resolution of the litigation.
J.H. Campbell 3 Plant Retirement Contract Dispute: In May 2022, Consumers filed a complaint against Wolverine Power Supply Cooperative, Inc.Power. in the Ottawa County Circuit Court and requested a ruling that Consumers has sole authority to decide to retire the J.H. Campbell 3 coal-fueled generating unit under the unit’s Joint Ownership and Operating Agreement. In July 2022, Wolverine Power Supply Cooperative, Inc. filed an answer, affirmative defenses, and a counterclaim seeking approximately $37 million in damages allegedly caused by Consumers’ decision to retire the unit before the end of its useful life. In July 2022, Consumers filed a motion for summary disposition, which was heard in August 2022. In October 2022, the state circuit court judge found that Consumers may, in its sole discretion, retire the J.H. Campbell 3 coal-fueled generating unit, provided that Consumers continues to operate and make necessary improvements to the unit while the litigation concerning Wolverine Power Supply Cooperative, Inc.’sPower’s claim for damages is pending. In May 2023, the circuit court judge issued an order granting Consumers’ Motion for Clarification confirming that Consumers may continue to operate and invest in J.H. Campbell 3 consistent with the May 2025 retirement date. Consumers believes Wolverine Power Supply Cooperative, Inc.’sPower’s claim has no merit, but cannot predict the final impact or outcome on this matter. An unfavorable outcome could have a material adverse effect on CMS Energy’s and Consumers’ financial condition, results of operations, or liquidity.
Consumers Gas Utility Contingencies
Gas Environmental Matters: Consumers expects to incur remediation and other response activity costs at a number of sites under NREPA. These sites include 23 former MGP facilities. Consumers operated the facilities on these sites for some part of their operating lives. For some of these sites, Consumers has no present ownership interest or may own only a portion of the original site.
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At SeptemberJune 30, 2022,2023, Consumers had a recorded liability of $63$62 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 $67 million. Consumers expects to pay the following amounts for remediation and other response activity costs during the remainder of 20222023 and in each of the next five years:
In MillionsIn MillionsIn Millions
202220232024202520262027202320242025202620272028
ConsumersConsumersConsumers
Remediation and other response activity costsRemediation and other response activity costs$1 $5 $11 $31 $6 $1 Remediation and other response activity costs$3 $2 $2 $6 $9 $23 
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 SeptemberJune 30, 2022,2023, Consumers had a regulatory asset of $111$103 million related to the MGP sites.
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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 SeptemberJune 30, 2022,2023, Consumers had a recorded liability of less than $1 million, the minimum amount in the range of its estimated probable liability, as no amount in the range was considered a better estimate than any other amount.
Ray Compressor Station: On January 30, 2019, Consumers experienced a fire at the Ray Compressor Station, which resulted in the Ray Storage Field being off‑line or operating at significantly reduced capacity, which negatively affected Consumers’ natural gas supply and delivery capacity. This incident, which occurred during the extreme polar vortex weather condition, required Consumers to request voluntary reductions in customer load, to implement contingency gas supply purchases, and to implement a curtailment of natural gas deliveries for industrial and large commercial customers pursuant to Consumers’ MPSC curtailment tariff. The curtailment and request for voluntary reductions of customer loads were canceled as of midnight, February 1, 2019. Consumers investigated the cause of the incident, and filed a report on the incident with the MPSC in April 2019. In response, the MPSC issued an order in July 2019, directing Consumers to file additional reports regarding the incident and to include detail of the resulting costs in a future rate proceeding. The compressor station is presently operating at full capacity.
In September 2020, the MPSC disallowed the recovery of $7 million in incremental gas purchases related to the fire. In January 2021, the MPSC denied Consumers’ petition for a rehearing challenging this disallowance. In February 2021, Consumers filed an appeal of the MPSC’s denial with the Michigan Court of Appeals.
In December 2021, Consumers filed a gas rate case with the MPSC that included a request for recovery of the capital expenditures incurred to restore and modify the compressor station. Consumers incurred capital expenditures of $17 million during 2020 and 2021 to restore and modify the compressor station.
During the nine months ended September 30, 2022, Consumers received insurance proceeds of $13 million, representing recovery of costs incurred to restore the compressor station and incremental gas purchases related to the fire. Consumers had recognized the insurance recovery during 2021.
In June 2022, Consumers, the MPSC Staff, and other intervenors reached a settlement of the gas rate case and the MPSC approved it in July 2022. As a part of the settlement agreement, Consumers agreed, at this time, to not seek recovery of the capital expenditures, net of insurance proceeds, related to restoring and modifying the Ray Compressor Station. As a result, Consumers recorded an impairment charge of $10 million within maintenance and other operating expenses on its consolidated statements of income for the nine months ended September 30, 2022.
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Guarantees
Presented in the following table are CMS Energy’s and Consumers’ guarantees at SeptemberJune 30, 2022:2023:
In MillionsIn MillionsIn Millions
Guarantee DescriptionGuarantee DescriptionIssue DateExpiration DateMaximum ObligationCarrying AmountGuarantee DescriptionIssue DateExpiration DateMaximum ObligationCarrying Amount
CMS Energy, including ConsumersCMS Energy, including ConsumersCMS Energy, including Consumers
Indemnity obligations from sale of membership interests in VIEs1
Indemnity obligations from sale of membership interests in VIEs1
variousindefinite$336 $— 
Indemnity obligations from sale of membership interests in VIEs1
variousindefinite$308 $— 
Indemnity obligations from stock and asset sale agreements2
Indemnity obligations from stock and asset sale agreements2
variousindefinite226 3 
Indemnity obligations from stock and asset sale agreements2
variousindefinite154 2 
Guarantee3
Guarantee3
2011indefinite30 — 
Guarantee3
2011indefinite30 — 
ConsumersConsumersConsumers
Guarantee3
Guarantee3
2011indefinite$30 $— 
Guarantee3
2011indefinite$30 $— 
1These obligations arose from the sale of membership interests in NWO Holdco and Aviator Wind to tax equity investors. NorthStar Clean Energy provided certain indemnity obligations that protect the tax equity investors against losses incurred as a result of breaches of representations and warranties under the associated limited liability company agreements. 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. For any indemnity obligations related to Aviator Wind, NorthStar Clean Energy 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 NorthStar Clean Energy’s ownership interest in NWO Holdco and Aviator Wind, see Note 13,11, Variable Interest Entities.
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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, including claims related to taxes and breaches of representations and warranties.taxes. The maximum obligation amount is mostly related to an Equatorial Guinea tax claim and an indemnity provided in connection with the sale of EnerBank to Regions Bank. For further details on the sale, see Note 14, Exit Activities and Discontinued Operations.claim.
3This obligation comprises a guarantee provided by Consumers to the U.S. Department of Energy in connection with a settlement agreement regarding damages resulting from the department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by Consumers.
Additionally, in the normal course of business, CMS Energy, Consumers, and certain other subsidiaries of CMS Energy have entered into various agreements containing tax and other indemnity provisions for which they are unable to estimate the maximum potential obligation. CMS Energy and Consumers consider the likelihood that they would be required to perform or incur substantial losses related to these indemnities and those disclosed in the table to be remote.
Other Contingencies
In addition to the matters disclosed in this Note and Note 1, Regulatory Matters, there are certain other lawsuits and administrative proceedings before various courts and governmental agencies, as well as unasserted claims that may result in such proceedings, arising in the ordinary course of business to which CMS Energy, Consumers, and certain other subsidiaries of CMS Energy are parties. These other lawsuits, proceedings, and unasserted claims may involve personal injury, property damage, contracts, environmental matters, federal and state taxes, rates, licensing, employment, and other matters. Further,
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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.
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3:    Financings and Capitalization
Financings: Presented in the following table is a summary of major long-term debt issuances during the ninesix months ended SeptemberJune 30, 2022:2023:
Principal
(In Millions)		Interest RateIssuance DateMaturity DatePrincipal
(In Millions)		Interest Rate (%)Issuance DateMaturity Date
CMS Energy, parent onlyCMS Energy, parent only
Convertible senior notesConvertible senior notes$800 3.375 May 2023May 2028
Total CMS Energy, parent onlyTotal CMS Energy, parent only$800 
NorthStar Clean Energy, including subsidiariesNorthStar Clean Energy, including subsidiaries
Term loan facility1
Term loan facility1
$85 variableFebruary 2023December 2023
Total NorthStar Clean Energy, including subsidiariesTotal NorthStar Clean Energy, including subsidiaries$85 
ConsumersConsumersConsumers
Term loan facility1
$550 variableJuly 2022January 2024
First mortgage bondsFirst mortgage bonds$425 4.650 January 2023March 2028
First mortgage bondsFirst mortgage bonds700 4.625 February 2023May 2033
First mortgage bondsFirst mortgage bonds115 5.240 May 2023May 2026
First mortgage bondsFirst mortgage bonds50 5.070 May 2023May 2029
First mortgage bondsFirst mortgage bonds350 3.600 %August 2022August 2032First mortgage bonds95 5.170 May 2023May 2032
First mortgage bondsFirst mortgage bonds450 4.200 %August 2022September 2052First mortgage bonds140 5.380 May 2023May 2037
Total ConsumersTotal Consumers$1,525 
Total CMS EnergyTotal CMS Energy$2,410 
1In JulyDecember 2022, Consumersa subsidiary of NorthStar Clean Energy entered into a delayed-draw $1.0 billion$185 million unsecured term loan credit agreement. Loans underUnder this facility havecredit agreement, a subsidiary of NorthStar Clean Energy borrowed $85 million in 2023. As of June 30, 2023, there was $185 million of loans outstanding bearing an interest rate of one-month SOFR plus 0.650 percent. At September 30, 2022, Consumers had loans outstanding6.102 percent under the unsecured term loan credit agreement.
