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C MS EN E R GY & C O N S U M E R S EN E R GY
ANNUAL
REPORT
2023
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Shareowners:
Thank you for your investment in CMS Energy.
Our commitment to our customers, communities, co-workers and investors is rooted in
our purpose – World Class Performance Delivering Hometown Service. We have a great
story and our strategy continues to deliver industry-leading performance.
2023 was remarkable. As we have for 137 years, the CMS Energy team rose to every
occasion, caring for all stakeholders and ensuring the company’s short and long-term
success.
Our commitment to running a world class energy company continues, and we
delivered strong performance in both operational and financial measures and remain
focused on company-wide efforts for reliability and competitive rates. I’m proud of the
work on our recently filed Reliability Roadmap, which is our plan for important customer
investments required to deliver the electric service our customers expect and deserve.
We continue to be leaders in the Clean Energy Transformation and have made
progress in our shift from coal to clean with the retirement of legacy fossil plants and the
acquisition of a natural gas plant, wind and solar plants, bolstering supply adequacy.
The recent passage of Michigan’s clean legislation supports and accelerates our plans
and ensures a robust and clean portfolio for our customers.
Financially, I’m happy to report we delivered our 21st year of industry-leading
performance, at the high end of our adjusted earnings per share (EPS) guidance range
and successfully counter-measured nearly $300 million of weather-driven financial
headwinds.
Outlined below are highlights of 2023 accomplishments delivered by the CMS Energy
team, exemplifying our impact on the triple bottom line – People, Planet and Profit.
i
TTaablble e of Cof Contonteentntss
PEOPLE
• Department of Defense Freedom Award – the highest honor for supporting co-
workers in the Guard and Reserves
• Top US Utility – Corporate Religious Equity, Diversity & Inclusion (REDI) index
• Top Utility for Economic Development awarded from Site Selection Magazine
• Filed our five-year $7 billion electric Reliability Roadmap – a pathway to improved
electric system reliability for our customers
• Secured more than $125 million of customer assistance in partnership with state and
federal agencies to help keep customer bills affordable
• Attracted ~360 megawatts (MW) of new or expanding load, creating ~5,000 jobs
and bringing ~$6 billion of investment to Michigan
• Saved customers ~$161 million in supply costs through efficient plant performance
PLANET
• Ensured solid energy policy for Michigan that reflects current clean energy goals,
more renewable energy, flexibility and financial upside
• Successfully retired Karn 1&2 – reducing coal & carbon emissions
• Executed 185 MW of contracts (with customers) for renewables – 365 MW to date
• Recognized with the Pacesetter Award for 95% of residential electric vehicles
charging off-peak
• Tier 1 ESG Scores – all four Tier 1 ratings agencies are listed in the top quartile
• Included in MSCI ESG Leaders Index – the only vertically integrated utility
• Eliminated >530 metric tons of methane through pipe replacement and
operational procedures
PROFIT
• Delivered adjusted EPS of $3.11 – toward the high end of the EPS guidance range
• Increased annual dividend to $2.06 – 18th increase in as many years
• Recognized as TRENDSETTER company by CPA-Zicklin Index for corporate political
disclosure and accountability
• Achieved $79 million in operations and maintenance savings and $172 million in
capital cost savings through the CE Way
I am extremely proud of the CMS Energy Team for yet another outstanding year of
operational and financial performance and I would like to thank you for your continued
support. I look forward to another year of strong performance in 2024.
Sincerely,
Garrick Rochow
President and CEO
This letter includes non-GAAP measures. Reconciliations to the most directly comparable GAAP measures
are found immediately following this letter and on our website at cmsenergy.com.
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CMS ENERGY CORPORATION
Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income
(Unaudited)
Twelve Months Ended December 31, 2023
Net Income Available to Common Stockholders
Reconciling items:
Disposal of discontinued operations (gain) loss
Tax impact
Other exclusions from adjusted earnings**
Tax impact
Voluntary separation program
Tax impact
Adjusted net income – non-GAAP
Average Common Shares Outstanding - Diluted
Diluted Earnings Per Average Common Share
Reported net income per share
Reconciling items:
Disposal of discontinued operations (gain) loss
Tax impact
Other exclusions from adjusted earnings**
Tax impact
Voluntary separation program
Tax impact
Adjusted net income per share – non-GAAP
In Millions, Except Per Share Amounts
$
877
$
$
(1)
*
9
(3)
33
(8)
907
291.7
3.01
(*)
*
0.03
(0.01)
0.11
(0.03)
$
3.11
* Less than $0.5 million or $0.01 per share.
** Includes restructuring costs, business optimization initiative, and unrealized gains or losses from mark-to-market adjustments, recognized in net income related to
NorthStar Clean Energy's interest expense.
Management views adjusted (non-Generally Accepted Accounting Principles) earnings as a key measure of the Company's present operating financial performance and uses
adjusted earnings for external communications with analysts and investors. Internally, the Company uses adjusted earnings to measure and assess performance. Adjustments
could include items such as discontinued operations, asset sales, impairments, restructuring costs, business optimization initiative, changes in accounting principles,
voluntary separation program, changes in federal tax policy, regulatory items from prior years, unrealized gains or losses from mark-to-market adjustments, recognized in net
income related to NorthStar Clean Energy’s interest expense, or other items. The adjusted earnings should be considered supplemental information to assist in understanding
our business results, rather than as a substitute for reported earnings.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to_____
Commission File Number
Registrant; State of Incorporation; Address; and Telephone Number
IRS Employer Identification No.
1-9513
1-5611
CMS ENERGY CORPORATION
(A Michigan Corporation)
One Energy Plaza, Jackson, Michigan 49201
(517) 788-0550
CONSUMERS ENERGY COMPANY
(A Michigan Corporation)
One Energy Plaza, Jackson, Michigan 49201
(517) 788-0550
38-2726431
38-0442310
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
CMS Energy Corporation Common Stock, $0.01 par value
CMS Energy Corporation 5.625% Junior Subordinated Notes due 2078
CMS Energy Corporation 5.875% Junior Subordinated Notes due 2078
CMS Energy Corporation 5.875% Junior Subordinated Notes due 2079
CMS Energy Corporation Depositary Shares, each representing a 1/1,000th interest in a share
of 4.200% Cumulative Redeemable Perpetual Preferred Stock, Series C
Consumers Energy Company Cumulative Preferred Stock, $100 par value: $4.50 Series
Securities registered pursuant to Section 12(g) of the Act:
None
Trading Symbol(s)
Name of each exchange on which registered
CMS
CMSA
CMSC
CMSD
CMS PRC
CMS-PB
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
CMS Energy Corporation:
Yes ☒
No ☐
Consumers Energy Company:
Yes ☒
No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
CMS Energy Corporation:
Yes ☐
No ☒
Consumers Energy Company:
Yes ☐
No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
CMS Energy Corporation:
Yes ☒
No ☐
Consumers Energy Company:
Yes ☒
No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
CMS Energy Corporation:
Yes ☒
No ☐
Consumers Energy Company:
Yes ☒
No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See
the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
CMS Energy Corporation:
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
☒
☐
☐
☐
☐
Consumers Energy Company:
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☒
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
CMS Energy Corporation:
☐
Consumers Energy Company:
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
CMS Energy Corporation:
Consumers Energy Company:
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an
error to previously issued financial statements.
CMS Energy Corporation:
Consumers Energy Company:
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b).
CMS Energy Corporation:
Consumers Energy Company:
☒
☐
☐
☒
☐
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
CMS Energy Corporation:
Yes ☐
No ☒
Consumers Energy Company:
Yes ☐
No ☒
The aggregate market value of CMS Energy voting and non-voting common equity held by non-affiliates was $17.063 billion for the 290,440,980 CMS Energy Corporation Common Stock
shares outstanding on June 30, 2023 based on the closing sale price of $58.75 for CMS Energy Corporation Common Stock, as reported by the New York Stock Exchange on such date.
There were no shares of Consumers common equity held by non-affiliates as of June 30, 2023.
There were 294,443,620 shares of CMS Energy Corporation Common Stock outstanding on January 12, 2024. On January 12, 2024, CMS Energy held all 84,108,789 outstanding shares of
common stock of Consumers.
Documents incorporated by reference in Part III: CMS Energy’s and Consumers’ proxy statement relating to their 2024 Annual Meetings of Shareholders to be held May 3, 2024.
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CMS Energy Corporation
Consumers Energy Company
Annual Reports on Form 10-K to the Securities and Exchange
Commission for the Year Ended December 31, 2023
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Glossary ...............................................................................................................................................
Filing Format .......................................................................................................................................
Forward-looking Statements and Information ....................................................................................
Part I ....................................................................................................................................................
Item 1.
Business .........................................................................................................................
Item 1A. Risk Factors ...................................................................................................................
Item 1B. Unresolved Staff Comments ..........................................................................................
Item 1C. Cybersecurity .................................................................................................................
Properties .......................................................................................................................
Item 2.
Legal Proceedings ..........................................................................................................
Item 3.
Mine Safety Disclosures ................................................................................................
Item 4.
Part II ...................................................................................................................................................
Item 5.
Item 6.
Item 7.
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities .......................................................................................
Reserved ........................................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of
Operations ......................................................................................................................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.......................................
Financial Statements and Supplementary Data .............................................................
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial
Item 9.
Disclosure ......................................................................................................................
Item 9A. Controls and Procedures ................................................................................................
Item 9B. Other Information ..........................................................................................................
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections...........................
Part III .................................................................................................................................................
Item 10. Directors, Executive Officers and Corporate Governance ............................................
Executive Compensation ...............................................................................................
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related
Item 12.
Stockholder Matters .......................................................................................................
Item 13. Certain Relationships and Related Transactions, and Director Independence ..............
Principal Accountant Fees and Services ........................................................................
Item 14.
Part IV .................................................................................................................................................
Exhibits and Financial Statement Schedules .................................................................
Form 10-K Summary .....................................................................................................
Signatures ............................................................................................................................................
Item 15.
Item 16.
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17
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50
50
52
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52
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Glossary
Certain terms used in the text and financial statements are defined below.
2022 Form 10-K
Each of CMS Energy’s and Consumers’ Annual Report on Form 10-K for the year ended
December 31, 2022
2023 Energy Law
Michigan’s Public Acts 229, 230, 231, 233, 234, and 235 of 2023
3G
Third generation technology
4G
Fourth generation technology
ABATE
Association of Businesses Advocating Tariff Equity
ABO
Accumulated benefit obligation; the liabilities of a pension plan based on service and pay to date, which
differs from the PBO in that it does not reflect expected future salary increases
AFUDC
Allowance for borrowed and equity funds used during construction
AOCI
Accumulated other comprehensive income (loss)
ARO
Asset retirement obligation
ASC 715
Financial Accounting Standards Board Accounting Standards Codification Topic 715, Retirement
Benefits
Audit Committee
The Audit Committee of the Board, which is composed entirely of independent directors.
Aviator Wind
Aviator Wind Holdings, LLC, a VIE in which Aviator Wind Equity Holdings holds a Class B
membership interest
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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
Board
Board of Directors of CMS Energy and Consumers
CAO
Chief Accounting Officer
CCR
Coal combustion residual
CEO
Chief Executive Officer
CERCLA
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended
CFO
Chief Financial Officer
city-gate contract
An arrangement made for the point at which a local distribution company physically receives gas from a
supplier or pipeline
Clean Air Act
Federal Clean Air Act of 1963, as amended
Clean Energy Plan
Consumers’ long-term strategy for delivering clean, reliable, resilient, and affordable energy to its
customers; this plan was originally outlined and approved in Consumers’ 2018 integrated resource plan
and subsequently updated and approved through its 2021 integrated resource plan
Clean Water Act
Federal Water Pollution Control Act of 1972, as amended
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CMS Capital
CMS Capital, L.L.C., a wholly owned subsidiary of CMS Energy
CMS Energy
CMS Energy Corporation and its consolidated subsidiaries, unless otherwise noted; the parent of
Consumers and NorthStar Clean Energy
CMS ERM
CMS Energy Resource Management Company, a wholly owned subsidiary of NorthStar Clean Energy
CMS Gas Transmission
CMS Gas Transmission 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
Consumers 2014 Securitization Funding
Consumers 2014 Securitization Funding LLC, a wholly owned consolidated bankruptcy-remote
subsidiary of Consumers and special-purpose entity organized for the sole purpose of purchasing and
owning securitization property, issuing securitization bonds, and pledging its interest in securitization
property to a trustee to collateralize the securitization bonds
Consumers 2023 Securitization Funding
Consumers 2023 Securitization Funding LLC, a wholly owned consolidated bankruptcy-remote
subsidiary of Consumers and special-purpose entity organized for the sole purpose of purchasing and
owning securitization property, issuing securitization bonds, and pledging its interest in securitization
property to a trustee to collateralize the securitization bonds
Covert Generating Station
A 1,200-MW natural gas-fueled generation station that was acquired by Consumers in May 2023 from
New Covert Generating Company, LLC, a non-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
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CSAPR
Cross-State Air Pollution Rule of 2011, as amended
DB Pension Plan A
Defined benefit pension plan of CMS Energy and Consumers, including certain present and former
affiliates and subsidiaries, created as of December 31, 2017 for active employees who were covered
under the defined benefit pension plan that closed in 2005
DB Pension Plan B
Defined benefit pension plan of CMS Energy and Consumers, including certain present and former
affiliates and subsidiaries, amended as of December 31, 2017 to include only retired and former
employees who were covered under the defined benefit pension plan that closed in 2005
DB Pension Plans
Defined benefit pension plans of CMS Energy and Consumers, comprising DB Pension Plan A and
DB Pension Plan B
DB SERP
Defined Benefit Supplemental Executive Retirement Plan
DCCP
Defined Company Contribution Plan
DC SERP
Defined Contribution Supplemental Executive Retirement Plan
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
EEI
Edison Electric Institute, an association representing all U.S. investor-owned electric companies
EGLE
Michigan Department of Environment, Great Lakes, and Energy
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Endangered Species Act
Endangered Species Act of 1973, as amended
EnerBank
EnerBank USA, a wholly owned subsidiary of CMS Capital until October 1, 2021
energy waste reduction
The reduction of energy consumption through energy efficiency and demand-side energy conservation,
as established under Michigan law
EPA
U.S. Environmental Protection Agency
EPS
Earnings per share
ERCOT
Electric Reliability Council of Texas
Exchange Act
Securities Exchange Act of 1934
Federal Power Act
Federal Power Act of 1920
FERC
Federal Energy Regulatory Commission
First Mortgage Bond Indenture
Indenture dated as of September 1, 1945 between Consumers and The Bank of New York Mellon, as
Trustee, as amended and supplemented
FTR
Financial transmission right
GAAP
U.S. Generally Accepted Accounting Principles
GCC
Gas Customer Choice, which allows gas customers to purchase gas from alternative suppliers
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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
Good Neighbor Plan
A plan issued by the EPA which secures significant reductions in ozone-forming emissions of NOx from
power plants and industrial facilities
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
GWh
Gigawatt-hour, a unit of energy equal to one billion watt-hours
Internal Revenue Code
Internal Revenue Code of 1986, as amended
IRP
Integrated resource plan
IRS
Internal Revenue Service
IT
Information Technology
kV
Thousand volts, a unit used to measure the difference in electrical pressure along a current
kVA
Thousand volt-amperes, a unit used to reflect the electrical power capacity rating of equipment or a
system
kWh
Kilowatt-hour, a unit of energy equal to one thousand watt-hours
Ludington
Ludington pumped-storage plant, jointly owned by Consumers and DTE Electric
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MATS
Mercury and Air Toxics Standards, which limit mercury, acid gases, and other toxic pollution from
coal-fueled and oil-fueled power plants
MCV Facility
A 1,647-MW natural gas-fueled, combined-cycle cogeneration facility operated by the MCV Partnership
MCV Partnership
Midland Cogeneration Venture Limited Partnership, a non-affiliated company
MCV PPA
PPA between Consumers and the MCV Partnership
METC
Michigan Electric Transmission Company, LLC, a non-affiliated company
MGP
Manufactured gas plant
Migratory Bird Treaty Act
Migratory Bird Treaty Act of 1918, as amended
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
MPSC
Michigan Public Service Commission
MRV
Market-related value of plan assets
MW
Megawatt, a unit of power equal to one million watts
MWh
Megawatt-hour, a unit of energy equal to one million watt-hours
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NAAQS
National Ambient Air Quality Standards
Natural Gas Act
Natural Gas Act of 1938
NERC
North American Electric Reliability Corporation, a non-affiliated company responsible for developing
and enforcing reliability standards, monitoring the bulk power system, and educating and certifying
industry personnel
Newport Solar
Newport Solar, LLC, a wholly owned subsidiary of Newport Solar Holdings
Newport Solar Holdings
Newport Solar Holdings III, LLC, a VIE in which Newport Solar Equity Holdings LLC, a wholly owned
subsidiary of Grand River Solar, LLC, a wholly owned subsidiary of NorthStar Clean Energy, holds a
Class B membership interest
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 benefits
OPEB Plan
Postretirement health care and life insurance plans of CMS Energy and Consumers, including certain
present and former affiliates and subsidiaries
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OSHA
Occupational Safety and Health Administration
PBO
Projected benefit obligation
PCB
Polychlorinated biphenyl
PFAS
Per- and polyfluoroalkyl substances
PISP
Performance Incentive Stock Plan
PJM
PJM Interconnection Inc.
PPA
Power purchase agreement
PSCR
Power supply cost recovery
PURPA
Public Utility Regulatory Policies Act of 1978
RCRA
Federal Resource Conservation and Recovery Act of 1976
REC
Renewable energy credit
ROA
Retail Open Access, which allows electric generation customers to choose alternative electric suppliers
pursuant to Michigan’s Public Acts 141 and 142 of 2000, as amended
S&P
Standard & Poor’s Financial Services LLC
SEC
U.S. Securities and Exchange Commission
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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
Series C preferred stock
CMS Energy 4.200 percent cumulative redeemable perpetual preferred stock, Series C, with a
liquidation value of $25,000 per share
SOFR
Secured overnight financing rate calculated and published by the Federal Reserve Bank of New York
and selected as the recommended alternative to replace the London Interbank Offered Rate for dollar-
denominated financial contracts by the Alternative Reference Rates Committee
TAES
Toshiba America Energy Systems Corporation, a non-affiliated company
TBJH
TBJH Inc., 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
Toshiba
Toshiba Corporation, a non-affiliated company
USW
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers
International Union, AFL-CIO-CLC
UWUA
Utility Workers Union of America, AFL-CIO
VEBA trust
Voluntary employees’ beneficiary association trusts accounts established specifically to set aside
employer-contributed assets to pay for future expenses of the OPEB Plan
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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-K is separately filed by CMS Energy and Consumers. Information in this
combined Form 10-K relating to each individual registrant is filed by such registrant on its own behalf.
Consumers makes no representation regarding information relating to any other companies affiliated with
CMS Energy other than its own subsidiaries.
CMS Energy is the parent holding company of several subsidiaries, including Consumers and NorthStar
Clean 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.
Forward-looking Statements and Information
This Form 10-K and other CMS Energy and Consumers disclosures may contain forward-looking
statements as defined by the Private Securities Litigation Reform Act of 1995. The use of “anticipates,”
“assumes,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goals,” “guidance,” “intends,”
“may,” “might,” “objectives,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,”
“targets,” “will,” 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 worsening trade relations, geopolitical tensions,
war, acts of terrorism, and the responses to these events, and related economic disruptions
including, but not limited to, inflation, energy price volatility, and supply chain disruptions
the impact of new regulation by the MPSC, FERC, and other applicable governmental
proceedings and regulations, including any associated impact on electric or gas rates or rate
structures
potentially adverse regulatory treatment, effects of a failure to receive timely regulatory orders
that are or could come before the MPSC, FERC, or other governmental authorities, or effects of a
government shutdown
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
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security, cybersecurity, gas pipeline safety, gas pipeline capacity, energy waste reduction, the
environment, regulation or deregulation, reliability, health care reforms, taxes, accounting
matters, climate change, air emissions, renewable energy, the Dodd-Frank Act, 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 CMS Energy’s or Consumers’
facilities, utility infrastructure, operations, or backup systems, such as costs and availability of
personnel, equipment, and materials; weather and climate, including catastrophic weather-related
damage and extreme temperatures; natural disasters; 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; changes in trade policies or
regulations; 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 seasonality 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 ability of CMS Energy and Consumers to execute their financing strategies
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
•
•
•
•
•
•
•
•
•
•
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•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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, energy waste reduction, or energy storage
loss of customer demand for natural gas due to alternative technologies or fuels or electrification
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 or make
timely progress on their greenhouse gas reduction goals related to reducing their impact on
climate change
adverse consequences of employee, director, or third-party fraud or non-compliance with codes of
conduct or with laws or regulations
federal regulation of electric sales, 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 Clean Energy Plan, including any action by a regulatory authority or other
third party to prohibit, delay, or impair the implementation of the Clean 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, environmental regulations, and government actions
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 and integrate technology successfully, including artificial intelligence
the impact of CMS Energy’s and Consumers’ integrated business software system and its effects
on their operations, including utility customer billing and collections
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•
•
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
other matters that may be disclosed from time to time in CMS Energy’s and Consumers’ SEC
filings, or in other public documents
All forward-looking statements should be considered in the context of the risk and other factors described
above and as detailed from time to time in CMS Energy’s and Consumers’ SEC filings. For additional
details regarding these and other uncertainties, see Item 1A. Risk Factors; Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Outlook; and Item 8.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2,
Regulatory Matters and Note 3, Contingencies and Commitments.
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Table of Contents
Part I
Item 1. Business
General
CMS Energy
CMS Energy was formed as a corporation in Michigan in 1987 and is an energy company operating
primarily in Michigan. It is the parent holding company of several subsidiaries, including Consumers, an
electric and gas utility, and NorthStar Clean Energy, primarily a domestic independent power producer
and marketer. 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 manages its businesses by the nature of services each provides, and operates principally in
three business segments: electric utility; gas utility; and NorthStar Clean Energy, its non-utility operations
and investments. Consumers’ consolidated operations account for the substantial majority of
CMS Energy’s total assets, income, and operating revenue. CMS Energy’s consolidated operating
revenue was $7.5 billion in 2023, $8.6 billion in 2022, and $7.3 billion in 2021.
For further information about operating revenue, income, and assets and liabilities attributable to all of
CMS Energy’s business segments and operations, see Item 8. Financial Statements and Supplementary
Data—CMS Energy Consolidated Financial Statements and Notes to the Consolidated Financial
Statements.
Consumers
Consumers has served Michigan customers since 1886. Consumers was incorporated in Maine in 1910
and became a Michigan corporation in 1968. Consumers owns and operates electric generation and
distribution facilities and gas transmission, storage, and distribution facilities. It provides electricity and/
or natural gas to 6.8 million of Michigan’s 10 million residents. Consumers’ rates and certain other
aspects of its business are subject to the jurisdiction of the MPSC and FERC, as well as to NERC
reliability standards, as described in Item 1. Business—CMS Energy and Consumers Regulation.
Consumers’ consolidated operating revenue was $7.2 billion in 2023, $8.2 billion in 2022, and
$7.0 billion in 2021. For further information about operating revenue, income, and assets and liabilities
attributable to Consumers’ electric and gas utility operations, see Item 8. Financial Statements and
Supplementary Data—Consumers Consolidated Financial Statements and Notes to the Consolidated
Financial Statements.
Consumers owns its principal properties in fee, except that most electric lines, gas mains, and renewable
generation projects are located below or adjacent to public roads or on land owned by others and are
accessed by Consumers through easements, leases, and other rights. Almost all of Consumers’ properties
are subject to the lien of its First Mortgage Bond Indenture. For additional information on Consumers’
properties, see Item 1. Business—Business Segments—Consumers Electric Utility—Electric Utility
Properties and Business Segments—Consumers Gas Utility—Gas Utility Properties.
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Table of Contents
In 2023, Consumers served 1.9 million electric customers and 1.8 million gas customers in Michigan’s
Lower Peninsula. Presented in the following map are Consumers’ service territories:
Electric service territory
Gas service territory
Combination electric and
gas service territory
• Electric generation and battery
storage facilities
CMS Energy and Consumers—The Triple Bottom Line
For information regarding CMS Energy’s and Consumers’ purpose and impact on the “triple bottom line”
of people, planet, and profit, see Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Executive Overview.
Business Segments
Consumers Electric Utility
Electric Utility Operations: Consumers’ electric utility operations, which include the generation,
purchase, distribution, and sale of electricity, generated operating revenue of $4.7 billion in 2023,
$5.4 billion in 2022, and $5.0 billion in 2021. Consumers’ electric utility customer base consists of a mix
of primarily residential, commercial, and diversified industrial customers in Michigan’s Lower Peninsula.
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Table of Contents
Presented in the following illustration is Consumers’ 2023 electric utility operating revenue of
$4.7 billion by customer class:
Consumers’ electric utility operations are not dependent on a single customer, or even a few customers,
and the loss of any one or even a few of Consumers’ largest customers is not reasonably likely to have a
material adverse effect on Consumers’ financial condition.
In 2023, Consumers’ electric deliveries were 36 billion kWh, which included ROA deliveries of
three billion kWh, resulting in net bundled sales of 33 billion kWh. In 2022, Consumers’ electric
deliveries were 37 billion kWh, which included ROA deliveries of three billion kWh, resulting in net
bundled sales of 34 billion kWh.
Consumers’ electric utility operations are seasonal. The consumption of electric energy typically
increases in the summer months, due primarily to the use of air conditioners and other cooling equipment.
19
Residential: 47%Commercial: 33%Industrial: 14%Other: 6% Table of Contents
Presented in the following illustration are Consumers’ monthly weather-normalized electric deliveries
(deliveries adjusted to reflect normal weather conditions) to its customers, including ROA deliveries,
during 2023 and 2022:
Consumers’ 2023 summer peak demand was 8,067 MW, which included ROA demand of 549 MW. For
the 2022-2023 winter season, Consumers’ peak demand was 5,358 MW, which included ROA demand of
430 MW. As required by MISO reserve margin requirements, Consumers owns or controls, through long-
term PPAs and short-term capacity purchases, all of the capacity required to supply its projected firm
peak load and necessary reserve margin for summer 2024.
Electric Utility Properties: Consumers owns and operates electric generation and distribution facilities.
For details about Consumers’ electric generation facilities, see the Electric Utility Generation and Supply
Mix section that follows this Electric Utility Properties section. Consumers’ distribution system consists
of:
•
•
•
•
•
•
•
•
270 miles of high-voltage distribution overhead lines operating at 138 kV
four miles of high-voltage distribution underground lines operating at 138 kV
4,645 miles of high-voltage distribution overhead lines operating at 46 kV and 69 kV
18 miles of high-voltage distribution underground lines operating at 46 kV
82,049 miles of electric distribution overhead lines
9,708 miles of underground distribution lines
1,099 substations with an aggregate transformer capacity of 28 million kVA
four battery facilities with storage capacity of ten MWh
Consumers is interconnected to the interstate high-voltage electric transmission system owned by METC
and operated by MISO. Consumers is also interconnected to neighboring utilities and to other
transmission systems.
Electric Utility Generation and Supply Mix: Consumers’ Clean Energy Plan details its strategy to meet
customers’ long-term energy needs. The Clean Energy Plan was most recently revised and approved by
20
Total GWh per Month20222023JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember05001,0001,5002,0002,5003,0003,5004,000 Table of Contents
the MPSC in June 2022. Under Michigan’s integrated resource planning process, Consumers is required
to file proposed updates to its Clean Energy Plan before or in 2027; these updates will outline a path to
meeting the requirements of the 2023 Energy Law that was enacted in Michigan in November 2023.
Consumers’ Clean Energy Plan provides the foundation for its goal to achieve net-zero carbon emissions
from its electric business by 2040. This goal includes not only emissions from 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, which calls for replacing its coal-fueled generation predominantly
with investment in renewable energy. 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.
In accordance with its Clean Energy Plan, Consumers retired the D.E. Karn coal-fueled generating units
in June 2023 and plans to retire the J.H. Campbell coal-fueled generating units in 2025. In order to
continue providing controllable sources of electricity to customers while expanding its investment in
renewable energy, Consumers purchased the Covert Generating Station, a natural gas-fueled generating
facility, in May 2023. For further information on Consumers’ progress towards its net-zero carbon
emissions goal, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Executive Overview.