Issuance of $300Convertible Senior Notes:In May 2023, CMS Energy issued an aggregate principal amount of $800 million convertible senior notes that bear an interest rate of 3.375 percent and mature in May 2028 unless redeemed, repurchased, or converted earlier. Unamortized debt costs associated with this issuance were $13 million at June 30, 2023. The convertible senior notes rank equal in right of payment to any of CMS Energy’s unsecured indebtedness that is not subordinated. There are no sinking fund requirements for the notes.
Holders of the convertible senior notes may convert their notes at their option in accordance with the conditions outlined in the related indenture. CMS Energy will settle conversions of the notes by paying cash up to the aggregate principal amount of the notes to be converted and paying or delivering, as the case may be, cash, shares of CMS Energy common stock, or a combination of cash and shares of CMS Energy common stock, at its election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the notes being converted. The conversion rate for the notes is initially 13.5194 shares of 3.456common stock per$1,000 principal amount of notes which is equivalent to an initial conversion price of approximately $73.97 per share of common stock. The conversion rate will be subject to adjustment for anti-dilutive events and fundamental change and redemption provisions as described in the related indenture.
CMS Energy may redeem for cash all or any portion of the notes, at its option, on or after May 6, 2026 if the last reported sale price of its common stock has been at least 130 percent and $250 millionof the conversion price then
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in effect for at least20trading days during any 30consecutive trading day period. Holders of the convertible senior notes may require CMS Energy to repurchase for cash all or any portion of their notes if a fundamental change, as outlined in the related indenture, occurs. In both cases, CMS Energy will redeem or repurchase the notes at a rateprice equal to 100 percent of 3.714 percent.the principal amount of the notes to be redeemed or repurchased, plus accrued and unpaid interest.
Retirements: Presented in the following table is a summary of major long-term debt retirements during the ninesix months ended SeptemberJune 30, 2022:2023:
Principal
(In Millions)		Interest RateRetirement DateMaturity Date
NorthStar Clean Energy, including subsidiaries
Term loan facility$76 variableJune 2022October 2025
Principal
(In Millions)		Interest Rate (%)Retirement DateMaturity Date
Consumers
Term loan facility$1,000 variableFebruary 2023January 2024
First mortgage bonds300 0.350June 2023June 2023
CMS Energy’s Purchase of Consumers’ First Mortgage Bonds: In June 2022, NorthStar CleanMay 2023, CMS Energy soldpurchased the following Consumers’ first mortgage bonds for $150 million:
Principal
(In Millions)
Interest Rate
(%)
First mortgage bonds due 2052$88 2.650 
First mortgage bonds due 2060150 2.500 
On a Class A membership interestconsolidated basis, CMS Energy’s repurchase of Consumers’ first mortgage bonds was accounted for as a debt extinguishment and resulted in NWO Holdco to a tax equity investor for $49 million. Proceeds from the sale were used to retire the non-recoursepre-tax gain of $84 million,which was recorded in other income on its consolidated statements of income.
Consumers’ outstanding debt held by its parent as a subsidiaryresult of NorthStar Clean Energy. For more information, see Note 13, Variable Interest Entities.CMS Energy’s repurchase of Consumers’ first mortgage bonds was $235 million, net of unamortized discount and fees, which was recorded as long-term debt – related parties on Consumers’ consolidated balance sheet at June 30, 2023.
Credit Facilities: The following credit facilities with banks were available at SeptemberJune 30, 2022:2023:
In Millions
Expiration DateAmount of FacilityAmount BorrowedLetters of Credit OutstandingAmount Available
CMS Energy, parent only
June 5, 2024$550 $— $14 $536 
September 22, 202450 — 50 — 
NorthStar Clean Energy, including subsidiaries
September 25, 20251
$37 $— $37 $— 
Consumers2
June 5, 2024$850 $— $29 $821 
November 19, 2023250 — 62 188 
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In Millions
Expiration DateAmount of FacilityAmount BorrowedLetters of Credit OutstandingAmount Available
CMS Energy, parent only
December 14, 20271
$550 $— $21 $529 
September 22, 202450 — 50 — 
NorthStar Clean Energy, including subsidiaries
September 25, 20252
$37 $— $37 $— 
Consumers3
December 14, 2027$1,100 $— $27 $1,073 
November 18, 2024250 — 27 223 
1There were no borrowings under this facility during the six months ended June 30, 2023.
2This letter of credit facility is available to Aviator Wind Equity Holdings. For more information regarding Aviator Wind Equity Holdings, see Note 13,11, Variable Interest Entities.
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3Obligations under these facilities are secured by first mortgage bonds of Consumers. There were no borrowings under these facilities during the six months ended June 30, 2023.
Regulatory Authorization for Financings: Consumers is required to maintain FERC authorization for financings. Any long-term issuances during the authorization period are exempt from FERC’s competitive bidding and negotiated placement requirements. In March 2022,2023, FERC granted Consumers the FERC issued an authorization for financings that was setauthority to expire onissue securities between April 1, 2023 and March 31, 2023. In April 2022, FERC issued a revision of its March authorization for financings that extends the expiration to March 31, 2024.2025.
Short-term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, investment-grade commercial paper notes with maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities and may have an aggregate principal amount outstanding of up to $500 million. While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At SeptemberJune 30, 2022,2023, there were no commercial paper notes outstanding under this program.
In December 2021,2022, Consumers renewed a short-term credit agreement with CMS Energy, permitting Consumers to borrow up to $500 million at an interest rate of the prior month’s average one-month LIBOR minus 0.100 percent.million. At SeptemberJune 30, 2022,2023, there were no outstanding borrowings under the agreement.
An unregulated subsidiary of Consumers entered into a short-term credit agreement with NorthStar Clean Energy, permitting it to borrow up to $40 million, from NorthStar Clean Energy, at an interest rate of one-month Term SOFR plus 1.750 percent. At June 30, 2023, outstanding borrowings under the agreement were $6 million bearing an interest rate of 6.924 percent.
Consumers’ Supplier Financing Program: Under a supplier financing program, Consumers agrees to pay a bank, acting as its payment agent, the stated amount of confirmed invoices from participating suppliers on the original maturity dates of the invoices. The supplier invoices that have been confirmed as valid under the program require payment in full within 60 days of the invoice date.Consumers does not provide collateral or a guarantee to the bank in support of its payment obligations under the agreement, nor does it pay a fee for the service. Consumers or the bank may terminate the supplier financing program agreement upon 30 days prior written notice to the other party. Amounts recorded as trade payables under the program in accounts payable on CMS Energy’s and Consumers’ consolidated balance sheets were $23 million at June 30, 2023 and less than $1 million at December 31, 2022.
Dividend Restrictions: At SeptemberJune 30, 2022,2023, payment of dividends by CMS Energy on its common stock was limited to $6.7$6.9 billion under provisions of the Michigan Business Corporation Act of 1972.
Under the provisions of its articles of incorporation, at SeptemberJune 30, 2022,2023, Consumers had $1.9$2.0 billion of unrestricted retained earnings available to pay dividends on its common stock to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that, under a variety of circumstances, dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.
During the ninesix months ended SeptemberJune 30, 2022,2023, Consumers paid $593$305 million in dividends on its common stock to CMS Energy.
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Issuance of Common Stock: Under an existing equity offering program, CMS Energy may sell shares of its common stock having an aggregate sales price of up to $500 million in privately negotiated transactions, in “at the market” offerings, through forward sales transactions, or otherwise.
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Issuance of Common Stock: Presented in the following table are details of CMS Energy’s forward sales contracts under thisits equity offering program at SeptemberJune 30, 2022:2023:
Forward Price Per ShareForward Price Per Share
Contract DateContract DateMaturity DateNumber of SharesInitialSeptember 30, 2022Contract DateMaturity DateNumber of SharesInitialJune 30, 2023
September 15, 2020December 31, 2022846,759$61.04 $57.31 
December 22, 2020December 31, 2023115,59561.81 58.65 
August 3, 2022August 3, 2022February 1, 20242,944,20767.59 67.78 August 3, 2022December 31, 20242,944,207$67.59 $68.23 
August 24, 2022August 24, 2022February 26, 20241,677,93869.46 69.59 August 24, 2022December 31, 20241,677,93869.46 70.18 
August 29, 2022August 29, 2022February 26, 20241,783,38868.18 68.29 August 29, 2022December 31, 20241,783,38868.18 68.84 
TheseUnder these contracts, allow CMS Energy tomay either physically settle the contractsphysically by issuing shares of its common stock at the then-applicable forward sale price specified by the agreement or settle net settle the contracts through the deliveryby delivering or receipt ofreceiving cash or shares. CMS Energy may settle the contracts at any time through their maturity dates, and presently intends to physically settle the contracts by delivering shares of its common stock.
The initial forward price in the forward equity sale contracts includes a deduction for commissions and will be adjusted on a daily basis over the term based on an interest rate factor and decreased on certain dates by certain predetermined amounts to reflect expected dividend payments. No amounts are recorded on CMS Energy’s consolidated balance sheets until settlements of the forward equity sale contracts occur. If CMS Energy had elected to net share settle or net cash settle the contracts as of SeptemberJune 30, 2022, it would have been required to pay less than $1 million. If2023, CMS Energy had elected to net share settle the contracts as of September 30, 2022, CMS Energy would not have been required to deliver 13,504 shares.shares or pay cash.
4:    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 MillionsIn MillionsIn Millions
CMS Energy, including ConsumersConsumersCMS Energy, including ConsumersConsumers
September 30
2022		December 31
2021		September 30
2022		December 31
2021		June 30
2023		December 31
2022		June 30
2023		December 31
2022
Assets1
Assets1
Assets1
Cash equivalentsCash equivalents$188 $— $42 $— 
Restricted cash equivalentsRestricted cash equivalents$27 $24 $27 $22 Restricted cash equivalents17 18 17 17 
Nonqualified deferred compensation plan assetsNonqualified deferred compensation plan assets22 27 17 21 Nonqualified deferred compensation plan assets28 24 20 18 
Derivative instrumentsDerivative instruments3 2 3 2 Derivative instruments5 2 4 2 
Total assetsTotal assets$52 $53 $47 $45 Total assets$238 $44 $83 $37 
Liabilities1
Liabilities1
Liabilities1
Nonqualified deferred compensation plan liabilitiesNonqualified deferred compensation plan liabilities$22 $27 $17 $21 Nonqualified deferred compensation plan liabilities$28 $24 $20 $18 
Derivative instruments— 7 — — 
Total liabilitiesTotal liabilities$22 $34 $17 $21 Total liabilities$28 $24 $20 $18 
1All assets and liabilities were classified as Level 1 with the exception of derivative contracts, which were classified as Level 2 or Level 3.
Restricted Cash Equivalents: RestrictedCash equivalents and restricted cash equivalents consist of money market funds with daily liquidity. For further details, see Note 11, Cash and Cash Equivalents.
Nonqualified Deferred Compensation Plan Assets and Liabilities: The nonqualified deferred compensation plan assets consist of mutual funds, which are valued using the daily quoted net asset values. CMS Energy and Consumers value their nonqualified deferred compensation plan liabilities based on the fair values of the plan assets, as they reflect the amount owed to the plan participants in accordance with their investment elections. CMS Energy and Consumers report the assets in other non‑current assets and the liabilities in other non‑current liabilities on their consolidated balance sheets.
Derivative Instruments: CMS Energy and Consumers value their derivative instruments using either a market approach that incorporates information from market transactions, or an income approach that discounts future expected cash flows to a present value amount. CMS Energy’s and Consumers’ derivatives are classified as Level 2 or Level 3.
The derivatives classified as Level 2 were interest rate swaps at CMS Energy, which were valued using market-based inputs. CMS Energy used interest rate swaps to manage its interest rate risk on certain long‑term debt obligations.
A subsidiary of NorthStar Clean Energy used 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 were accounted for as cash flow hedges of the future variability of interest payments on the debt. In June 2022, NorthStar Clean Energy repaid the hedged debt and terminated the related interest rate swaps. As a result, the associated unrecognized losses recorded in other comprehensive income were recognized in interest on long-term debt on CMS Energy’s consolidated statements of income; this amount was immaterial. NorthStar Clean Energy also had other interest rate
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swaps that economically hedged interest rate risk on debt, but that did not qualify for cash flow hedge accounting. These swaps were also terminated in June 2022; the amounts associated with these swaps were not material for the periods presented.
The majority of derivatives classified as Level 3 are FTRs held by Consumers. Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements. There was no material activity within the Level 3 categories of assets and liabilities during the periods presented.
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5:    Financial Instruments
Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value. The table excludes cash, cash equivalents, short-term financial instruments, and trade accounts receivable and payable whose carrying amounts approximate their fair values. For information about assets and liabilities recorded at fair value and for additional details regarding the fair value hierarchy, see Note 4, Fair Value Measurements.
In MillionsIn MillionsIn Millions
September 30, 2022December 31, 2021June 30, 2023December 31, 2022
Carrying AmountFair ValueCarrying AmountFair ValueCarrying AmountFair ValueCarrying AmountFair Value
TotalLevelTotalLevelTotalLevelTotalLevel
123Carrying Amount23123Carrying Amount23
CMS Energy, including ConsumersCMS Energy, including ConsumersCMS Energy, including Consumers
AssetsAssetsAssets
Long-term receivables1
Long-term receivables1
$11 $11 $— $— $11 $14 $14 $— $— $14 
Long-term receivables1
$13 $13 $— $— $13 $14 $14 $— $— $14 
LiabilitiesLiabilitiesLiabilities
Long-term debt2
Long-term debt2
13,675 11,679 1,034 8,566 2,079 12,419 13,800 1,189 10,656 1,955 
Long-term debt2
15,051 13,638 1,076 10,389 2,173 14,212 12,384 987 8,741 2,656 
Long-term payables3
Long-term payables3
9 9 — — 9 31 32 — — 32 
Long-term payables3
14 14 — — 14 9 7 — — 7 
ConsumersConsumersConsumers
AssetsAssetsAssets
Long-term receivables1
Long-term receivables1
$11 $11 $— $— $11 $14 $14 $— $— $14 
Long-term receivables1
$13 $13 $— $— $13 $14 $14 $— $— $14 
Notes receivable – related party4
Notes receivable – related party4
101 101 — — 101 104 104 — — 104 
Notes receivable – related party4
99 99 — — 99 101 101 — — 101 
LiabilitiesLiabilitiesLiabilities
Long-term debt5
Long-term debt5
9,746 8,132 — 6,053 2,079 8,415 9,410 — 7,455 1,955 
Long-term debt5
10,147 8,989 — 7,001 1,988 10,183 8,728 — 6,172 2,556 
Long-term debt – related partyLong-term debt – related party235 146 — 146 — — — — — — 
Long-term payablesLong-term payables6 6 — — 6 — — — — — 
1Includes current portion of long-term accounts receivable and notes receivable of $7$6 million at SeptemberJune 30, 20222023 and $9$7 million at December 31, 2021.2022.
2Includes current portion of long-term debt of $990$1,126 million at SeptemberJune 30, 20222023 and $373$1,090 million at December 31, 2021.2022.
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3Includes current portion of long-term payables of $1 million at SeptemberJune 30, 20222023 and $23$2 million at December 31, 2021.2022.
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4Includes current portion of notes receivable – related party of $7 million at SeptemberJune 30, 20222023 and December 31, 2021.2022.
5Includes current portion of long-term debt of $990$691 million at SeptemberJune 30, 20222023 and $365$991 million at December 31, 2021.2022.
The DB SERP noteNotes receivable – related party isrepresents Consumers’ portion of athe DB SERP 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.
6:    Asset Retirement Obligations
In September 2022, Consumers increased its ARO liability for coal ash disposal areas. The increase was attributable to a proposed change for closure work at the J.H. Campbell 3 ash disposal landfill and an updated cost estimate for other coal ash disposal areas. These changes provided Consumers with sufficient information to reasonably estimate a revision to the ARO liability associated with the coal ash disposal areas. Presented in the following table are the changes in CMS Energy’s and Consumers’ ARO liabilities:
In Millions
Company and ARO DescriptionARO Liability 12/31/2021IncurredSettledAccretionCash Flow RevisionsARO Liability 9/30/2022
CMS Energy, including Consumers
Consumers$605 $— $(30)$19 $129 $723 
Renewable generation assets23 — — 1 — 24 
Total CMS Energy$628 $— $(30)$20 $129 $747 
Consumers
Coal ash disposal areas$157 $— $(17)$4 $129 $273 
Gas distribution cut, purge, and cap282 — (10)11 — 283 
Asbestos abatement38 — (1)1 — 38 
Renewable generation assets93 — — 2 — 95 
Gas wells plug and abandon35 — (2)1 — 34 
Total Consumers$605 $— $(30)$19 $129 $723 
7:    Retirement Benefits
CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans.