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Presented in the following table are details about Consumers’ 2023 electric generation and supply mix:
Name and Location (Michigan)
Coal steam generation
J.H. Campbell 1 & 2 – West Olive2
J.H. Campbell 3 – West Olive2,3
D.E. Karn 1 & 2 – Essexville4
Oil/Gas steam generation
D.E. Karn 3 & 4 – Essexville
Hydroelectric
Ludington – Ludington
Conventional hydro generation
Gas combined cycle
Covert Generating Station – Covert7
Jackson – Jackson
Zeeland – Zeeland
Gas combustion turbines
Zeeland (simple cycle) – Zeeland
Wind generation
Crescent Wind Farm – Hillsdale County
Cross Winds® Energy Park – Tuscola County
Gratiot Farms Wind Project – Gratiot County
Heartland Farms Wind Project – Gratiot County
Lake Winds® Energy Park – Mason County
Solar generation
Solar Gardens – Allendale, Cadillac, and Kalamazoo
Total owned generation
Purchased power8
Coal generation – T.E.S. Filer City
Gas generation – MCV Facility9
Other gas generation
Wind generation
Solar generation
Other renewable generation
Net interchange power10
Total purchased and interchange power
Total supply
Less distribution and transmission loss
Total net bundled sales
Number of Units and
Year Entered Service
2 Units, 1962-1967
1 Unit, 1980
2 Units, 1959-1961
2023
Generation
Capacity
(MW)
1
617
784
—
1,401
2023
Electric
Supply
(GWh)
2,025
4,260
599
6,884
2 Units, 1975-1977
1,200
14
6 Units, 1973
35 Units, 1906-1949
3 Units, 2004
1 Unit, 2002
3 Units, 2002
2 Units, 2001
2021
2014-2019
2020
2023
2012
2016-2021
1,115 5
77
1,192
1,088
538
532
2,158
318
150
231
150
—
101
632
5
6,906
60
1,240
152
385
307
210
2,354
—
2,354
9,260
(349) 6
376
27
4,654
1,937
3,418
10,009
1,200
356
669
342
1
242
1,610
7
19,751
318
6,029
1,215
970
554
1,061
10,147
4,532
14,679
34,430
1,699
32,731
1 With the exception of wind and solar generation, the amount represents generation capacity during the
summer months (planning year 2023 capacity as reported to MISO and limited by interconnection service
limits). For wind and solar generation, the amount represents installed capacity during the summer months,
except for Heartland Farms Wind Project, which began operation in December 2023.
2
Consumers plans to retire these generating units in 2025.
22
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3
4
5
6
7
8
9
Represents Consumers’ share of the capacity of the J.H. Campbell 3 unit, net of the 6.69-percent ownership
interest of the Michigan Public Power Agency and Wolverine Power Supply Cooperative, Inc, each a
non-affiliated company.
Consumers retired these generating units in June 2023.
Represents Consumers’ 51-percent share of the capacity of Ludington. DTE Electric holds the remaining
49-percent ownership interest.
Represents Consumers’ share of net pumped-storage generation. The pumped-storage facility consumes
electricity to pump water during off-peak hours for storage in order to generate electricity later during
peak-demand hours.
Consumers completed the purchase of this facility in May 2023.
Represents purchases under long-term PPAs.
For information about Consumers’ long-term PPA related to the MCV Facility, see Item 8. Financial
Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3,
Contingencies and Commitments—Contractual Commitments.
10 Represents purchases from the MISO energy market.
23
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Presented in the following table are the sources of Consumers’ electric supply for the last three years:
Years Ended December 31
Owned generation
Gas
Coal
Renewable energy
Oil
Net pumped storage1
Total owned generation
Purchased power2
Gas generation
Renewable energy generation
Coal generation
Nuclear generation3
Net interchange power4
Total purchased and interchange power
Total supply
2023
2022
GWh
2021
11,221
6,684
5,555
6,884
10,217
10,861
1,993
2,217
1,974
2
4
7
(349)
(370)
(321)
19,751
18,752
18,076
7,244
2,585
318
—
4,532
7,182
2,441
500
2,692
3,943
5,862
2,408
494
6,901
645
14,679
16,758
16,310
34,430
35,510
34,386
1
2
3
4
Represents Consumers’ share of net pumped-storage generation. During 2023, the pumped-storage facility
consumed 1,269 GWh of electricity to pump water during off-peak hours for storage in order to generate
920 GWh of electricity later during peak-demand hours.
Represents purchases under long-term PPAs.
Represents purchases from a nuclear generating facility that closed in May 2022.
Represents purchases from the MISO energy market.
During 2023, Consumers acquired 43 percent of the electricity it provided to customers through long-term
PPAs and the MISO energy market. Consumers offers its generation into the MISO energy market on a
day-ahead and real-time basis and bids for power in the market to serve the demand of its customers.
Consumers is a net purchaser of power and supplements its generation capability with purchases from the
MISO energy market.
At December 31, 2023, Consumers had future commitments to purchase capacity and energy under long-
term PPAs with various generating plants. These contracts require monthly capacity payments based on
the plants’ availability or deliverability. The payments for 2024 through 2048 are estimated to total
$7.2 billion and, for each of the next five years, range from $0.7 billion to $0.8 billion annually. These
amounts may vary depending on plant availability and fuel costs. For further information about
Consumers’ future capacity and energy purchase obligations, see Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Capital Resources and Liquidity—Other
Material Cash Requirements and Item 8. Financial Statements and Supplementary Data—Notes to the
Consolidated Financial Statements—Note 3, Contingencies and Commitments—Contractual
Commitments.
During 2023, 33 percent of the energy Consumers provided to customers was generated by its natural
gas-fueled generating units, which burned 83 bcf of natural gas and produced a combined total of
11,221 GWh of electricity.
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In order to obtain the gas it needs for electric generation fuel, Consumers’ electric utility purchases gas
from the market near the time of consumption, at prices that allow it to compete in the electric wholesale
market. For the Covert Generating Station and Jackson and Zeeland plants, Consumers utilizes an agent
that owns firm transportation rights to each plant to purchase gas from the market and transport the gas to
the facilities. For units 3 & 4 of D.E. Karn, Consumers holds gas transportation contracts to transport to
the plant gas that Consumers or an agent purchase from the market.
During 2023, 20 percent of the energy Consumers provided to customers was generated by its coal-fueled
generating units, which burned four million tons of coal and produced a combined total of 6,884 GWh of
electricity. In order to obtain the coal it needs, Consumers enters into physical coal supply contracts.
At December 31, 2023, Consumers had future commitments to purchase coal during 2024 and 2025;
payment obligations under these contracts totaled $56 million. Most of Consumers’ rail-supplied coal
contracts have fixed prices, although some contain market-based pricing. At December 31, 2023,
Consumers had 77 percent of its 2024 expected coal requirements under contract, as well as a 67-day
supply of coal on hand.
In conjunction with its coal supply contracts, Consumers leases a fleet of railcars and has transportation
contracts with various companies to provide rail services for delivery of purchased coal to Consumers’
generating facilities. Consumers’ coal transportation contracts are future commitments and expire on
various dates through 2025; payment obligations under these contracts totaled $213 million at
December 31, 2023.
Electric Utility Competition: Consumers’ electric utility business is subject to actual and potential
competition from many sources, in both the wholesale and retail markets, as well as in electric generation,
electric delivery, and retail services.
Michigan law allows electric customers in Consumers’ service territory to buy electric generation service
from alternative electric suppliers in an aggregate amount capped at ten percent of Consumers’ sales, with
certain exceptions. At December 31, 2023, electric deliveries under the ROA program were at the
ten-percent limit. Fewer than 300 of Consumers’ electric customers purchased electric generation service
under the ROA program. For additional information, see Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Outlook—Consumers Electric Utility Outlook and
Uncertainties.
Consumers also faces competition or potential competition associated with industrial customers relocating
all or a portion of their production capacity outside of Consumers’ service territory for economic reasons;
municipalities owning or operating competing electric delivery systems; and customer self-generation.
Consumers addresses this competition in various ways, including:
•
aggressively controlling operating, maintenance, and fuel costs and passing savings on to
customers
providing renewable energy options and energy waste reduction programs
providing competitive rate-design options, particularly for large energy-intensive customers
offering tariff-based incentives that support economic development
•
•
•
• monitoring activity in adjacent geographical areas
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Consumers Gas Utility
Gas Utility Operations: Consumers’ gas utility operations, which include the purchase, transmission,
storage, distribution, and sale of natural gas, generated operating revenue of $2.4 billion in 2023,
$2.7 billion in 2022, and $2.1 billion in 2021. Consumers’ gas utility customer base consists of a mix of
primarily residential, commercial, and diversified industrial customers in Michigan’s Lower Peninsula.
Presented in the following illustration is Consumers’ 2023 gas utility operating revenue of $2.4 billion by
customer class:
Consumers’ gas utility operations are not dependent on a single customer, or even a few customers, and
the loss of any one or even a few of Consumers’ largest customers is not reasonably likely to have a
material adverse effect on Consumers’ financial condition.
In 2023, deliveries of natural gas through Consumers’ pipeline and distribution network, including off-
system transportation deliveries, totaled 375 bcf, which included GCC deliveries of 31 bcf. In 2022,
deliveries of natural gas through Consumers’ pipeline and distribution network, including off-system
transportation deliveries, totaled 391 bcf, which included GCC deliveries of 34 bcf. Consumers’ gas
utility operations are seasonal. The consumption of natural gas increases in the winter, due primarily to
colder temperatures and the resulting use of natural gas as heating fuel. Consumers injects natural gas into
storage during the summer months for use during the winter months. During 2023, 45 percent of the
natural gas supplied to all customers during the winter months was supplied from storage.
26
Residential 60%Commercial: 15%GCC: 15%Industrial: 5%Other: 5% Table of Contents
Presented in the following illustration are Consumers’ monthly weather-normalized natural gas deliveries
(deliveries adjusted to reflect normal weather conditions) to its customers, including GCC deliveries,
during 2023 and 2022:
Gas Utility Properties: Consumers’ gas transmission, storage, and distribution system consists of:
•
•
•
•
2,371 miles of transmission lines
15 gas storage fields with a total storage capacity of 309 bcf and a working gas volume of 154 bcf
28,277 miles of distribution mains
eight compressor stations with a total of 157,893 installed and available horsepower
Under its Methane Reduction Plan, Consumers 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, from 2012 baseline levels, 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. For further information on
Consumers’ progress towards its net-zero methane emissions goal, see Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations—Executive Overview.
27
Total bcf per Month20222023JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember0102030405060 Table of Contents
Gas Utility Supply: In 2023, Consumers purchased 85 percent of the gas it delivered from U.S. suppliers.
The remaining 15 percent was purchased from authorized GCC suppliers and delivered by Consumers to
customers in the GCC program. Presented in the following illustration are the supply arrangements for the
gas Consumers delivered to GCC and GCR customers during 2023:
Firm city-gate and firm gas transportation contracts are those that define a fixed amount, price, and
delivery time frame. Consumers’ firm gas transportation contracts are with Panhandle Eastern Pipe Line
Company and Trunkline Gas Company, LLC, each a non-affiliated company. Under these contracts,
Consumers purchases and transports gas to Michigan for ultimate delivery to its customers. Consumers’
firm gas transportation contracts expire on various dates through 2028 with planned contract volumes
providing 34 percent of Consumers’ total forecasted gas supply requirements for 2024. Consumers
purchases the balance of its required gas supply under firm city-gate contracts and through authorized
suppliers under the GCC program.
Gas Utility Competition: Competition exists in various aspects of Consumers’ gas utility business.
Competition comes from GCC and transportation programs; system bypass opportunities for new and
existing customers; and from alternative fuels and energy sources, such as propane, oil, and electricity.
28
GCR firm city-gate contracts:48%GCR firm gas transportation contracts: 37%GCC suppliers: 15% Table of Contents
NorthStar Clean Energy—Non-utility Operations and Investments
NorthStar Clean Energy, through various subsidiaries and certain equity investments, is engaged in
domestic independent power production, including the development and operation of renewable
generation, and the marketing of independent power production. NorthStar Clean Energy’s operating
revenue was $297 million in 2023, $445 million in 2022, and $308 million in 2021.
Independent Power Production: Presented in the following table is information about the independent
power plants in which CMS Energy had an ownership interest at December 31, 2023:
Location
Dearborn, Michigan
Jackson County, Arkansas2
Gaylord, Michigan
Paulding County, Ohio
Comstock, Michigan
Delta Township, Michigan
Phillips, Wisconsin
Paulding County, Ohio
Coke County, Texas
Filer City, Michigan
New Bern, North Carolina
Flint, Michigan
Grayling, Michigan
Total
Ownership
Interest
(%)
Primary Fuel Type
Gross Capacity
(MW)
1
100
100
100
100
100
100
100
100
51
50
50
50
50
Natural gas
Solar
Natural gas
Wind
Natural gas
Solar
Solar
Solar and storage
Wind
Coal
Wood waste
Wood waste
Wood waste
770
180
134
100
76
24
3
3
525
73
50
40
38
2023 Net
Generation
(GWh)
5,178
62
10
279
189
39
4
1
1,824
318
310
113
134
2,016
8,461
1
2
Represents the intended full-load sustained output of each plant. The amount of capacity relating to
CMS Energy’s ownership interest was 1,658 MW and net generation relating to CMS Energy’s ownership
interest was 7,130 GWh at December 31, 2023.
This project began operations in October 2023.
The operating revenue from independent power production was $64 million in 2023, $58 million in 2022,
and $48 million in 2021.
Energy Resource Management: CMS ERM purchases and sells energy commodities in support of
CMS Energy’s generating facilities with a focus on optimizing CMS Energy’s independent power
production portfolio. In 2023, CMS ERM marketed two bcf of natural gas and 6,828 GWh of electricity.
Electricity marketed by CMS ERM was generated by independent power production of NorthStar Clean
Energy and by unrelated third parties. CMS ERM’s operating revenue was $233 million in 2023,
$387 million in 2022, and $260 million in 2021.
NorthStar Clean Energy Competition: NorthStar Clean Energy competes with other independent
power producers. The needs of this market are driven by electric demand and the generation available.
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CMS Energy and Consumers Regulation
CMS Energy, Consumers, and their subsidiaries are subject to regulation by various federal, state, and
local governmental agencies, including those described in the following sections. If CMS Energy,
Consumers, or their subsidiaries failed to comply with applicable laws and regulations, they could
become subject to fines, penalties, or disallowed costs, or be required to implement additional
compliance, cleanup, or remediation programs, the cost of which could be material. For more information
on the potential impacts of government regulation affecting CMS Energy, Consumers, and their
subsidiaries, see Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Outlook, and Item 8. Financial Statements and Supplementary
Data—Notes to the Consolidated Financial Statements—Note 2, Regulatory Matters.
FERC and NERC
CMS Energy and its affiliates and subsidiaries are subject to regulation by FERC in a number of areas.
FERC regulates certain aspects of Consumers’ electric business, including, but not limited to, compliance
with FERC accounting rules, wholesale electric and transmission rates, operation of licensed
hydroelectric generating plants, corporate mergers and the sale and purchase of certain assets, issuance of
securities, and conduct among affiliates. FERC also regulates the tariff rules and procedures administered
by MISO and other independent system operators/regional transmission organizations, including
wholesale electric markets and interconnection of new generating facilities to the transmission system.
FERC, in connection with NERC and with regional reliability organizations, also regulates generation and
transmission owners and operators, load-serving entities, and others with regard to reliability of the bulk
power system.
FERC also regulates limited aspects of Consumers’ gas business, principally compliance with FERC
capacity release rules, shipping rules, the prohibition of certain buy/sell transactions, and the price-
reporting rule.
FERC also regulates holding company matters, interlocking directorates, and other issues affecting
CMS Energy. In addition, similar to FERC’s regulation of Consumers’ electric and gas businesses, FERC
has jurisdiction over several independent power plants, PURPA-qualifying facilities, and exempt
wholesale generators in which NorthStar Clean Energy has ownership interests, as well as over NorthStar
Clean Energy itself, CMS ERM, CMS Gas Transmission, and DIG.
MPSC
Consumers is subject to the jurisdiction of the MPSC, which regulates public utilities in Michigan with
respect to retail utility rates, accounting, utility services, certain facilities, certain asset transfers, corporate
mergers, and other matters.
The Michigan Attorney General, ABATE, the MPSC Staff, residential customer advocacy groups,
environmental organizations, and certain other parties typically participate in MPSC proceedings
concerning Consumers. These parties often challenge various aspects of those proceedings, including the
prudence of Consumers’ policies and practices, and seek cost disallowances and other relief. The parties
also have appealed significant MPSC orders.
Rate Proceedings: For information regarding open rate proceedings, see Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Outlook and Item 8.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2,
Regulatory Matters.
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Other Regulation
The U.S. Secretary of Energy regulates imports and exports of natural gas and has delegated various
aspects of this jurisdiction to FERC and the U.S. Department of Energy’s Office of Fossil Fuels.
The U.S. Department of Transportation’s Office of Pipeline Safety regulates the safety and security of gas
pipelines through the Natural Gas Pipeline Safety Act of 1968 and subsequent laws.
The Transportation Security Administration, an agency of the U.S. Department of Homeland Security,
regulates certain activities related to the safety and security of natural gas pipelines.
Energy Legislation
In November 2023, Michigan enacted the 2023 Energy Law, which among other things:
•
•
•
•
•
•
•
•
•
•
raises the renewable energy standard from the present 15-percent requirement to 50 percent by
2030 and 60 percent by 2035; renewable energy generated anywhere within MISO may be
applied to meeting this standard, with certain limitations
sets a clean energy standard of 80 percent by 2035 and 100 percent by 2040; low- or zero-carbon
emitting resources, such as nuclear generation and natural gas generation coupled with carbon
capture, are considered clean energy sources under this standard
authorizes the MPSC to grant extensions of the clean energy or renewable energy standards
deadlines if compliance is not practically feasible, would be excessively costly to customers, or
would cause reliability issues
increases the energy waste reduction requirement for electric utilities to achieve annual reductions
in customers’ electricity use from the present one-percent reduction requirement to 1.5 percent
beginning in 2026; beyond this requirement, the law sets a goal of a two-percent reduction and
requires that such goal be incorporated into in an electric utility’s integrated resource plan
modeling scenarios
increases the energy waste reduction requirement for gas utilities to achieve annual reductions in
customers’ gas use from the present 0.75-percent reduction requirement to 0.875 percent
beginning in 2026
enhances existing incentives for energy efficiency programs and returns earned on competitively
bid PPAs
creates a new energy storage standard that requires electric utilities to file plans by 2029 to obtain
new energy storage that will contribute to a Michigan target of 2,500 MW based on their pro rata
share
expands the statutory cap on distributed generation resources to ten percent
expands the MPSC’s scope of considerations in integrated resource plans to include affordability,
greenhouse gas emissions, environmental justice considerations, the effects on human health, and
other environmental concerns
provides the MPSC siting authority over large renewable energy projects
Consumers is required to file updates to its amended renewable energy plan before or in 2025 and its
Clean Energy Plan before or in 2027. Together, these updated plans will outline a path to meeting the
requirements of the 2023 Energy Law by focusing on increasing the generation of renewable energy,
deploying energy storage, helping customers use less energy, and offering demand response programs to
reduce demand during critical peak times.
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CMS Energy and Consumers Environmental Strategy and
Compliance
CMS Energy and Consumers are committed to protecting the environment; this commitment extends
beyond compliance with applicable laws and regulations. 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. This goal includes not only emissions from
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, which calls for replacing its coal-fueled generation predominantly
with investment in renewable energy. 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.
Under its Clean Energy Plan, Consumers will eliminate the use of coal-fueled generation in 2025 and
currently forecasts renewable energy capacity levels of over 60 percent in 2040. For additional
information on Consumers’ Clean Energy Plan, see Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Outlook—Consumers Electric Utility Outlook and
Uncertainties.
In addition to Consumers’ efforts to reduce the electric utility’s carbon footprint, it is also making efforts
to reduce the gas utility’s methane footprint. Under its Methane Reduction Plan, Consumers 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, from 2012 baseline levels, 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. For additional information on Consumers’ Methane Reduction Plan, see Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook—
Consumers Gas Utility Outlook and Uncertainties—Gas Environmental Outlook.
Encompassing both its electric and gas businesses, Consumers has set a net-zero greenhouse gas
emissions target by 2050. This goal incorporates 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 the adoption of cost-
effective emerging technologies once proven and commercially available.
CMS Energy’s and Consumers’ commitment to protecting the environment extends to advancing the
principles of environmental justice in current and future operations. These principles center on protecting
communities impacted by the companies’ operations, especially those communities that are most
vulnerable and may have suffered disparate impacts of environmental harm.
Advancing environmental justice comes in a variety of forms. For example, Consumers has conducted an
environmental justice analysis to help understand the environmental impacts of its clean energy
transformation. Similarly, Consumers is using an environmental justice screening tool provided by the
State of Michigan in the planning of improvements to the electric distribution system, including
prioritizing investments in more vulnerable communities.
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A core tenet of environmental justice is inviting the input of the stakeholders in the local communities
where CMS Energy and Consumers operate and invest. The companies are committed to maintaining a
transparent dialogue when developing projects, whether in new or existing areas of operation.
CMS Energy, Consumers, and their subsidiaries are subject to various federal, state, and local
environmental regulations for solid waste management, air and water quality, and other matters.
Consumers expects to recover costs to comply with environmental regulations in customer rates but
cannot guarantee this result. For additional information concerning environmental matters, see Item 1A.
Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Outlook, and Item 8. Financial Statements and Supplementary Data—Notes to the
Consolidated Financial Statements—Note 3, Contingencies and Commitments.
CMS Energy has recorded a $45 million liability for its subsidiaries’ obligations associated with
Bay Harbor and Consumers has recorded a $62 million liability for its obligations at a number of former
MGP sites. For additional information, see Item 1A. Risk Factors and Item 8. Financial Statements and
Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and
Commitments.
Costs related to the construction, operation, corrective action, and closure of solid waste disposal facilities
for coal ash are significant. Consumers’ coal ash disposal areas are regulated under Michigan’s solid
waste rules and by the EPA’s rules regulating CCRs. To address some of the requirements of these rules,
Consumers has converted all of its fly ash handling systems to dry systems. In addition, Consumers’ ash
facilities have programs designed to protect the environment and are subject to quarterly EGLE
inspections. Consumers’ estimate of capital and cost of removal expenditures to comply with regulations
relating to ash disposal is $238 million from 2024 through 2028. Consumers’ future costs to comply with
solid waste disposal regulations may vary depending on future legislation, litigation, executive orders,
treaties, or rulemaking.
For further information concerning estimated capital expenditures related to environmental matters, see
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Outlook—Consumers Electric Utility Outlook and Uncertainties—Electric Environmental Outlook.
Insurance
CMS Energy and its subsidiaries, including Consumers, maintain insurance coverage generally similar to
comparable companies in the same lines of business. The insurance policies are subject to terms,
conditions, limitations, and exclusions that might not fully compensate CMS Energy or Consumers for all
losses. A portion of each loss is generally assumed by CMS Energy or Consumers in the form of
deductibles and self-insured retentions that, in some cases, are substantial. As CMS Energy or Consumers
renews its policies, it is possible that some of the present insurance coverage may not be renewed or
obtainable on commercially reasonable terms due to restrictive insurance markets.
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Human Capital
CMS Energy and Consumers employ a highly trained and skilled workforce comprised of union and
non-union employees. Presented in the following table are the number of employees of CMS Energy and
Consumers:
December 31
CMS Energy, including Consumers
Full-time and part-time employees
Consumers
Full-time and part-time employees
2023
2022
2021
8,356
9,073
9,122
8,144
8,879
8,927
At December 31, 2023, unions represented 44 percent of CMS Energy’s employees and 45 percent of
Consumers’ employees. The UWUA represents Consumers’ operating, maintenance, construction, and
customer contact center employees. The USW represents Zeeland plant employees. The UWUA and
USW agreements expire in 2025.
The safety of employees, customers, and the general public is a priority of CMS Energy and Consumers.
Accordingly, CMS Energy and Consumers have worked to integrate a set of safety principles into their
business operations and culture. These principles include complying with applicable safety, health, and
security regulations and implementing programs and processes aimed at continually improving safety and
security conditions. On an annual basis, CMS Energy and Consumers set various safety goals tied to the
OSHA recordable incident rate and high-risk injuries. The companies’ OSHA recordable incident rate
was 1.48 in 2023 and 1.17 in 2022. The target recordable incident rate for 2024 is 0.96, which, if
achieved, would place Consumers within the first quartile of its EEI peer group. Over the last ten years,
Consumers’ OSHA recordable incident rate has decreased by 20 percent. High-risk injuries encompass all
recordable and non-recordable incidents with the potential for serious injury or fatality. In 2023, the
companies recorded ten high-risk injuries, achieving their goal of less than 20 high-risk injuries.
Within the utility industry, there is strong competition for rare, high-demand talent, including those
related to renewable energy generation, technology, and data analytics. In order to address this
competition and to be able to meet their human capital needs, CMS Energy and Consumers provide
compensation and benefits that are competitive with industry peers. Furthermore, CMS Energy and
Consumers have developed a comprehensive talent strategy, the People Strategy, to attract, develop, and
retain highly skilled employees. The strategy focuses on three areas, which are summarized below. The
first two areas listed below focus on creating an environment that attracts and retains top talent and
ensuring that all co-workers can thrive and contribute to the companies’ mission and purpose.
• Cultivating a Purpose-driven Culture: This goal aims to ensure all co-workers understand how
their work contributes to CMS Energy’s and Consumers’ key strategic goals.
• Creating a Breakthrough Employee Experience: A breakthrough employee experience is one
that instills pride and ownership in one’s work. To measure progress toward a breakthrough
employee experience, CMS Energy and Consumers assess engagement, empowerment, and
diversity, equity, and inclusion efforts using the companies’ culture index. For the year ended
December 31, 2023, the companies attained a score of 61 percent positive sentiment for
engagement, 48 percent positive sentiment for empowerment, and 65 percent positive sentiment
for diversity, equity, and inclusion. CMS Energy and Consumers aim to enhance these scores by
two percentage points year over year.
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• Building Skill Sets at Scale: With an overarching goal of ensuring employees have the right
skills to succeed, CMS Energy and Consumers measure progress in this area through achievement
of workforce planning and hiring milestones and through a first-time skill attainment index to
evaluate the effectiveness of training. CMS Energy and Consumers develop skill sets in
co-workers through a variety of means, including union apprenticeship programs and yearly
trainings for newly required skills. In 2023, CMS Energy and Consumers launched two new
leadership development programs for mid-level and front-line leaders.
This talent strategy allows CMS Energy and Consumers to shape employees’ experience and enable
leaders to coach and develop co-workers, source talent, and anticipate and adjust to changing skill sets in
the business environment.
Diversity, Equity, and Inclusion
As a part of their People Strategy, CMS Energy and Consumers also employ a comprehensive diversity,
equity, and inclusion strategy designed to embed diversity, equity, and inclusion into all aspects of their
business. This is done through embedding standards for diversity, equity, and inclusion into all company
processes and ensuring these standards are incorporated into all employee experiences. To measure their
success, CMS Energy and Consumers utilize select questions in the annual engagement survey to create a
diversity, equity, and inclusion index. For the year ended December 31, 2023, the diversity, equity, and
inclusion index score was 65 percent.