In March 2022, CMS Energy and Consumers determined it was probable that 2022 lump-sum payments to participants 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 it is probable such settlements will 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 March 31, 2022, June 30, 2022, and September 30, 2022. For the nine months ended September 30, 2022, CMS Energy, including Consumers, recognized a settlement loss of $19 million; of this amount, $19 million was deferred as a regulatory asset. Consumers recognized a settlement loss of $19 million, all of which was deferred as a regulatory asset. CMS Energy and Consumers will amortize the regulatory asset over eight years.
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As a result of the remeasurements, the non-current asset for DB Pension Plan A increased by $69 million from December 31, 2021 at CMS Energy, with an offsetting decrease in the associated regulatory asset of $67 million and a $2 million gain to accumulated other comprehensive loss. At Consumers, the non‑current asset increased by $67 million and the associated regulatory asset decreased by $67 million.
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 benefit plans:
In MillionsIn MillionsIn Millions
DB Pension PlansOPEB PlanDB Pension PlansOPEB Plan
Three Months EndedNine Months EndedThree Months EndedNine Months EndedThree Months EndedSix Months EndedThree Months EndedSix Months Ended
September 3020222021202220212022202120222021
June 30June 3020232022202320222023202220232022
CMS Energy, including ConsumersCMS Energy, including ConsumersCMS Energy, including Consumers
Net periodic cost (credit)
Net periodic creditNet periodic credit
Service costService cost$9 $14 $32 $41 $4 $5 $13 $14 Service cost$8 $11 $15 $23 $3 $5 $6 $9 
Interest costInterest cost21 14 59 44 7 6 21 17 Interest cost26 20 53 38 11 7 22 14 
Expected return on plan assetsExpected return on plan assets(51)(51)(155)(155)(29)(28)(87)(82)Expected return on plan assets(55)(52)(110)(104)(25)(29)(51)(58)
Amortization of:Amortization of:Amortization of:
Net lossNet loss5 25 32 76 — 2 1 6 Net loss3 10 6 27 3 1 6 1 
Prior service cost (credit)Prior service cost (credit)1 1 3 3 (12)(14)(38)(40)Prior service cost (credit)1 1 2 2 (11)(14)(21)(26)
Settlement lossSettlement loss2 1 6 4 — — — — Settlement loss3 2 5 4 — — — — 
Net periodic cost (credit)$(13)$4 $(23)$13 $(30)$(29)$(90)$(85)
Net periodic creditNet periodic credit$(14)$(8)$(29)$(10)$(19)$(30)$(38)$(60)
ConsumersConsumersConsumers
Net periodic cost (credit)
Net periodic creditNet periodic credit
Service costService cost$9 $14 $32 $40 $4 $4 $13 $13 Service cost$7 $11 $14 $23 $3 $5 $6 $9 
Interest costInterest cost20 14 56 42 6 6 20 17 Interest cost26 20 51 36 10 7 21 14 
Expected return on plan assetsExpected return on plan assets(48)(49)(147)(147)(26)(26)(80)(77)Expected return on plan assets(52)(50)(104)(99)(24)(27)(48)(54)
Amortization of:Amortization of:Amortization of:
Net lossNet loss5 24 30 73 — 2 — 6 Net loss2 9 5 25 3 — 6 — 
Prior service cost (credit)Prior service cost (credit)1 1 3 3 (13)(12)(38)(38)Prior service cost (credit)1 1 2 2 (10)(13)(20)(25)
Settlement lossSettlement loss2 1 6 4 — — — — Settlement loss3 2 5 4 — — — — 
Net periodic cost (credit)$(11)$5 $(20)$15 $(29)$(26)$(85)$(79)
Net periodic creditNet periodic credit$(13)$(7)$(27)$(9)$(18)$(28)$(35)$(56)
In Consumers’ 2022 electric rate case, the MPSC approved a mechanism allowing Consumers to defer the future recovery or refund of pension and OPEB expenses above or below the amounts used to set existing
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8:rates, respectively, beginning in 2023. At June 30, 2023, CMS Energy, including Consumers, had deferred $6 million of pension credits and $12 million of OPEB costs under this mechanism.
7:    Income Taxes
Presented in the following table is a reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate from continuing operations:
Nine Months Ended September 3020222021
Six Months Ended June 30Six Months Ended June 3020232022
CMS Energy, including ConsumersCMS Energy, including ConsumersCMS Energy, including Consumers
U.S. federal income tax rateU.S. federal income tax rate21.0 %21.0 %U.S. federal income tax rate21.0 %21.0 %
Increase (decrease) in income taxes from:Increase (decrease) in income taxes from:Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect5.6 5.5 
TCJA excess deferred taxes1
(7.2)(5.8)
State and local income taxes, net of federal effect1
State and local income taxes, net of federal effect1
2.6 5.5 
Production tax creditsProduction tax credits(5.2)(4.8)Production tax credits(4.4)(5.1)
Accelerated flow-through of regulatory tax benefits2
(4.3)(3.2)
TCJA excess deferred taxes2
TCJA excess deferred taxes2
(4.0)(7.2)
Accelerated flow-through of regulatory tax benefits3
Accelerated flow-through of regulatory tax benefits3
— (4.3)
Other, netOther, net0.1 0.1 Other, net0.3 — 
Effective tax rateEffective tax rate10.0 %12.8 %Effective tax rate15.5 %9.9 %
ConsumersConsumersConsumers
U.S. federal income tax rateU.S. federal income tax rate21.0 %21.0 %U.S. federal income tax rate21.0 %21.0 %
Increase (decrease) in income taxes from:Increase (decrease) in income taxes from:Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect5.3 5.2 
TCJA excess deferred taxes1
(5.9)(4.6)
State and local income taxes, net of federal effect1
State and local income taxes, net of federal effect1
2.4 5.2 
Production tax creditsProduction tax credits(3.8)(3.5)Production tax credits(4.1)(3.8)
Accelerated flow-through of regulatory tax benefits2
(3.5)(2.2)
TCJA excess deferred taxes2
TCJA excess deferred taxes2
(3.6)(6.0)
Accelerated flow-through of regulatory tax benefits3
Accelerated flow-through of regulatory tax benefits3
— (3.6)
Other, netOther, net(0.4)(0.5)Other, net(0.4)(0.4)
Effective tax rateEffective tax rate12.7 %15.4 %Effective tax rate15.3 %12.4 %
1CMS Energy initiated a plan to divest immaterial business activities in a non‑Michigan jurisdiction and will no longer have a taxable presence within that jurisdiction after 2023. As a result of these actions, CMS Energy reversed a $13 million non‑Michigan reserve, all of which was recognized at Consumers.
2In September 2020, the MPSC authorized Consumers to accelerate the amortization of athe gas portion of its regulatory liability associated with unprotected, non‑property-relatednon-property-related excess deferred income taxes resulting from the TCJA. TheThis portion of the regulatory liability which was previously scheduled to be amortized through 2029, will now be fully amortized by the end ofin 2022.
23In September 2020, the MPSC authorized Consumers to accelerate the amortization of income tax benefits associated with the cost to remove gas plant assets. These tax benefits which were previously scheduled to be amortized through 2025, will now be fully amortized by the end ofin 2022.
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9:8:    Earnings Per Share—CMS Energy
Presented in the following table are CMS Energy’s basic and diluted EPS computations based on income from continuing operations:
In Millions, Except Per Share AmountsIn Millions, Except Per Share AmountsIn Millions, Except Per Share Amounts
Three Months EndedNine Months EndedThree Months EndedSix Months Ended
September 302022202120222021
June 30June 302023202220232022
Income available to common stockholdersIncome available to common stockholdersIncome available to common stockholders
Income from continuing operationsIncome from continuing operations$163 $153 $646 $614 Income from continuing operations$189 $142 $383 $483 
Less loss attributable to noncontrolling interestsLess loss attributable to noncontrolling interests(2)(6)(16)(18)Less loss attributable to noncontrolling interests(8)(6)(18)(14)
Less preferred stock dividendsLess preferred stock dividends2 3 7 3 Less preferred stock dividends3 3 5 5 
Income from continuing operations available to common stockholders – basic and dilutedIncome from continuing operations available to common stockholders – basic and diluted$163 $156 $655 $629 Income from continuing operations available to common stockholders – basic and diluted$194 $145 $396 $492 
Average common shares outstandingAverage common shares outstandingAverage common shares outstanding
Weighted-average shares – basicWeighted-average shares – basic289.6 289.1 289.5 288.9 Weighted-average shares – basic290.9 289.5 290.8 289.4 
Add dilutive nonvested stock awardsAdd dilutive nonvested stock awards0.4 0.5 0.4 0.5 Add dilutive nonvested stock awards0.4 0.4 0.4 0.4 
Add dilutive forward equity sale contractsAdd dilutive forward equity sale contracts0.1 — 0.1 — Add dilutive forward equity sale contracts— 0.2 — 0.2 
Weighted-average shares – dilutedWeighted-average shares – diluted290.1 289.6 290.0 289.4 Weighted-average shares – diluted291.3 290.1 291.2 290.0 
Income from continuing operations per average common share available to common stockholdersIncome from continuing operations per average common share available to common stockholdersIncome from continuing operations per average common share available to common stockholders
BasicBasic$0.56 $0.54 $2.26 $2.18 Basic$0.67 $0.50 $1.36 $1.70 
DilutedDiluted0.56 0.54 2.26 2.18 Diluted0.67 0.50 1.36 1.70 
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.