CMS Energy and Consumers are committed to building an inclusive workplace that embraces the diverse
makeup of the communities that they serve. The following table presents the composition of
CMS Energy’s and Consumers’ workforce:
December 31, 2023
Percent female employees
Percent racially or ethnically diverse employees
Percent employees with disabilities
Percent veteran employees
CMS Energy,
including
Consumers
Consumers
26 %
13
4
11
26 %
13
5
11
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Co-workers are also empowered to engage in business employee resource groups and events that
encourage candid conversations around diversity, equity, and inclusion. There are seven business
employee resource groups available to all co-workers; these groups are:
• Women in Energy, working toward an inclusive place for all women in the fields they have
•
•
chosen, from front line to management
the Minority Advisory Panel, promoting a culture of diversity and inclusion among all racial and
ethnic minorities through education, leadership, development, and networking
the Veteran’s Advisory Panel, supporting former and active military personnel and assisting in
recruiting and retaining veterans through career development
• GEN-ERGY, a multigenerational group designed to bridge the gap of learning, networking, and
•
•
•
mentoring across the generations of the workforce
the Pride Alliance of Consumers Energy, promoting an inclusive environment that is safe,
supportive, and respectful for lesbian, gay, bi-sexual, and transgender persons and allies
capABLE, aimed at removing barriers and creating pathways to meaningful work for employees
of all abilities
Interfaith, a space for co-workers of all backgrounds to gather and celebrate their unique beliefs,
creating an environment of understanding and respect for all faiths, religions, and spiritual beliefs,
including those with no faith affiliation
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Information About CMS Energy’s and Consumers’
Executive Officers
Presented in the following table are the company positions held during the last five years for each of
CMS Energy’s and Consumers’ executive officers as of February 8, 2024:
Period
12/2020 – Present
1/2020 – 12/2020
7/2016 – 1/2020
12/2020 – Present
1/2020 – 12/2020
7/2016 – 1/2020
12/2020 – Present
5/2017 – Present
5/2017 – Present
5/2017 – Present
10/2018 – 10/2021
2/2022 – Present
2/2022 – Present
11/2018 – 2/2022
4/2017 – Present
4/2017 – Present
Name, Age, Position(s)
Garrick J. Rochow (age 49)
CMS Energy
President, CEO, and Director
Executive Vice President
Senior Vice President
Consumers
President, CEO, and Director
Executive Vice President
Senior Vice President
NorthStar Clean Energy
Chairman of the Board, CEO, and Director
Rejji P. Hayes (age 49)
CMS Energy
Executive Vice President and CFO
Consumers
Executive Vice President and CFO
NorthStar Clean Energy
Executive Vice President, CFO, and Director
EnerBank
Chairman of the Board and Director
Tonya L. Berry (age 51)
CMS Energy
Senior Vice President
Consumers
Senior Vice President
Vice President
Catherine A. Hendrian (age 55)
CMS Energy
Senior Vice President
Consumers
Senior Vice President
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Name, Age, Position(s)
Brandon J. Hofmeister (age 47)
CMS Energy
Senior Vice President
Consumers
Senior Vice President
NorthStar Clean Energy
Senior Vice President
Shaun M. Johnson (age 45)
CMS Energy
Senior Vice President and General Counsel
Vice President and Deputy General Counsel
Consumers
Senior Vice President and General Counsel
Vice President and Deputy General Counsel
NorthStar Clean Energy
Senior Vice President, General Counsel, and Director
Vice President and General Counsel
EnerBank
Senior Vice President and General Counsel
Venkat Dhenuvakonda Rao (age 53)
CMS Energy
Senior Vice President
Consumers
Senior Vice President
NorthStar Clean Energy
Director
Senior Vice President
Brian F. Rich (age 49)
CMS Energy
Senior Vice President and Chief Customer Officer
Senior Vice President and Chief Information Officer
Consumers
Senior Vice President and Chief Customer Officer
Senior Vice President and Chief Information Officer
LeeRoy Wells, Jr. (age 45)
CMS Energy
Senior Vice President
Consumers
Senior Vice President
Vice President
38
Period
7/2017 – Present
7/2017 – Present
9/2017 – Present
5/2019 – Present
4/2016 – 5/2019
5/2019 – Present
4/2016 – 5/2019
4/2019 – Present
10/2018 – 4/2019
8/2018 – 6/2020
9/2016 – Present
9/2016 – Present
11/2017 – Present
9/2016 – Present
8/2019 – Present
7/2016 – 8/2019
8/2019 – Present
7/2016 – 8/2019
12/2020 – Present
12/2020 – Present
8/2017 – 12/2020
Table of Contents
Name, Age, Position(s)
Scott B. McIntosh (age 48)
CMS Energy
Vice President, Controller, and CAO
Vice President and Controller
Vice President
Consumers
Vice President, Controller, and CAO
Vice President and Controller
Vice President
NorthStar Clean Energy
Vice President, Controller, and CAO
Vice President and Controller
Vice President
Period
9/2021 – Present
6/2021 – 9/2021
9/2015 – 6/2021
9/2021 – Present
6/2021 – 9/2021
9/2015 – 6/2021
9/2021 – Present
6/2021 – 9/2021
9/2015 – 6/2021
There are no family relationships among executive officers and directors of CMS Energy or Consumers.
The list of directors and their biographies will be included in CMS Energy’s and Consumers’ definitive
proxy statement for their 2024 Annual Meetings of Shareholders to be held May 3, 2024. The term of
office of each of the executive officers extends to the first meeting of the Board after the next annual
election of Directors of CMS Energy and Consumers (to be held on May 3, 2024).
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. CMS Energy’s and Consumers’ annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed
pursuant to Section 13(a) or 15(d) of the Exchange Act are accessible free of charge on CMS Energy’s
website. These reports are available soon after they are electronically filed with the SEC. Also on
CMS Energy’s website are CMS Energy’s and Consumers’:
• Corporate Governance Principles
• Articles of Incorporation
• Bylaws
• Charters and Codes of Conduct (including the Charters of the Audit Committee, Compensation
and Human Resources Committee, Finance Committee, and Governance, Sustainability and
Public Responsibility Committee, as well as the Employee, the Board, and Third Party Codes of
Conduct)
CMS Energy will provide this information in print to any stockholder who requests it.
The SEC maintains an internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The address is www.sec.gov.
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Item 1A. Risk Factors
CMS Energy and Consumers are exposed to a variety of factors, often beyond their control, that are
difficult to predict and that involve uncertainties that may materially adversely affect CMS Energy’s or
Consumers’ business, liquidity, financial condition, or results of operations. Additional risks and
uncertainties not presently known or that management believes to be immaterial may also adversely affect
CMS Energy or Consumers. The risk factors described in the following sections, as well as the other
information included in this report and in other documents filed with the SEC, should be considered
carefully before making an investment in securities of CMS Energy or Consumers. Risk factors of
Consumers are also risk factors of CMS Energy.
Investment/Financial Risks
CMS Energy depends on dividends from its subsidiaries to meet its debt service obligations.
Due to its holding company structure, CMS Energy depends on dividends from its subsidiaries to meet its
debt service and other payment obligations. If sufficient dividends were not paid to CMS Energy by its
subsidiaries, CMS Energy might not be able to generate the funds necessary to fulfill its payment
obligations.
Consumers’ ability to pay dividends or acquire its own stock from CMS Energy is limited by restrictions
contained in Consumers’ preferred stock provisions and potentially by other legal restrictions, such as
certain terms in its articles of incorporation and FERC requirements.
CMS Energy has indebtedness that could limit its financial flexibility and its ability to meet its debt
service obligations.
The level of CMS Energy’s present and future indebtedness could have several important effects on its
future operations, including, among others, that:
•
•
a significant portion of CMS Energy’s cash flow from operations could be dedicated to the
payment of principal and interest on its indebtedness and would not be available for other
purposes
covenants contained in CMS Energy’s existing debt arrangements, which require it to meet
certain financial tests, could affect its flexibility in planning for, and reacting to, changes in its
business
• CMS Energy’s ability to obtain additional financing for working capital, capital expenditures,
acquisitions, and general corporate and other purposes could become limited
• CMS Energy could be placed at a competitive disadvantage to its competitors that are less
leveraged
• CMS Energy’s vulnerability to adverse economic and industry conditions could increase
• CMS Energy’s future credit ratings could fluctuate
CMS Energy’s ability to meet its debt service obligations and to reduce its total indebtedness will depend
on its future performance, which will be subject to general economic conditions, industry cycles, changes
in laws or regulatory decisions, and financial, business, and other factors affecting its operations, many of
which are beyond its control. CMS Energy cannot make assurances that its businesses will continue to
generate sufficient cash flow from operations to service its indebtedness, which could require
CMS Energy to sell assets or obtain additional financing.
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CMS Energy and Consumers have financing needs and could be unable to obtain bank financing or
access the capital markets.
CMS Energy and Consumers rely on the capital markets, as well as on bank syndications, to meet their
financial commitments and short-term liquidity needs not otherwise funded internally.
Disruptions in the capital and credit markets, or the inability to obtain required regulatory authorization
for issuances of securities including debt, could adversely affect CMS Energy’s and Consumers’ access to
liquidity needed for their businesses. Any liquidity disruption could require CMS Energy and Consumers
to take measures to conserve cash including, but not limited to, deferring capital expenditures, changing
commodity purchasing strategies to avoid collateral-posting requirements, and reducing or eliminating
future share repurchases, dividend payments, or other discretionary uses of cash.
Entering into new financings is subject in part to capital market receptivity to utility industry securities in
general and to CMS Energy’s and Consumers’ securities in particular. CMS Energy and Consumers
continue to explore financing opportunities to supplement their respective financial strategies. These
potential opportunities include refinancing and/or issuing new debt, issuing CMS Energy preferred stock
and/or common equity, or entering into commercial paper, bank financing, and leasing arrangements.
CMS Energy and Consumers cannot guarantee the capital markets’ acceptance of their securities.
CMS Energy and Consumers may also, from time to time, repurchase (either in open market transactions
or through privately negotiated transactions), redeem, or otherwise retire outstanding debt. Such activities,
if any, will depend on prevailing market conditions, contractual restrictions, and other factors. The
amounts involved may or may not be material.
Certain of CMS Energy’s and Consumers’ securities and those of their affiliates are rated by various
credit rating agencies. A reduction or withdrawal of one or more of its credit ratings could have a material
adverse impact on CMS Energy’s or Consumers’ ability to access capital on acceptable terms and
maintain commodity lines of credit, could increase their cost of borrowing, and could cause CMS Energy
or Consumers to reduce capital expenditures. If either or both were unable to maintain commodity lines of
credit, CMS Energy or Consumers might have to post collateral or make prepayments to certain suppliers
under existing contracts. Further, since Consumers provides dividends to CMS Energy, any adverse
developments affecting Consumers that result in a lowering of its credit ratings could have an adverse
effect on CMS Energy’s credit ratings.
Market performance and other changes could decrease the value of employee benefit plan assets,
which then could require substantial funding.
The performance of various markets affects the value of assets that are held in trust to satisfy future
obligations under CMS Energy’s and Consumers’ pension and postretirement benefit plans. CMS Energy
and Consumers have significant obligations under these plans and hold significant assets in these trusts.
These assets are subject to market fluctuations and will yield uncertain returns, which could fall below
CMS Energy’s and Consumers’ forecasted return rates. A decline in the market value of the assets or a
change in the level of interest rates used to measure the required minimum funding levels could
significantly increase the funding requirements of these obligations. Also, changes in demographics,
including an increased number of retirements or changes in life expectancy assumptions, could
significantly increase the funding requirements of the obligations related to the pension and
postretirement benefit plans.
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Industry/Regulatory Risks
Changes to ROA could have a material adverse effect on CMS Energy’s and Consumers’
businesses.
Michigan law allows electric customers in Consumers’ service territory to buy electric generation service
from alternative electric suppliers in an aggregate amount capped at ten percent of Consumers’ sales, with
certain exceptions. The proportion of Consumers’ electric deliveries under the ROA program and on the
ROA waiting list is over ten percent. Consumers’ rates are regulated by the MPSC, while alternative
electric suppliers charge market-based rates, putting competitive pressure on Consumers’ electric supply.
Groups are advocating for an ROA-like community solar system that allows third parties to sell directly to
customers and offer them a regulated bill credit. If the ROA limit were increased, this new ROA-like
community solar system were allowed, or electric generation service in Michigan were deregulated, it
could have a material adverse effect on CMS Energy and Consumers.
Distributed energy resources could have a material adverse effect on CMS Energy’s and
Consumers’ businesses.
Michigan law allows customers to use distributed energy resources for their electric energy needs. These
distributed energy resources are connected to Consumers’ electric grid. The 2023 Energy Law increases
the cap on distributed generation to ten percent of utilities’ peak loads. It also specifies an inflow and
outflow rate method that must be implemented by the MPSC and provides federal funding for low-
income distributed generation. Recent FERC policy allows many customer-owned behind-the-meter and
grid-connected distributed energy resources to participate in and receive revenue from wholesale
electricity markets. Increased customer use of distributed energy resources could result in a reduction of
Consumers’ electric sales. Third parties’ operations of distributed energy resources could also potentially
have a negative impact on the stability of the grid. An increase in customers’ use of distributed energy
resources, and the rate structure for distributed energy resources customers’ use of Consumers’ system
and Consumers’ purchases of their excess generation, could have a material adverse effect on
CMS Energy and Consumers.
CMS Energy and Consumers are subject to rate regulation, which could have a material adverse
effect on financial results.
CMS Energy and Consumers are subject to rate regulation. Consumers’ electric and gas retail rates are set
by the MPSC and cannot be changed without regulatory authorization. If rate regulators fail to provide
adequate rate relief, it could have a material adverse effect on Consumers or Consumers’ plans for
making significant capital investments. Additionally, increasing rates could result in additional regulatory
scrutiny, regulatory or legislative actions, and increased competitive or political pressures, all of which
could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and
results of operations.
Orders of the MPSC could limit recovery of costs of providing service. These orders could also result in
adverse regulatory treatment of other matters. For example, MPSC orders could prevent or curtail
Consumers from shutting off non-paying customers or could prevent or limit the implementation of an
electric or gas revenue mechanism. Regulators could face competitive or political pressures to avoid or
limit rate increases for a number of reasons, including economic downturn in the state, reliability and
economic justice concerns, or decreased customer base, among others.
FERC authorizes certain subsidiaries of CMS Energy, including Consumers, to sell wholesale electricity
at market-based rates and to provide certain other wholesale electric services at rates and terms subject to
FERC approval. Failure of these subsidiaries to maintain this FERC authority could have a material
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adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.
Electric transmission and natural gas pipeline rates paid by Consumers and other CMS Energy
subsidiaries are also set by FERC, as are the tariff terms governing the participation of Consumers and
other CMS Energy subsidiaries in FERC-regulated wholesale electricity markets operated by regional
transmission organizations and independent system operators such as MISO and PJM. At least one
CMS Energy subsidiary participates in the wholesale electricity markets operated by ERCOT, over which
FERC has limited control.