Forward Equity Sale Contracts
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 of basic EPS. For further details on the forward equity sale contracts, see Note 3, Financings and Capitalization.
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10:Convertible Securities
In May 2023, CMS Energy issued an aggregate principal amount of $800 million convertible senior notes. Potentially dilutive common shares issuable upon conversion of the convertible senior notes are determined using the if-converted method for calculating diluted earnings per share. Upon conversion, the convertible senior notes are required to be paid in cash with only amounts exceeding the principal permitted to be settled in shares. The convertible senior notes were anti-dilutive for the three and six months ended June 30, 2023. For further details on CMS Energy’s convertible senior notes, see Note 3, Financings and Capitalization.
9:    Revenue
Presented in the following tables are the components of operating revenue:
In MillionsIn MillionsIn Millions
Three Months Ended September 30, 2022Electric UtilityGas Utility
NorthStar Clean Energy1
Consolidated
Three Months Ended June 30, 2023Three Months Ended June 30, 2023Electric UtilityGas Utility
NorthStar Clean Energy1
Consolidated
CMS Energy, including ConsumersCMS Energy, including ConsumersCMS Energy, including Consumers
Consumers utility revenueConsumers utility revenue$1,591 $294 $— $1,885 Consumers utility revenue$1,115 $356 $— $1,471 
OtherOther— — 70 70 Other— — 43 43 
Revenue recognized from contracts with customersRevenue recognized from contracts with customers$1,591 $294 $70 $1,955 Revenue recognized from contracts with customers$1,115 $356 $43 $1,514 
Leasing incomeLeasing income— — 68 68 Leasing income— — 27 27 
Financing incomeFinancing income3 1 — 4 Financing income3 1 — 4 
Consumers alternative-revenue programsConsumers alternative-revenue programs— (3)— (3)Consumers alternative-revenue programs10 — — 10 
Total operating revenue – CMS EnergyTotal operating revenue – CMS Energy$1,594 $292 $138 $2,024 Total operating revenue – CMS Energy$1,128 $357 $70 $1,555 
ConsumersConsumersConsumers
Consumers utility revenueConsumers utility revenueConsumers utility revenue
ResidentialResidential$767 $190 $957 Residential$513 $229 $742 
CommercialCommercial515 51 566 Commercial393 68 461 
IndustrialIndustrial226 10 236 Industrial159 8 167 
OtherOther83 43 126 Other50 51 101 
Revenue recognized from contracts with customersRevenue recognized from contracts with customers$1,591 $294 $1,885 Revenue recognized from contracts with customers$1,115 $356 $1,471 
Financing incomeFinancing income3 1 4 Financing income3 1 4 
Alternative-revenue programsAlternative-revenue programs— (3)(3)Alternative-revenue programs10 — 10 
Total operating revenue – ConsumersTotal operating revenue – Consumers$1,594 $292 $1,886 Total operating revenue – Consumers$1,128 $357 $1,485 
1Amounts represent NorthStar Clean Energy’s operating revenue from independent power production and its sales of energy commodities. Certain of NorthStar Clean Energy’s power sales of energy commoditiesagreements are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. NorthStar Clean Energy’s leasing income included variable lease payments of $57$16 million for the three months ended SeptemberJune 30, 2022.2023.
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In MillionsIn MillionsIn Millions
Three Months Ended September 30, 2021Electric UtilityGas Utility
NorthStar Clean Energy1
Consolidated
Three Months Ended June 30, 2022Three Months Ended June 30, 2022Electric UtilityGas Utility
NorthStar Clean Energy1
Consolidated
CMS Energy, including ConsumersCMS Energy, including ConsumersCMS Energy, including Consumers
Consumers utility revenueConsumers utility revenue$1,416 $224 $— $1,640 Consumers utility revenue$1,322 $468 $— $1,790 
OtherOther— — 31 31 Other— — 52 52 
Revenue recognized from contracts with customersRevenue recognized from contracts with customers$1,416 $224 $31 $1,671 Revenue recognized from contracts with customers$1,322 $468 $52 $1,842 
Leasing incomeLeasing income— — 50 50 Leasing income— — 66 66 
Financing incomeFinancing income2 1 — 3 Financing income2 2 — 4 
Consumers alternative-revenue programsConsumers alternative-revenue programs1 — — 1 Consumers alternative-revenue programs1 7 — 8 
Total operating revenue – CMS EnergyTotal operating revenue – CMS Energy$1,419 $225 $81 $1,725 Total operating revenue – CMS Energy$1,325 $477 $118 $1,920 
ConsumersConsumersConsumers
Consumers utility revenueConsumers utility revenueConsumers utility revenue
ResidentialResidential$718 $143 $861 Residential$597 $309 $906 
CommercialCommercial456 36 492 Commercial420 99 519 
IndustrialIndustrial167 5 172 Industrial207 15 222 
OtherOther75 40 115 Other98 45 143 
Revenue recognized from contracts with customersRevenue recognized from contracts with customers$1,416 $224 $1,640 Revenue recognized from contracts with customers$1,322 $468 $1,790 
Financing incomeFinancing income2 1 3 Financing income2 2 4 
Alternative-revenue programsAlternative-revenue programs1 — 1 Alternative-revenue programs1 7 8 
Total operating revenue – ConsumersTotal operating revenue – Consumers$1,419 $225 $1,644 Total operating revenue – Consumers$1,325 $477 $1,802 
1Amounts represent NorthStar Clean Energy’s operating revenue from independent power production and its sales of energy commodities. Certain of NorthStar Clean Energy’s power sales of energy commoditiesagreements are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. NorthStar Clean Energy’s leasing income included variable lease payments of $35$53 million for the three months ended SeptemberJune 30, 2021.2022.
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In MillionsIn MillionsIn Millions
Nine Months Ended September 30, 2022Electric UtilityGas Utility
NorthStar Clean Energy1
Consolidated
Six Months Ended June 30, 2023Six Months Ended June 30, 2023Electric UtilityGas Utility
NorthStar Clean Energy1
Consolidated
CMS Energy, including ConsumersCMS Energy, including ConsumersCMS Energy, including Consumers
Consumers utility revenueConsumers utility revenue$4,151 $1,809 $— $5,960 Consumers utility revenue$2,204 $1,472 $— $3,676 
OtherOther— — 155 155 Other— — 86 86 
Revenue recognized from contracts with customersRevenue recognized from contracts with customers$4,151 $1,809 $155 $6,115 Revenue recognized from contracts with customers$2,204 $1,472 $86 $3,762 
Leasing incomeLeasing income— — 192 192 Leasing income— — 58 58 
Financing incomeFinancing income8 5 — 13 Financing income5 4 — 9 
Consumers alternative-revenue programsConsumers alternative-revenue programs1 (3)— (2)Consumers alternative-revenue programs10 — — 10 
Total operating revenue – CMS EnergyTotal operating revenue – CMS Energy$4,160 $1,811 $347 $6,318 Total operating revenue – CMS Energy$2,219 $1,476 $144 $3,839 
ConsumersConsumersConsumers
Consumers utility revenueConsumers utility revenueConsumers utility revenue
ResidentialResidential$1,955 $1,239 $3,194 Residential$1,041 $1,005 $2,046 
CommercialCommercial1,319 371 1,690 Commercial740 315 1,055 
IndustrialIndustrial601 53 654 Industrial320 39 359 
OtherOther276 146 422 Other103 113 216 
Revenue recognized from contracts with customersRevenue recognized from contracts with customers$4,151 $1,809 $5,960 Revenue recognized from contracts with customers$2,204 $1,472 $3,676 
Financing incomeFinancing income8 5 13 Financing income5 4 9 
Alternative-revenue programsAlternative-revenue programs1 (3)(2)Alternative-revenue programs10 — 10 
Total operating revenue – ConsumersTotal operating revenue – Consumers$4,160 $1,811 $5,971 Total operating revenue – Consumers$2,219 $1,476 $3,695 
1Amounts represent NorthStar Clean Energy’s operating revenue from independent power production and its sales of energy commodities. Certain of NorthStar Clean Energy’s power sales of energy commoditiesagreements are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. NorthStar Clean Energy’s leasing income included variable lease payments of $154$38 million for the ninesix months ended SeptemberJune 30, 2022.2023.