The various risks associated with the MPSC and FERC regulation of CMS Energy’s and Consumers’
businesses, which include the risk of adverse decisions in any number of rate or regulatory proceedings
before either agency, as well as judicial proceedings challenging any agency decisions, could have a
material adverse effect on CMS Energy and Consumers. Changes to the tariffs or business practice
manuals of certain wholesale market operators such as MISO, PJM, or ERCOT could also have a material
adverse effect on CMS Energy and Consumers.
Utility regulation, state or federal legislation, and compliance could have a material adverse effect
on CMS Energy’s and Consumers’ businesses.
CMS Energy and certain of its subsidiaries, including Consumers, are subject to, or affected by, extensive
utility regulation and state and federal legislation. If it were determined that CMS Energy or Consumers
failed to comply with applicable laws and regulations or with applicable tariff provisions, they could
become subject to fines, penalties, or disallowed costs, or be required to implement additional
compliance, cleanup, or remediation programs, the cost of which could be material. CMS Energy and
Consumers cannot predict the impact of new laws, rules, regulations, principles, or practices by federal or
state agencies or wholesale electricity market operators, or challenges or changes to present laws, rules,
regulations, principles, or practices and the interpretation of any adoption or change. Furthermore, any
state or federal legislation concerning CMS Energy’s or Consumers’ operations could also have a material
adverse effect.
FERC, through NERC and its delegated regional entities, oversees reliability of certain portions of the
electric grid. CMS Energy and Consumers cannot predict the impact of FERC orders or actions of NERC
and its regional entities on electric system reliability. Additionally, national gas pipeline infrastructure has
recently been under scrutiny following disruptions related to extreme weather and cyber incidents. In
2021, the Transportation Security Administration issued two mandatory security directives related to
natural gas pipelines that apply to Consumers. Additional regulation in this area could adversely affect
Consumers’ gas operations.
CMS Energy and Consumers have announced ambitious plans to reduce their impact on climate
change and increase the reliability of their electric distribution system. Achieving these plans
depends on numerous factors, many of which are outside of their control.
Consumers has announced a long-term strategy for delivering clean, reliable, resilient, and affordable
energy, including a plan to end coal use in 2025. The MPSC, FERC, other regulatory authorities, or other
third parties may prohibit, delay, or impair some or all of Consumers’ planned acquisitions of owned or
purchased electric generation capacity. Consumers may be unable to acquire, site, and/or permit some or
all of the generation capacity proposed in its plan. Consumers’ ability to implement its plan may be
affected by environmental regulations, global supply chain disruptions, and changes in the cost,
availability, and supply of generation capacity. While CMS Energy and Consumers continue to advocate
for advances in technologies required to reduce or eliminate greenhouse gases on a cost-effective basis,
such advances are largely outside of CMS Energy’s and Consumers’ control. Advancements in
technology related to items such as battery storage and electric vehicles may not become commercially
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available or economically feasible as projected. Customer programs such as energy efficiency and
demand response may not realize the projected levels of customer participation.
Consumers has also announced its Natural Gas Delivery Plan, a rolling ten-year investment plan to
deliver safe, reliable, clean, and affordable natural gas to customers. This plan includes accelerated
infrastructure replacements, innovative leak detection technology, and process changes to reduce or
eliminate methane emissions. The MPSC, FERC, other regulatory authorities, or other third parties may
prohibit, delay, or impair the Natural Gas Delivery Plan and some or all of the associated capital
investments. Consumers’ ability to implement its plan may be affected by environmental regulations,
global supply chain disruptions, and changes in the cost, availability, and supply of natural gas or the
ability to deliver natural gas to customers. Advancements in technology related to items such as
renewable natural gas may not become commercially available or economically feasible as projected in
Consumers’ plan.
CMS Energy and Consumers could suffer financial loss, reputational damage, litigation, or other negative
repercussions if they are unable to achieve their ambitious plans.
Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business
decisions could negatively impact CMS Energy and Consumers.
CMS Energy and Consumers are required to make judgments regarding the potential tax effects of
various financial transactions and results of operations in order to estimate their obligations to taxing
authorities. The tax obligations include income taxes, real estate taxes, sales and use taxes, employment-
related taxes, and ongoing issues related to these tax matters. The judgments include determining reserves
for potential adverse outcomes regarding tax positions that have been taken and may be subject to
challenge by the IRS and/or other taxing authorities. Unfavorable settlements of any of the issues related
to these reserves or other tax matters at CMS Energy or Consumers could have a material adverse effect.
Additionally, changes in federal, state, or local tax rates or other changes in tax laws could have adverse
impacts.
CMS Energy and its subsidiaries, including Consumers, must comply with the Dodd-Frank Act and
its related regulations.
The Dodd-Frank Act provides for regulation by the Commodity Futures Trading Commission of certain
commodity-related contracts. Although CMS Energy, Consumers, and certain subsidiaries of NorthStar
Clean Energy qualify for an end-user exception from mandatory clearing of commodity-related swaps,
these regulations could affect the ability of these entities to participate in these markets and could add
additional regulatory oversight over their contracting activities.
CMS Energy and Consumers could incur substantial costs to comply with environmental
requirements.
CMS Energy and Consumers are subject to costly and stringent environmental regulations that may
require additional significant capital expenditures for CCR disposal and storage, emission reductions, and
PCB remediation. In addition, regulatory action on PFAS at the state and/or federal level could cause
CMS Energy and Consumers to further test and remediate some sites if PFAS is present at certain levels.
Present and reasonably anticipated state and federal environmental statutes and regulations will continue
to have a material effect on CMS Energy and Consumers.
CMS Energy and Consumers have interests in fossil-fuel-fired power plants, other types of power plants,
and natural gas systems that emit greenhouse gases. Federal, state, and local environmental laws and
rules, as well as international accords and treaties, could require CMS Energy and Consumers to install
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additional equipment for emission controls, undertake heat-rate improvement projects, purchase carbon
emissions allowances, curtail operations, invest in generating capacity with fewer carbon dioxide
emissions, or take other significant steps to manage or lower the emission of greenhouse gases. Similarly,
Consumers could be restricted from constructing natural gas infrastructure due to potential environmental
regulations, which could require more costly alternatives.
The following risks related to climate change, emissions, and environmental regulations could also have a
material adverse impact on CMS Energy and Consumers:
•
•
a change in regulators’ implementation of policy or litigation originated by third parties against
CMS Energy or Consumers due to CMS Energy’s or Consumers’ greenhouse gas or other
emissions or CCR disposal and storage
impairment of CMS Energy’s or Consumers’ reputation due to their greenhouse gas or other
emissions and public perception of their response to potential environmental regulations, rules,
and legislation
• weather that may affect customer demand, company operations, or company infrastructure,
including catastrophic weather-related damage and extreme temperatures; natural disasters such
as severe storms, floods, and droughts; fires; or smoke
implementation of state or federal environmental justice requirements
•
Consumers expects to collect fully from its customers, through the ratemaking process, expenditures
incurred to comply with environmental regulations, but cannot guarantee this outcome. If Consumers
were unable to recover these expenditures from customers in rates, CMS Energy or Consumers could be
required to seek significant additional financing to fund these expenditures.
For additional information regarding compliance with environmental regulations, see Item 1. Business—
CMS Energy and Consumers Environmental Strategy and Compliance and Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Outlook.
CMS Energy’s and Consumers’ businesses could be affected adversely by any delay in meeting
environmental requirements.
A delay or failure by CMS Energy or Consumers to obtain or maintain any necessary environmental
permits or approvals to satisfy any applicable environmental regulatory requirements or install emission
or pollution control equipment could:
prevent the construction of new facilities
prevent the continued operation of and sale of energy from existing facilities
•
•
• modify the way in which a facility is operated
•
•
•
prevent the suspension of operations at existing facilities
prevent the modification of existing facilities
result in significant additional costs, including fines or penalties
CMS Energy and Consumers expect to incur additional substantial costs related to environmental
remediation of former sites.
Consumers expects to incur additional substantial costs related to the remediation of its former MGP sites
and other response activity costs at a number of other former sites, including, but not limited to, sites of
retired coal-fueled electric generating units, under NREPA, RCRA, and CERCLA. Consumers believes
these costs should be recoverable in rates, but cannot guarantee that outcome.
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Business/Operations Risks
There are risks associated with Consumers’ substantial capital investment program planned for the
next five years.
Consumers’ planned investments include the construction or acquisition of electric generation, electric
and gas infrastructure, conversions and expansions, environmental controls, electric grid modernization
technology, and other electric and gas investments to upgrade delivery systems, as well as
decommissioning of older facilities. The success of these capital investments depends on or could be
affected by a variety of factors that include, but are not limited to:
•
•
•
•
•
•
•
•
•
•
•
effective pre-acquisition evaluation of asset values, future operating costs, potential
environmental and other liabilities, and other factors beyond Consumers’ control
effective cost and schedule management of new capital projects
availability of qualified construction personnel, both internal and contracted
changes in commodity and other prices, applicable tariffs, and/or material and equipment
availability
governmental actions
operational performance
changes in environmental, legislative, and regulatory requirements
regulatory cost recovery
inflation of labor rates and material and equipment prices
supply chain disruptions and increased lead times
barriers to accessing key materials for renewable projects (solar, battery, and other key
equipment) created by geopolitical relations
It is possible that adverse events associated with these factors could have a material adverse effect on
Consumers.
CMS Energy and Consumers could be affected adversely by legacy litigation and retained
liabilities.
The agreements that CMS Energy and Consumers enter into for the sale of assets customarily include
provisions whereby they are required to:
•
•
retain specified preexisting liabilities, such as for taxes, pensions, or environmental conditions
indemnify the buyers against specified risks, including the inaccuracy of representations and
warranties that CMS Energy and Consumers make
• make payments to the buyers depending on the outcome of post-closing adjustments, litigation,
audits, or other reviews, including claims resulting from attempts by foreign or domestic
governments to assess taxes on past operations or transactions
Many of these contingent liabilities can remain open for extended periods of time after the sales are
closed. Depending on the extent to which the buyers might ultimately seek to enforce their rights under
these contractual provisions, and the resolution of any disputes concerning them, there could be a material
adverse effect on CMS Energy’s or Consumers’ liquidity, financial condition, and results of operations.
Consumers is exposed to risks related to general economic conditions in its service territories.
Consumers’ electric and gas utility businesses are affected by the economic conditions impacting the
customers they serve. If the Michigan economy becomes sluggish or declines, Consumers could
experience reduced demand for electricity or natural gas that could result in decreased earnings and cash
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flow. In addition, economic conditions in Consumers’ service territory affect its collections of accounts
receivable and levels of lost or stolen gas.
Consumers is exposed to changes in customer usage that could impact financial results.
Technology advances, government incentives and subsidies, and regulatory decisions could increase the
cost effectiveness of customer-owned methods of producing electricity and managing energy use resulting
in reduced load, cross subsidization, and increased costs.
Customers could also reduce their consumption through energy waste reduction programs. Similarly,
customers could also reduce their consumption of natural gas through alternative technologies or fuels or
through electrification.
CMS Energy’s and Consumers’ energy sales and operations are affected by seasonal factors and
varying weather conditions from year to year.
CMS Energy’s and Consumers’ utility operations are seasonal. The consumption of electric energy
typically increases in the summer months, due primarily to the use of air conditioners and other cooling
equipment, while peak demand for natural gas occurs in the winter due to colder temperatures and the
resulting use of natural gas as heating fuel. Accordingly, CMS Energy’s and Consumers’ overall results
may fluctuate substantially on a seasonal basis. Mild temperatures during the summer cooling season and
winter heating season as well as the impact of extreme weather events on Consumers’ system could have
a material adverse effect.
CMS Energy and Consumers are subject to information security risks, risks of unauthorized access
to their systems, and technology failures.
In the regular course of business, CMS Energy and Consumers handle a range of sensitive confidential
security and customer information. In addition, CMS Energy and Consumers operate in a highly regulated
industry that requires the continued operation of sophisticated information and control technology
systems and network infrastructure. Despite implementation of security measures, technology systems,
including disaster recovery and backup systems, are vulnerable to failure, cyber crime, unauthorized
access, and being disabled. These events could impact the reliability of electric generation and electric
and gas delivery and also subject CMS Energy and Consumers to financial harm. Cyber crime, which
includes the use of malware, ransomware, computer viruses, and other means for disruption or
unauthorized access against companies, including CMS Energy and Consumers, is increasing in
frequency, scope, and potential impact. While CMS Energy and Consumers have not been subject to
cyber incidents that have had a material impact on their operations to date, their security measures in
place may be insufficient to prevent a major cyber incident in the future. If technology systems, including
disaster recovery and backup systems, were to fail or be breached, CMS Energy and Consumers might not
be able to fulfill critical business functions, and sensitive confidential and proprietary data could be
compromised. In addition, because CMS Energy’s and Consumers’ generation, transmission, and
distribution systems are part of an interconnected system, a disruption caused by a cyber incident at
another utility, electric generator, system operator, or commodity supplier could also adversely affect
CMS Energy or Consumers.
A variety of technological tools and systems, including both company-owned information technology and
technological services provided by outside parties, support critical functions. The failure of these
technologies, including backup systems, or the inability of CMS Energy and Consumers to have these
technologies supported, updated, expanded, or integrated into other technologies, could hinder their
business operations.
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CMS Energy’s and Consumers’ businesses have liability risks.
Consumers’ electric and gas delivery systems, power plants, gas infrastructure including storage facilities,
wind energy or solar equipment, energy products, vehicle fleets and equipment, or other assets; the
independent power plants or other assets and equipment owned in whole or in part by CMS Energy; or
CMS Energy or Consumers employees could be involved in incidents, failures, or accidents that result in
injury, loss of life, or property loss to customers, employees, or the public. Although CMS Energy and
Consumers have insurance coverage for many potential incidents (subject to deductibles, limitations, and
self-insurance amounts that could be material), depending upon the nature or severity of any incident,
failure, or accident, CMS Energy or Consumers could suffer financial loss, reputational damage, and
negative repercussions from regulatory agencies or other public authorities.
CMS Energy and Consumers are subject to risks that are beyond their control, including but not
limited to natural disasters, civil unrest, terrorist attacks and related acts of war, cyber incidents,
vandalism, and other catastrophic events.
Natural disasters, severe weather, extreme temperatures, fires, smoke, flooding, wars, terrorist acts, civil
unrest, vandalism, theft, cyber incidents, pandemics, and other catastrophic events could result in severe
damage to CMS Energy’s and Consumers’ assets beyond what could be recovered through insurance
policies (which are subject to deductibles, limitations, and self-insurance amounts that could be material),
could require CMS Energy and Consumers to incur significant upfront costs, and could severely disrupt
operations, resulting in loss of service to customers. There is also a risk that regulators could, after the
fact, conclude that Consumers’ preparedness or response to such an event was inadequate and take
adverse actions as a result.
Energy risk management strategies might not be effective in managing fuel and electricity pricing
risks, which could result in unanticipated liabilities to CMS Energy and Consumers or increased
volatility in their earnings.
CMS Energy and Consumers are exposed to changes in market prices for commodities including, but not
limited to, natural gas, coal, electric capacity, electric energy, emission allowances, gasoline, diesel fuel,
and RECs. CMS Energy and Consumers manage commodity price risk using established policies and
procedures, and they may use various contracts to manage this risk, including swaps, options, futures, and
forward contracts. No assurance can be made that these strategies will be successful in managing
CMS Energy’s and Consumers’ risk or that they will not result in net liabilities to CMS Energy or
Consumers as a result of future volatility.
A substantial portion of Consumers’ operating expenses for its electric generating plants and vehicle fleet
consists of the costs of obtaining these commodities. The contracts associated with Consumers’ fuel for
electric generation and purchased power are executed in conjunction with the PSCR mechanism, which is
designed to allow Consumers to recover prudently incurred costs associated with its positions in these
commodities. If the MPSC determined that any of these contracts or related contracting policies were
imprudent, recovery of these costs could be disallowed.
Natural gas prices in particular have been historically volatile. Consumers routinely enters into contracts
for natural gas to mitigate exposure to the risks of demand, market effects of weather, and changes in
commodity prices associated with the gas distribution business. These contracts are executed in
conjunction with the GCR mechanism, which is designed to allow Consumers to recover prudently
incurred costs associated with its natural gas positions. If the MPSC determined that any of these
contracts or related contracting policies were imprudent, recovery of these costs could be disallowed.
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CMS Energy and Consumers do not always hedge any or all of the exposure of their operations from
commodity price volatility. Furthermore, the ability to hedge exposure to commodity price volatility
depends on liquid commodity markets. As a result, to the extent the commodity markets are illiquid,
CMS Energy and Consumers might not be able to execute their risk management strategies, which could
result in larger unhedged positions than preferred at a given time. To the extent that unhedged positions
exist, fluctuating commodity prices could have a negative effect on CMS Energy and Consumers.
Changes in laws that limit CMS Energy’s and Consumers’ ability to hedge could also have a negative
effect on CMS Energy and Consumers.
Consumers might not be able to obtain an adequate supply of natural gas or coal, which could limit
its ability to operate its electric generation facilities or serve its natural gas customers.
Consumers has natural gas and coal supply and transportation contracts in place for the natural gas and
coal it requires for its electric generating capacity. Consumers also has interstate transportation and
supply agreements in place to facilitate delivery of natural gas to its customers. Apart from the contractual
and monetary remedies available to Consumers in the event of a counterparty’s failure to perform under
any of these contracts, there can be no assurances that the counterparties to these contracts will fulfill their
obligations to provide natural gas or coal to Consumers. The counterparties under the agreements could
experience financial or operational problems that inhibit their ability to fulfill their obligations to
Consumers. In addition, counterparties under these contracts might not be required to supply natural gas
or coal to Consumers under certain circumstances, such as in the event of a natural disaster or severe
weather.
If Consumers were unable to obtain its supply requirements, it could be required to purchase natural gas
or coal at higher prices, implement its natural gas curtailment program filed with the MPSC, or purchase
replacement power at higher prices.
Unplanned outages or maintenance could be costly for CMS Energy or Consumers.
Unforeseen outages or maintenance of the electric and gas delivery systems, power plants, gas
infrastructure including storage facilities and compression stations, wind energy or solar equipment, and
energy products owned in whole or in part by CMS Energy or Consumers may be required for many
reasons. When unplanned outages occur, CMS Energy and Consumers will not only incur unexpected
maintenance expenses, but may also have to make spot market purchases of electric and gas commodities
that may exceed CMS Energy’s or Consumers’ expected cost of generation or gas supply, be forced to
curtail services, or retire a given asset if the cost or timing of the maintenance is not reasonable and
prudent. Unplanned generator outages could reduce the capacity credit CMS Energy or Consumers
receives from MISO and could cause CMS Energy or Consumers to incur additional capacity costs in
future years.
General Risk Factors
CMS Energy and Consumers are exposed to counterparty risk.
Adverse economic conditions or financial difficulties experienced by counterparties with whom
CMS Energy and Consumers do business could impair the ability of these counterparties to pay for
CMS Energy’s and Consumers’ services and/or fulfill their contractual obligations, including
performance and payment of damages. CMS Energy and Consumers depend on these counterparties to
remit payments and perform contracted services in a timely and adequate fashion. Any delay or default in
payment or performance, including inadequate performance, of contractual obligations could have a
material adverse effect on CMS Energy and Consumers.
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Volatility and disruptions in capital and credit markets could have a negative impact on CMS Energy’s
and Consumers’ lenders, vendors, contractors, suppliers, customers, and other counterparties, causing
them to fail to meet their obligations.
CMS Energy and Consumers are exposed to significant reputational risks.
CMS Energy and Consumers could suffer negative impacts to their reputations as a result of operational
incidents, violations of corporate policies, regulatory violations, inappropriate use of social media, or
other events. Reputational damage could have a material adverse effect and could result in negative
customer perception and increased regulatory oversight.
A work interruption or other union actions could adversely affect Consumers.
At December 31, 2023, unions represent 45 percent of Consumers’ employees. Consumers’ union
agreements expire in 2025. If these employees were to engage in a strike, work stoppage, or other
slowdown, Consumers could experience a significant disruption in its operations and higher ongoing
labor costs.
Failure to attract and retain an appropriately qualified workforce could adversely impact
CMS Energy’s and Consumers’ results of operations.
In some areas, competition for skilled employees is high and if CMS Energy and Consumers were unable
to match skill sets to future needs, they could encounter operating challenges and increased costs. These
challenges could include a lack of resources, loss of knowledge, and delays in skill development.
Additionally, higher costs could result from the use of contractors to replace employees, loss of
productivity, and safety incidents. Failing to train replacement employees adequately and to transfer
internal knowledge and expertise could adversely affect CMS Energy’s and Consumers’ ability to manage
and operate their businesses.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Enterprise Risk Management: CMS Energy and Consumers manage security risks, including
cybersecurity risks, through a robust enterprise risk management program that includes people, processes,
technology, and governance structures. The enterprise risk management program identifies risks that may
significantly impact the business and informs the companies’ risk-mitigation strategies. The enterprise
risk management program is reviewed with the Board at least annually.
Cybersecurity Program: CMS Energy’s and Consumers’ security function, led by the Executive
Director of Security, is an integrated organization accountable for cyber and physical security and is
subject to various state, federal, and industry cybersecurity, physical security, and privacy regulations.
Their cybersecurity program is responsible for assessing, identifying, and managing risks from
cybersecurity threats using industry frameworks, as well as best practices developed by government and
industry partners. All employees and contractors are required to complete annual trainings on a variety of
security-related topics. Additionally, the companies continuously upgrade technological investments
designed to prevent, detect, and respond to attacks. The companies’ electric, natural gas, and corporate
systems each follow standards, controls, and requirements designed to maintain compliance with
applicable regulations and standards, such as MPSC, NERC critical infrastructure protection, and
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payment card industry regulations. Technology projects and third-party service providers are reviewed for
adherence to cybersecurity requirements.
CMS Energy’s and Consumers’ cybersecurity program focuses on finding and remediating vulnerabilities
in their systems. The companies use third-party firms for penetration testing, audits, and assessments, and
conduct exercises to practice their response to simulated events. The companies also have a dedicated,
proactive function focused fully on monitoring CMS Energy’s and Consumers’ systems and responding
when issues occur. This includes regular information sharing with industry partners, peer utilities, and
state and federal partners. The companies’ incident response plan outlines the individuals responsible, the
methods employed, and the timeline for notifying state and federal governmental agencies. The
companies retain a third-party cybersecurity firm to assist with potentially significant incidents and have
invested in cybersecurity insurance to offset costs incurred from any such incidents. To manage
cybersecurity risks associated with the companies’ use of third-party service providers, the companies
incorporate security requirements into contracts, when deemed applicable, and pursue third-party security
certifications for vendors with a higher risk profile.
CMS Energy and Consumers have experienced no material cybersecurity incidents; however, future
cybersecurity incidents could materially affect their business strategy, results of operations, or financial
condition. For additional details regarding these and other uncertainties, see Item 1A. Risk Factors.
Management’s Role: The Executive Director of Security has 25 years of information technology and
security experience. To enhance governance, the Executive Director of Security reports to the Senior Vice
President and Chief Customer Officer, who has extensive experience overseeing cybersecurity and has
had executive oversight of the security function for nine years at CMS Energy and Consumers. Prior to
joining CMS Energy, this officer served as Vice President of Business Technology at Pacific
Gas & Electric Company, a non-affiliated company. The Executive Director of Security is responsible for
informing the CEO and other members of senior management, as necessary, about cybersecurity
incidents, covering prevention, detection, mitigation, and remediation efforts as they are detected by the
Executive Director’s team. Cyber incidents are managed using the companies’ standard process for
critical events. In the event of such incidents, the Executive Director of Security communicates and
collaborates with the officers of the companies and subject matter experts to address business continuity,
contingency, and recovery plans. Senior management will notify the Board, including the Audit
Committee, of any significant cybersecurity incidents.
Board Oversight: As part of the Board’s risk oversight process, senior management meets with the
Board or Audit Committee at least twice annually to provide updates on and discuss cybersecurity. Such
updates include a review of the companies’ cybersecurity strategy, a scan of the threat landscape, and
recent performance. Additionally, cybersecurity risks are included in the Audit Committee’s risk
oversight functions, which focus on operating and financial activities that could impact the companies’
financial and other disclosure reporting. The Audit Committee’s oversight involves reviewing and
approving policies on risk assessment, controls, and accounting risk exposure. The Audit Committee also
reviews internal audit reports regarding cybersecurity processes, and receives updates that focus on
CMS Energy’s and Consumers’ cybersecurity program, mitigation of cybersecurity risks, and assessments
by third-party experts. Of note, two members of the Board have extensive industry experience in
cybersecurity and are on CMS Energy’s and Consumers’ Audit Committee.
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Item 2.
Properties
Descriptions of CMS Energy’s and Consumers’ properties are found in the following sections of Item 1.
Business, all of which are incorporated by reference in this Item 2:
• General—CMS Energy
• General—Consumers
• Business Segments—Consumers Electric Utility—Electric Utility Properties
• Business Segments—Consumers Electric Utility—Electric Utility Generation and Supply Mix
• Business Segments—Consumers Gas Utility—Gas Utility Properties
• Business Segments—NorthStar Clean Energy—Non-utility Operations and Investments—
Independent Power Production
Item 3. Legal Proceedings
For information regarding CMS Energy’s and Consumers’ significant pending administrative and judicial
proceedings involving regulatory, operating, transactional, environmental, and other matters, see Item 8.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2,
Regulatory Matters and Note 3, Contingencies and Commitments.
CMS Energy, Consumers, and certain of their affiliates are also parties to routine lawsuits and
administrative proceedings incidental to their businesses involving, for example, claims for personal
injury and property damage, contractual matters, various taxes, and rates and licensing.
Item 4. Mine Safety Disclosures
Not applicable.
Part II
Item 5. Market For Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
CMS Energy
CMS Energy’s common stock is traded on the New York Stock Exchange under the symbol CMS. At
January 12, 2024, the number of registered holders of CMS Energy’s common stock totaled 25,328, based
on the number of record holders.
For additional information regarding securities authorized for issuance under equity compensation plans,
see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial
Statements—Note 11, Stock-based Compensation and Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters. For additional information regarding
dividends and dividend restrictions, see Item 8. Financial Statements and Supplementary Data—Notes to
the Consolidated Financial Statements—Note 4, Financings and Capitalization.
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Comparison of Five-year Cumulative Total Return
Company/Index
CMS Energy
S&P 500 Index
S&P 400 Utilities Index
Five-Year Cumulative Total Return
$
2018
100
100
100
$
2019
130
131
114
$
2020
130
156
99
$
2021
142
200
118
$
2022
142
164
118
$
2023
135
207
102
These cumulative total returns assume reinvestments of dividends.
Consumers
Consumers’ common stock is privately held by its parent, CMS Energy, and does not trade in the public
market.
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CMS EnergyS&P 500 IndexS&P 400 Utilities Index201820192020202120222023$100$120$140$160$180$200
Table of Contents
Issuer Repurchases of Equity Securities
CMS Energy repurchases common stock to satisfy the minimum statutory income tax withholding
obligation for common shares that have vested under the PISP. The value of shares repurchased is based
on the market price on the vesting date. Presented in the following table are CMS Energy’s repurchases of
common stock for the three months ended December 31, 2023:
Period
October 1, 2023 to October 31, 2023
November 1, 2023 to November 30, 2023
December 1, 2023 to December 31, 2023
Total
Total Number
of Shares
Purchased
Average Price
Paid per Share
730
187
2,042
2,959
$
$
52.87
56.51
58.37
56.90
As of December 31, 2023, CMS Energy has no other publicly announced plans or programs that permit
the repurchase of equity securities.
Unregistered Sales of Equity Securities
None.
Item 6. Reserved
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is a
combined report of CMS Energy and Consumers.
Executive Overview
CMS Energy is an energy company operating primarily in Michigan. It is the parent holding company of
several subsidiaries, including Consumers, an electric and gas utility, and NorthStar Clean Energy,
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 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
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segments: electric utility and gas utility. CMS Energy’s and Consumers’ businesses are affected primarily
by:
•
•
•
• weather
•
•
•
regulation and regulatory matters
state and federal legislation
economic conditions
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,
the investment community, and other stakeholders, and it reflects the broader societal impacts of
CMS Energy’s and Consumers’ activities.
CMS Energy’s 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. Over the last ten years, Consumers’ OSHA recordable incident rate has decreased by
20 percent.
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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.