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In MillionsIn MillionsIn Millions
Nine Months Ended September 30, 2021Electric UtilityGas Utility
NorthStar Clean Energy1
Consolidated
Six Months Ended June 30, 2022Six Months Ended June 30, 2022Electric UtilityGas Utility
NorthStar Clean Energy1
Consolidated
CMS Energy, including ConsumersCMS Energy, including ConsumersCMS Energy, including Consumers
Consumers utility revenueConsumers utility revenue$3,705 $1,357 $— $5,062 Consumers utility revenue$2,560 $1,515 $— $4,075 
OtherOther— — 86 86 Other— — 85 85 
Revenue recognized from contracts with customersRevenue recognized from contracts with customers$3,705 $1,357 $86 $5,148 Revenue recognized from contracts with customers$2,560 $1,515 $85 $4,160 
Leasing incomeLeasing income— — 136 136 Leasing income— — 124 124 
Financing incomeFinancing income7 4 — 11 Financing income5 4 — 9 
Consumers alternative-revenue programsConsumers alternative-revenue programs1 — — 1 Consumers alternative-revenue programs1 — — 1 
Total operating revenue – CMS EnergyTotal operating revenue – CMS Energy$3,713 $1,361 $222 $5,296 Total operating revenue – CMS Energy$2,566 $1,519 $209 $4,294 
ConsumersConsumersConsumers
Consumers utility revenueConsumers utility revenueConsumers utility revenue
ResidentialResidential$1,847 $917 $2,764 Residential$1,188 $1,049 $2,237 
CommercialCommercial1,191 258 1,449 Commercial804 320 1,124 
IndustrialIndustrial458 36 494 Industrial375 43 418 
OtherOther209 146 355 Other193 103 296 
Revenue recognized from contracts with customersRevenue recognized from contracts with customers$3,705 $1,357 $5,062 Revenue recognized from contracts with customers$2,560 $1,515 $4,075 
Financing incomeFinancing income7 4 11 Financing income5 4 9 
Alternative-revenue programsAlternative-revenue programs1 — 1 Alternative-revenue programs1 — 1 
Total operating revenue – ConsumersTotal operating revenue – Consumers$3,713 $1,361 $5,074 Total operating revenue – Consumers$2,566 $1,519 $4,085 
1Amounts represent NorthStar Clean Energy’s operating revenue from independent power production and its sales of energy commodities. Certain of NorthStar Clean Energy’s power sales of energy commoditiesagreements are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. NorthStar Clean Energy’s leasing income included variable lease payments of $94$97 million for the ninesix months ended SeptemberJune 30, 2021.2022.
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
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product comprising the commodity, electricity or natural gas, and the service of delivering such commodity.
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.
Alternative-Revenue Program: Consumers accounts for its financial compensation mechanism as an alternative-revenue program. Consumers recognizes revenue related to the financial compensation mechanism as payments are made on MPSC-approved PPAs.
Under a gas revenue decoupling 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 adjustments on revenue as gas is delivered.
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.
Accounts Receivable and Unbilled Revenues: Accounts receivable comprise trade receivables and unbilled receivables. CMS Energy and Consumers record their accounts receivable at cost 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 the allowance based on historical losses, management’s assessment of existing economic conditions, customer payment trends, and 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 recorded uncollectible accounts expense of $13$8 million for the three months ended SeptemberJune 30, 20222023 and $6$14 million for the three months ended SeptemberJune 30, 2021.2022. CMS Energy and Consumers recorded uncollectible accounts expense of $31 million for the nine months ended September 30, 2022 and $17 million for the ninesix months ended SeptemberJune 30, 2021.2023 and $18 million for the six months ended June 30, 2022.
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 $369$339 million at SeptemberJune 30, 20222023 and $486$663 million at December 31, 2021.2022.
Alternative‑revenue Programs: Under a demand response incentive mechanism, Consumers earns a financial incentive when it meets demand response targets set by the MPSC. Consumers recognizes revenue related to this program once demand response incentive objectives are complete, the incentive amount is calculable, and the incentive revenue will be collected within a 24‑month period.
Under a gas revenue decoupling 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 adjustments on revenue as gas is delivered.
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.
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11:    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
September 30, 2022December 31, 2021
CMS Energy, including Consumers
Cash and cash equivalents$168 $452 
Restricted cash and cash equivalents27 24 
Cash and cash equivalents, including restricted amounts – CMS Energy$195 $476 
Consumers
Cash and cash equivalents$83 $22 
Restricted cash and cash equivalents27 22 
Cash and cash equivalents, including restricted amounts – Consumers$110 $44 
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.
12:10:    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.
CMS Energy
The segments reported for CMS Energy are:
•electric utility, consisting of regulated activities associated with the generation, purchase, 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
•NorthStar Clean Energy (formerly known as the enterprises segment), 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
In August 2022, CMS Enterprises Company changed its legal name to NorthStar Clean Energy Company. To align the segment reporting with the legal organizational structure and the internal reporting of CMS Energy, the enterprises segment will now be referred to as NorthStar Clean Energy. There were no changes to CMS Energy’s reportable segment composition as a result of this name change.
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In October 2021, EnerBank was acquired by Regions Bank. As a result, EnerBank was removed from the composition of CMS Energy’s reportable segments. EnerBank’s results of operations through the date of the sale are presented as income from discontinued operations on CMS Energy’s consolidated statements of income. For information regarding the sale of EnerBank, see Note 14, Exit Activities and Discontinued Operations.
CMS Energy presents corporate interest and other expenses, discontinued operations, and Consumers’ other consolidated entities within other reconciling items.
Consumers
The segments reported for Consumers are:
•electric utility, consisting of regulated activities associated with the generation, purchase, 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
Three Months EndedNine Months Ended
September 302022202120222021
CMS Energy, including Consumers
Operating revenue
Electric utility$1,594 $1,419 $4,160 $3,713 
Gas utility292 225 1,811 1,361 
NorthStar Clean Energy138 81 347 222 
Total operating revenue – CMS Energy$2,024 $1,725 $6,318 $5,296 
Consumers
Operating revenue
Electric utility$1,594 $1,419 $4,160 $3,713 
Gas utility292 225 1,811 1,361 
Total operating revenue – Consumers$1,886 $1,644 $5,971 $5,074 
CMS Energy, including Consumers
Net income (loss) available to common stockholders
Electric utility$194 $195 $501 $504 
Gas utility(13)(9)239 208 
NorthStar Clean Energy11 7 26 26 
Other reconciling items(29)(7)(107)(27)
Total net income available to common stockholders – CMS Energy$163 $186 $659 $711 
Consumers
Net income (loss) available to common stockholder
Electric utility$194 $195 $501 $504 
Gas utility(13)(9)239 208 
Other reconciling items8 — 4 (1)
Total net income available to common stockholder – Consumers$189 $186 $744 $711 
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In Millions
September 30, 2022December 31, 2021
CMS Energy, including Consumers
Plant, property, and equipment, gross
Electric utility1
$17,720 $18,147 
Gas utility1
11,233 10,601 
NorthStar Clean Energy1,146 1,122 
Other reconciling items26 23 
Total plant, property, and equipment, gross – CMS Energy$30,125 $29,893 
Consumers
Plant, property, and equipment, gross
Electric utility1
$17,720 $18,147 
Gas utility1
11,233 10,601 
Other reconciling items25 23 
Total plant, property, and equipment, gross – Consumers$28,978 $28,771 
CMS Energy, including Consumers
Total assets
Electric utility1
$17,362 $16,493 
Gas utility1
11,499 10,517 
NorthStar Clean Energy1,434 1,312 
Other reconciling items77 431 
Total assets – CMS Energy$30,372 $28,753 
Consumers
Total assets
Electric utility1
$17,423 $16,555 
Gas utility1
11,545 10,564 
Other reconciling items24 21 
Total assets – Consumers$28,992 $27,140 
1Amounts include a portion of Consumers’ other common assets attributable to both the electric and gas utility businesses.
13:    Variable Interest Entities
In June 2022, NorthStar Clean Energy sold a Class A membership interest in NWO Holdco to a tax equity investor for $49 million. NWO Holdco owns 100 percent of Northwest Ohio Wind, LLC, a 105‑MW wind generation project in Paulding County, Ohio. NorthStar Clean Energy retained a Class B membership interest in NWO Holdco.
NorthStar Clean Energy has a 51‑percent ownership interest in Aviator Wind Equity Holdings, which holds a Class B membership interest in Aviator Wind, a 525‑MW wind generation project in Coke County, Texas. The Class A membership interest in Aviator Wind is held by a tax equity investor.
Earnings, tax attributes, and cash flows generated by NWO Holdco and Aviator Wind are allocated among and distributed to the membership classes in accordance with the ratios specified in the associated limited liability company agreements; these ratios change over time and are not representative of the ownership interest percentages of each membership class. Since NWO Holdco’s and Aviator Wind’s income and cash flows are not distributed among their investors based on ownership interest percentages,
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NorthStar Clean Energy allocates the entities’ income (loss) among the investors by applying the hypothetical liquidation at book value method. This method calculates each investor’s earnings based on a hypothetical liquidation of the entities at the net book value of underlying 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.
NWO Holdco, Aviator Wind Equity Holdings, and Aviator Wind are VIEs. In accordance with the associated limited liability company agreements, the tax equity investors are guaranteed preferred returns from NWO Holdco and Aviator Wind. However, NorthStar Clean Energy manages and controls the operating activities of NWO Holdco and Aviator Wind Equity Holdings (and, thereby, Aviator Wind). As a result, NorthStar Clean Energy is the primary beneficiary, 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. NorthStar Clean Energy consolidates NWO Holdco, Aviator Wind Equity Holdings, and Aviator Wind and presents the Class A membership interests and 49 percent of the Class B membership interest in Aviator Wind as noncontrolling interests.
Presented in the following table are the carrying values of the VIEs’ assets and liabilities included on CMS Energy’s consolidated balance sheets:
In Millions
September 30, 2022December 31, 2021
Current
Cash and cash equivalents$33 $21 
Restricted cash and cash equivalents— 1 
Accounts receivable6 3 
Prepayments and other current assets3 2 
Non-current
Plant, property, and equipment, net833 856 
Total assets1
$875 $883 
Current
Accounts payable$15 $17 
Other Liabilities— 2 
Non-current
Asset retirement obligations24 23 
Other Liabilities4 
Total liabilities$39 $46 
1Assets may be used only to meet VIEs’ obligations and commitments.
NorthStar Clean Energy is obligated under certain indemnities that protect the tax equity investors against losses incurred as a result of breaches of representations and warranties under the associated limited liability company agreements. For additional details on these indemnity obligations, see Note 2, Contingencies and Commitments—Guarantees.
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.
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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 Consumers1
Operating and management contract
GeneseeWood waste-fueled power generatorLong-term PPA between partnership and Consumers
Reduced dispatch agreement with Consumers1
Operating and management contract
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.
The creditors of these partnerships do not have recourse to the general credit of CMS Energy or Consumers. CMS Energy and Consumers have 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 at September 30, 2022 and $71 million at December 31, 2021.
14:    Exit Activities and Discontinued Operations
Exit Activities: Under its Clean Energy Plan, Consumers plans to retire the D.E. Karn coal-fueled electric generating units in 2023. In 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 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. In its order in Consumers’ 2020 electric rate case, the MPSC approved deferred accounting treatment for these costs; Consumers began deferring these costs as a regulatory asset in 2021.
Under the 2021 IRP, Consumers will retire the J.H. Campbell coal-fueled generating units in 2025. Similar to the D.E. Karn program, Consumers is providing a retention incentive program to ensure necessary staffing at the J.H. Campbell generating complex through retirement. Based on the number of employees that have chosen to participate, the aggregate cost of the program through 2025 is estimated to be $50 million. Additionally, Consumers recognized $4 million related to severance benefits during the nine months ended September 30, 2022. This amount was recorded in other non-current liabilities on its consolidated balance sheets at September 30, 2022. The 2021 IRP provides deferred accounting treatment for the retention and severance costs recognized during 2022; deferral of costs beyond 2022 will be addressed in future rate cases.
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As of September 30, 2022, the cumulative cost incurred and charged to expense related to the D.E. Karn retention incentive program was $16 million. Additionally, an amount of $4 million has been capitalized as a cost of plant, property, and equipment and an amount of $11 million has been deferred as a regulatory asset. The cumulative cost incurred and deferred as a regulatory asset related to the J.H. Campbell retention incentive program was $10 million.
Presented in the following table is a reconciliation of the retention benefit liability recorded in other liabilities on Consumers’ consolidated balance sheets:
In Millions
Nine Months Ended
September 3020222021
Retention benefit liability at beginning of period$14 $11 
Costs deferred as a regulatory asset1
14 5 
Costs incurred and capitalized— 1 
Retention benefit liability at the end of the period2
$28 $17 
1Includes $11 million for the three months ended September 30, 2022 and $2 million for the three months ended September 30, 2021.
2Includes current portion of other liabilities of $25 million at September 30, 2022 and $5 million at September 30, 2021.
Discontinued Operations: In October 2021, EnerBank was acquired by Regions Bank. CMS Energy received proceeds of over $1.0 billion from the transaction and recognized a pre-tax gain of $657 million in 2021. In March 2022, CMS Energy received $6 million of additional proceeds as the result of a post-closing adjustment. Net of related transaction costs, CMS Energy recognized a pre-tax gain of $5 million during the nine months ended September 30, 2022.
In December 2021, CMS Energy submitted a notice of disagreement to Regions Bank relating to a $36 million negative post-closing purchase price adjustment that it believed was inconsistent with the merger agreement. In accordance with the merger agreement, the disputed adjustment was submitted to a mutually agreed upon independent accounting firm for final determination. In June 2022, the accounting firm rendered a determination on the disputed items entirely in favor of CMS Energy. As a result, no further adjustment was required in 2022.
EnerBank’s results of operations through the date of the sale are presented as income from discontinued operations on CMS Energy’s consolidated statements of income for the three and nine months ended
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September 30, 2021. The table below presents the financial results of EnerBank included in income from discontinued operations:
In Millions
Three Months EndedNine Months Ended
September 302022202120222021
Operating revenue$— $70 $— $209 
Expenses
Operating expenses— 17 — 60 
Interest expense— 11 — 34 
Income before income taxes$— $42 $— $115 
Gain on sale1
— (3)5 (8)
Income from discontinued operations before income taxes$— $39 $5 $107 
Income tax expense— 9 1 25 
Income from discontinued operations, net of tax$— $30 $4 $82 
1Amounts in 2021 represent transaction costs.
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis of financial condition and results of operations for CMS Energy and Consumers is contained in Part I—Item 1. Financial Statements—MD&A, which is incorporated by reference herein.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to market risk as previously disclosed in Part II—Item 7A. Quantitative and Qualitative Disclosures About Market Risk, in the 2021 Form 10‑K.
Item 4.    Controls and Procedures
CMS Energy
The segments reported for CMS Energy are:
•electric utility, consisting of regulated activities associated with the generation, purchase, 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
•NorthStar Clean Energy, 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
CMS Energy presents corporate interest and other expenses, discontinued operations, and Consumers’ other consolidated entities within other reconciling items.
Consumers
The segments reported for Consumers are:
•electric utility, consisting of regulated activities associated with the generation, purchase, 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
Three Months EndedSix Months Ended
June 302023202220232022
CMS Energy, including Consumers
Operating revenue
Electric utility$1,128 $1,325 $2,219 $2,566 
Gas utility357 477 1,476 1,519 
NorthStar Clean Energy70 118 144 209 
Total operating revenue – CMS Energy$1,555 $1,920 $3,839 $4,294 
Consumers
Operating revenue
Electric utility$1,128 $1,325 $2,219 $2,566 
Gas utility357 477 1,476 1,519 
Total operating revenue – Consumers$1,485 $1,802 $3,695 $4,085 
CMS Energy, including Consumers
Net income (loss) available to common stockholders
Electric utility$147 $140 $217 $307 
Gas utility23 36 177 252 
NorthStar Clean Energy3 7 10 15 
Other reconciling items22 (38)(7)(78)
Total net income available to common stockholders – CMS Energy$195 $145 $397 $496 
Consumers
Net income (loss) available to common stockholder
Electric utility$147 $140 $217 $307 
Gas utility23 36 177 252 
Other reconciling items(4)(4)4 (4)
Total net income available to common stockholder – Consumers$166 $172 $398 $555 
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In Millions
June 30, 2023December 31, 2022
CMS Energy, including Consumers
Plant, property, and equipment, gross
Electric utility1
$18,615 $17,870 
Gas utility1
11,795 11,443 
NorthStar Clean Energy1,154 1,148 
Other reconciling items28 30 
Total plant, property, and equipment, gross – CMS Energy$31,592 $30,491 
Consumers
Plant, property, and equipment, gross
Electric utility1
$18,615 $17,870 
Gas utility1
11,795 11,443 
Other reconciling items35 29 
Total plant, property, and equipment, gross – Consumers$30,445 $29,342 
CMS Energy, including Consumers
Total assets
Electric utility1
$18,889 $17,907 
Gas utility1
11,552 11,873 
NorthStar Clean Energy1,536 1,464 
Other reconciling items288 109 
Total assets – CMS Energy$32,265 $31,353 
Consumers
Total assets
Electric utility1
$18,949 $17,968 
Gas utility1
11,597 11,918 
Other reconciling items42 30 
Total assets – Consumers$30,588 $29,916 
1Amounts include a portion of Consumers’ other common assets attributable to both the electric and gas utility businesses.
11:    Variable Interest Entities
NorthStar Clean Energy holds a Class B membership interest in NWO Holdco, which owns 100 percent of Northwest Ohio Wind, LLC, a 100‑MW wind generation project in Paulding County, Ohio. The Class A membership interest in NWO Holdco is held by a tax equity investor.
NorthStar Clean Energy has a 51‑percent ownership interest in Aviator Wind Equity Holdings, which holds a Class B membership interest in Aviator Wind, the holding company of a 525‑MW wind generation project in Coke County, Texas. The Class A membership interest in Aviator Wind is held by a tax equity investor.
Earnings, tax attributes, and cash flows generated by NWO Holdco and Aviator Wind are allocated among and distributed to the membership classes in accordance with the ratios specified in the associated limited liability company agreements; these ratios change over time and are not representative of the ownership interest percentages of each membership class. Since NWO Holdco’s and Aviator Wind’s income and cash flows are not distributed among their investors based on ownership interest percentages,
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NorthStar Clean Energy allocates the entities’ income (loss) among the investors by applying the hypothetical liquidation at book value method. This method calculates each investor’s earnings based on a hypothetical liquidation of the entities at the net book value of underlying 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.
NWO Holdco, Aviator Wind Equity Holdings, and Aviator Wind are VIEs. In accordance with the associated limited liability company agreements, the tax equity investors are guaranteed preferred returns from NWO Holdco and Aviator Wind. However, NorthStar Clean Energy manages and controls the operating activities of NWO Holdco and Aviator Wind Equity Holdings (and, thereby, Aviator Wind). As a result, NorthStar Clean Energy is the primary beneficiary, 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. NorthStar Clean Energy consolidates NWO Holdco, Aviator Wind Equity Holdings, and Aviator Wind and presents the Class A membership interests and 49 percent of the Class B membership interest in Aviator Wind as noncontrolling interests.
Presented in the following table are the carrying values of the VIEs’ assets and liabilities included on CMS Energy’s consolidated balance sheets:
In Millions
June 30, 2023December 31, 2022
Current
Cash and cash equivalents$22 $28 
Accounts receivable4 7 
Prepayments and other current assets4 3 
Non-current
Plant, property, and equipment, net810 825 
Total assets1
$840 $863 
Current
Accounts payable$7 $15 
Non-current
Asset retirement obligations24 24 
Total liabilities$31 $39 
1Assets may be used only to meet VIEs’ obligations and commitments.
NorthStar Clean Energy is obligated under certain indemnities that protect the tax equity investors against losses incurred as a result of breaches of representations and warranties under the associated limited liability company agreements. For additional details on these indemnity obligations, see Note 2, Contingencies and Commitments—Guarantees.
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.
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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 Consumers1
Operating and management contract
GeneseeWood waste-fueled power generatorLong-term PPA between partnership and Consumers
Reduced dispatch agreement with Consumers1
Operating and management contract
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.
The creditors of these partnerships do not have recourse to the general credit of CMS Energy or Consumers. CMS Energy’s maximum risk exposure to these partnerships is generally limited to its investment in the partnerships, which is included in investments on its consolidated balance sheets in the amount of $72 million at June 30, 2023 and $71 million at December 31, 2022.
12:    Transition Activities
Asset Acquisition: In May 2023, Consumers purchased the Covert Generating Facility, a natural gas-fueled generating unit with 1,200 MW of nameplate capacity in Van Buren County, Michigan, for $810 million. Consumers accounted for the purchase as an asset acquisition, allocating the purchase price to the assets acquired and liabilities assumed based on their relative fair value. The original cost of the plant was $665 million and the seller had recognized $225 million of accumulated depreciation. Upon acquisition, Consumers recorded the net book value of $440 million and a plant acquisition adjustment of $370 million, resulting in an increase to plant, property, and equipment of $810 million.
Exit Activities: In accordance with its Clean Energy Plan, Consumers retired the D.E. Karn coal-fueled electric generating units in June 2023. In 2019, when the MPSC approved the retirement of these units, Consumers removed from total plant, property, and equipment an amount representing the projected remaining book value of the two coal-fueled electric generating units upon their retirement, and recorded it as a regulatory asset. As of June 30, 2023, Consumers has recorded a regulatory asset of $670 million representing the remaining book value of these units.
Through a 2020 securitization financing order, the MPSC authorized Consumers to issue securitization bonds in order to finance the recovery of the remaining book value of the two coal-fueled electric generating units upon their retirement. Until securitization, the book value of the generating units will remain in rate base and receive full regulatory returns in general rate cases.
Under its Clean Energy Plan, Consumers also plans to retire the J.H. Campbell coal-fueled generating units in 2025. In order to ensure necessary staffing at both D.E. Karn and J.H. Campbell through retirement, Consumers has implemented retention incentive programs. The aggregate cost of the D.E. Karn program, which is now complete, was $32 million. The aggregate cost of the J.H. Campbell
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program through 2025 is estimated to be $50 million. The MPSC has approved deferred accounting treatment for these costs; these expenses are deferred as a regulatory asset.
As of June 30, 2023, the cumulative cost incurred and charged to expense related to the D.E. Karn retention incentive program was $16 million. Additionally, an amount of $4 million has been capitalized as a cost of plant, property, and equipment and an amount of $12 million has been deferred as a regulatory asset. The cumulative cost incurred and deferred as a regulatory asset related to the J.H. Campbell retention incentive program was $28 million. The regulatory assets for both programs will be collected from customers over three years.
Presented in the following table is a reconciliation of the retention benefit liability recorded in other liabilities on Consumers’ consolidated balance sheets:
In Millions
Six Months Ended
June 3020232022
Retention benefit liability at beginning of period$21 $14 
Costs deferred as a regulatory asset1
10 3 
Retention benefit liability at the end of the period2
$31 $17 
1Includes $5 million for the three months ended June 30, 2023 and $2 million for the three months ended June 30, 2022.
2Includes current portion of other liabilities of $18 million at June 30, 2023 and $6 million at June 30, 2022.
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis of financial condition and results of operations for CMS Energy and Consumers is contained in Part I—Item 1. Financial Statements—MD&A, which is incorporated by reference herein.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to market risk as previously disclosed in Part II—Item 7A. Quantitative and Qualitative Disclosures About Market Risk, in the 2022 Form 10‑K.
Item 4.    Controls and Procedures
CMS Energy
Disclosure Controls and Procedures: CMS Energy’s management, with the participation of its CEO and CFO, has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, CMS Energy’s CEO and CFO have concluded that, as of the end of such period, its disclosure controls and procedures are effective.
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Internal Control Over Financial Reporting: There have not been any changes in CMS Energy’s internal control over financial reporting (as such term is defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the last fiscal quarter that have materially affected, or are reasonably likely to affect materially, its internal control over financial reporting.
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Consumers
Disclosure Controls and Procedures: Consumers’ management, with the participation of its CEO and CFO, has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, Consumers’ CEO and CFO have concluded that, as of the end of such period, its disclosure controls and procedures are effective.
Internal Control Over Financial Reporting: There have not been any changes in Consumers’ internal control over financial reporting (as such term is defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the last fiscal quarter that have materially affected, or are reasonably likely to affect materially, its internal control over financial reporting.
Part II—Other Information
Item 1.    Legal Proceedings
CMS Energy, Consumers, and certain of their affiliates are parties to various lawsuits and regulatory matters in the ordinary course of business. For information regarding material legal proceedings, including updates to information reported under Part I—Item 3. Legal Proceedings of the 20212022 Form 10‑K, see Part I—Item 1. Financial Statements—Notes to the Unaudited Consolidated Financial Statements—Note 1, Regulatory Matters and Note 2, Contingencies and Commitments.
Item 1A.    Risk Factors
There have been no material changes to the Risk Factors as previously disclosed in Part I—Item 1A. Risk Factors in the 20212022 Form 10-K,10‑K, which Risk Factors are incorporated herein by reference.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
None.
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Issuer Repurchases of Equity Securities
Presented in the following table are CMS Energy’s repurchases of common stock for the three months ended SeptemberJune 30, 2022:2023:
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
July 1, 2022 to July 31, 202216 $69.03 — — 
August 1, 2022 to August 31, 2022430 69.86 — — 
September 1, 2022 to September 30, 2022235 67.60 — — 
Total681 $69.06 — — 
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
April 1, 2023 to April 30, 2023182 $61.38 — — 
May 1, 2023 to May 31, 2023— — — — 
June 1, 2023 to June 30, 2023326 57.70 — — 
Total508 $59.02 — — 
1All of the common shares were repurchased to satisfy the minimum statutory income tax withholding obligation for common shares that have vested under the Performance Incentive Stock Plan. The value of shares repurchased is based on the market price on the vesting date.
Item 3.    Defaults Upon Senior Securities
None.
Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information
None.
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Item 6.    Exhibits
CMS Energy’s and Consumers’ Exhibit Index
The agreements included as exhibits to this Form 10-Q10‑Q 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.
ExhibitsDescription
4.11
—
10.1—
4.2—
10.12
—
10.22
—
10.32
—
10.4—
31.1—
31.2—
31.3—
31.4—
32.1—
32.2—
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ExhibitsDescription
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    Obligations of CMS Energy or its subsidiaries, but not of Consumers.
2    Management contract or compensatory plan or arrangement.
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Table of Contents
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiary.
CMS ENERGY CORPORATION
Dated: OctoberJuly 27, 20222023By:/s/ Rejji P. Hayes
Rejji P. Hayes
Executive Vice President and Chief Financial Officer
CONSUMERS ENERGY COMPANY
Dated: OctoberJuly 27, 20222023By:/s/ Rejji P. Hayes
Rejji P. Hayes
Executive Vice President and Chief Financial Officer
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