In September 2023, Consumers filed its Reliability Roadmap, an update to its previous Electric
Distribution Infrastructure Investment Plan filed in 2021, with the MPSC. The Reliability Roadmap
outlines a five-year strategy to improve Consumers’ electric distribution system and the reliability of the
grid. The plan proposes the following spending for projects designed to reduce the number and duration
of power outages to customers through investment in infrastructure upgrades, forestry management, and
grid modernization:
•
capital expenditures of $7 billion over the next five years; this amount is $3 billion higher than
proposed in the previous plan
• maintenance and operating spending of $1.7 billion over the next five years, reflecting an increase
of $300 million over the previous plan
Consumers will request rate recovery of these proposed expenditures in future electric rate cases.
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
tax planning
cost-effective financing
•
•
•
•
•
•
•
• workforce productivity enhancements
While CMS Energy and Consumers have experienced some supply chain disruptions and inflationary
pressures, they have 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
and federal environmental, health, and safety laws and regulations. Management considers climate change
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 reduce
their carbon footprint from owned generation. CMS Energy, including Consumers, has decreased its
combined percentage of electric supply (self-generated and purchased) from coal by 25 percentage points
since 2015. Additionally, as a result of actions already taken through 2023, initial measurement data
indicates Consumers has:
•
•
•
reduced carbon dioxide emissions by nearly 40 percent since 2005
reduced methane emissions by more than 25 percent since 2012
reduced the volume of water used to generate electricity by more than 50 percent since 2012
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•
•
reduced landfill waste disposal by more than 1.8 million tons since 1992
enhanced, restored, or protected more than 8,800 acres of land since 2017
Since 2005, Consumers has reduced its sulfur dioxide and particulate matter emissions by more than
95 percent and its NOx emissions by nearly 88 percent. Consumers began tracking mercury emissions in
2007; since that time, it has reduced such emissions by nearly 93 percent.
Presented in the following illustration are Consumers’ reductions in these emissions:
In November 2023, Michigan enacted the 2023 Energy Law, which among other things:
•
•
•
•
raises the renewable energy standard from the present 15-percent requirement to 50 percent by
2030 and 60 percent by 2035; renewable energy generated anywhere within MISO may be
applied to meeting this standard, with certain limitations
sets a clean energy standard of 80 percent by 2035 and 100 percent by 2040; low- or zero-carbon
emitting resources, such as nuclear generation and natural gas generation coupled with carbon
capture, are considered clean energy sources under this standard
enhances existing incentives for energy efficiency programs and returns earned on competitively
bid PPAs
expands the statutory cap on distributed generation resources to ten percent
Consumers is required to file updates to its amended renewable energy plan before or in 2025 and its
Clean Energy Plan before or in 2027. Together, these updated plans will outline a path to meeting the
requirements of the 2023 Energy Law by focusing on increasing the generation of renewable energy,
deploying energy storage, helping customers use less energy, and offering demand response programs to
reduce demand during critical peak times.
57
SO2, NOx, and PM Emissions (Tons)Mercury Emissions (Lbs)Sulfur dioxide (SO2)Nitrogen oxide (NOx)MercuryParticulate matter (PM)2005200820112014201720202023015,00030,00045,00060,00075,00090,000105,00002004006008001,000 Table of Contents
Consumers’ Clean Energy Plan details its strategy to meet customers’ long-term energy needs and was
most recently revised and approved by the MPSC in June 2022 under Michigan’s integrated resource
planning process. The Clean Energy Plan 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 the Covert Generating Station, a natural gas-fueled generating facility with 1,200 MW
of nameplate capacity, allowing Consumers to continue to provide controllable sources of
electricity to customers; this purchase was completed in May 2023
solicit up to 700 MW of capacity through PPAs from sources able 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 Clean Energy Plan, Consumers earns a return equal to its pre-tax weighted-average cost of
capital on permanent capital structure on payments made under new competitively bid PPAs with
non-affiliated entities approved by the MPSC.
The Clean Energy Plan will allow Consumers to exceed its breakthrough goal of at least 50-percent
combined renewable energy and energy waste reduction by 2030.
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Presented in the following illustration is Consumers’ 2021 capacity portfolio and its future capacity
portfolio under its Clean Energy Plan. This illustration includes the effects of purchased capacity and
customer programs and uses the nameplate capacity for all energy sources:
1 Does not include RECs.
2
3
Includes energy waste reduction, demand response, and conservation voltage reduction programs.
These amounts and fuel sources will vary and are dependent on a one-time competitive solicitation to
acquire up to 700 MW of capacity through PPAs from sources able to deliver to Michigan’s Lower
Peninsula beginning in 2025.
In addition to Consumers’ plan to eliminate its use of coal-fueled generation in 2025, CMS Energy and
Consumers have set the net-zero emissions goals discussed below.
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, from 2012
baseline levels, 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. To date, Consumers has reduced methane
emissions by more than 25 percent.
Net-zero carbon emissions from electric business by 2040: This goal includes not only emissions from
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.
59
11%10%9%8%18%26%31%19%21%10%7%6%3%3%11%9%9%11%11%12%13%14%15%15%14%30%43%50%61%Renewable energy¹Customer programs²Energy storageOne-time solicitation³Natural gasCoalNuclearOil/gas20212025203020352040 Table of Contents
Net-zero greenhouse gas emissions target for the entire business by 2050: This goal incorporates
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 the adoption of cost-effective emerging technologies once proven and
commercially available.
Additionally, to advance its environmental stewardship in Michigan and to minimize the impact of future
regulations, Consumers set the following targets in 2022:
•
•
•
to enhance, restore, or protect 6,500 acres of land by 2026; through 2023, Consumers enhanced,
restored, or protected more than 2,700 acres of land
to reduce water usage by 1.5 billion gallons by 2026; through 2023, Consumers reduced water
usage by more than 1.4 billion gallons
to increase the rate of waste diverted from landfills (through waste reduction, recycling, and
reuse) to 90 percent through 2023 from a baseline of 88 percent in 2021; during 2023,
Consumers’ rate of waste diverted from landfills was 91 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 attract and retain talent, and to reinvest in the communities they
serve.
In 2023, CMS Energy’s net income available to common stockholders was $877 million, and diluted EPS
were $3.01. This compares with net income available to common stockholders of $827 million and
diluted EPS of $2.85 in 2022. In 2023, gas and electric rate increases, operational cost performance, and
gains on the extinguishment of debt were offset partially by lower gas and electric sales due primarily to
unfavorable weather, higher service restoration costs attributable to storms, and higher interest charges. 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 compared to 2023. This outlook reflects the effects of energy waste reduction programs
offset 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
2023, CMS Energy met all requirements for inclusion in the MSCI ESG Leaders Indexes; these indexes
are designed to represent the performance of companies that have high environmental, social, and
governance ratings relative to their sector peers. Additionally, Consumers:
• was selected to receive a $100 million grant from the U.S. Department of Energy to fund
investments in its electric distribution system, improving the reliability of Michigan’s electric
grid
participated in the state’s economic development efforts that have resulted in commitments by
large third-party manufacturers to construct facilities for electric vehicle batteries and battery
components in Michigan
announced plans for an 85-MW solar array to be constructed at the former D.E. Karn coal-
generating facilities, which were retired earlier in 2023
grew its voluntary large customer renewable energy program to approximately 365 MW
opened a state-of-the-art natural gas training facility in Flint, Michigan that will facilitate
employee training that is critical to keeping workers, customers, and the public safe
announced plans to install more than 120 automatic transfer reclosers to improve electric
reliability and help prevent power outages
completed the first phase of its Mid-Michigan Pipeline Project, part of Consumers’ commitment
to providing safe, reliable, and affordable natural gas to Michigan homes and businesses
announced new efforts to install electric vehicle chargers at apartment buildings, condominiums,
and overnight community locations across the state of Michigan
•
•
•
•
•
•
•
• was one of 15 recipients of the U.S. Department of Defense’s 2023 Secretary of Defense
Employer Support Freedom Award, an honor to employers for support of National Guard and
Reserve employees
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: Over the next five years, Consumers expects to make significant expenditures on
infrastructure upgrades, replacements, and 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, which is subject to
approval through general rate case proceedings, is expected to result in annual rate-base growth of more
than seven percent. This rate-base growth, together with cost-control measures, should allow Consumers
to maintain affordable customer prices.
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Presented in the following illustration are Consumers’ planned capital expenditures through 2028 of
$17.0 billion:
Of this amount, Consumers plans to spend $13.6 billion over the next five years primarily to maintain and
upgrade its electric distribution systems and gas infrastructure in order to enhance safety and reliability,
improve customer satisfaction, reduce energy waste on those systems, and facilitate its clean energy
transformation. Electric distribution and other projects comprise $7.3 billion primarily to strengthen
circuits and substations, replace poles, and interconnect clean energy resources. The gas infrastructure
projects comprise $6.3 billion to sustain deliverability, enhance pipeline integrity and safety, and reduce
methane emissions. Consumers also expects to spend $3.4 billion on clean generation, which includes
investments in wind, solar, and hydroelectric generation 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.
2023 Gas Rate Case: In December 2023, Consumers filed an application with the MPSC seeking an
annual rate increase of $136 million based on a 10.25-percent authorized return on equity for the
projected 12-month period ending September 30, 2025. The filing requests authority to recover new
infrastructure investment and related costs that are expected to allow Consumers to continue to provide
safe, reliable, affordable, and increasingly cleaner natural gas service.
2022 Gas Rate Case: In August 2023, the MPSC approved a settlement agreement authorizing an annual
rate increase of $95 million, based on a 9.9-percent authorized return on equity, effective
October 1, 2023. The MPSC also authorized the use of a cost deferral mechanism that will allow
Consumers to defer for future recovery or refund pension and OPEB expense above or below the amounts
used to set existing rates.
62
Electric distribution and other $7.3 billionGas infrastructure$6.3 billionClean generation$3.4 billion Table of Contents
2023 Electric Rate Case: In May 2023, Consumers filed an application with the MPSC seeking a rate
increase of $216 million, made up of two components. First, Consumers requested a $207 million annual
rate increase, based on an authorized return on equity of 10.25 percent for the projected 12-month period
ending February 28, 2025. The filing requested authority to recover costs related to new infrastructure
investment primarily in distribution system reliability and 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. In
September 2023, Consumers revised its requested increase to $169 million.
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. The new rates became effective January 20, 2023.
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
Years Ended December 31
Net Income Available to Common Stockholders
Basic Earnings Per Average Common Share
Diluted Earnings Per Average Common Share
Years Ended December 31
Electric utility
Gas utility
NorthStar Clean Energy
Corporate interest and other
Net Income Available to Common Stockholders
In Millions, Except Per Share Amounts
2023
2022
Change
$
877
$
827
$
50
$ 3.01
$ 2.85
$ 0.16
$ 3.01
$ 2.85
$ 0.16
In Millions
2023
2022
Change
$
$
550
315
67
(55)
877
$
$
567
378
34
(152)
827
$
$
(17)
(63)
33
97
50
For a summary of net income available to common stockholders for 2022 versus 2021, as well as detailed
changes by reportable segment, see Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Results of Operations, in the Form 10-K for the fiscal year ended
December 31, 2022, filed February 9, 2023.
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Amounts in the following tables are presented pre-tax, with the exception of income tax changes.
Presented in the following table is a summary of changes to net income available to common stockholders
for 2023 versus 2022:
Year Ended December 31, 2022
Reasons for the change
Consumers electric utility and gas utility
Electric sales
Gas sales
Electric rate increase
Gas rate increase
Lower other maintenance and operating expenses
Absence of 2022 voluntary revenue refunds, including one-time bill credit
commitment1
Higher other income, net of expenses
Higher interest charges
Higher service restoration costs
Higher depreciation and amortization
Higher property taxes, reflecting higher capital spending, and other
2023 voluntary separation program expenses
Higher income tax expense
NorthStar Clean Energy
Corporate interest and other
Year Ended December 31, 2023
1
See Note 2, Regulatory Matters.
$
(103)
(130)
165
151
108
37
21
(112)
(75)
(48)
(37)
(33)
(24)
In Millions
$
827
$
(80)
33
97
$
877
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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 2023 versus 2022:
Year Ended December 31, 2022
Reasons for the change
Electric deliveries1 and rate increases
Rate increase, including return on higher renewable capital spending
$
165
Absence of 2022 voluntary revenue refunds, including one-time bill credit
commitment2
Lower revenue due primarily to unfavorable weather and sales mix
Lower other revenues
Maintenance and other operating expenses
Lower corporate and general operating expenses
Lower distribution and generation expenses
Higher service restoration costs due primarily to increased storm activity
2023 voluntary separation program expenses
Lower mutual insurance distribution
Higher vegetation management costs
Higher other maintenance and operating expenses
Depreciation and amortization
Increased plant in service, reflecting higher capital spending
General taxes
Higher property taxes, reflecting higher capital spending, and other
Other income, net of expenses
Higher interest income
Higher non-operating retirement benefits expenses
Higher other income, net of expenses
Interest charges
Income taxes
Lower electric utility pre-tax earnings
Deferred tax liability reversal3
Lower income tax expense due to excess deferred income taxes
Lower other income taxes
Year Ended December 31, 2023
29
(101)
(3)
37
35
(75)
(20)
(9)
(7)
(7)
18
(9)
15
16
10
8
8
1
2
3
Deliveries to end-use customers were 36.3 billion kWh in 2023 and 37.3 billion kWh in 2022.
See Note 2, Regulatory Matters.
See Note 12, Income Taxes.
66
In Millions
$
567
$
90
(46)
(40)
(20)
24
(67)
42
550
$
Table of Contents
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 2023 versus 2022:
Year Ended December 31, 2022
Reasons for the change
Gas deliveries1 and rate increases
Rate increase
Absence of 2022 voluntary revenue refund2
Lower revenue due primarily to unfavorable weather
Higher other revenues
Maintenance and other operating expenses
Lower distribution, transmission, and compression expenses
Lower corporate and general operating expenses
Absence of 2022 Ray Compressor Station impairment
2023 voluntary separation program expenses
Lower other maintenance and operating expenses
Depreciation and amortization
Increased plant in service, reflecting higher capital spending
General taxes
Higher property taxes, reflecting higher capital spending, and other
Other income, net of expenses
Higher non-operating retirement benefits expenses
Higher other income, net of expenses
Interest charges
Income taxes
Absence of 2022 accelerated tax amortizations3
Deferred tax liability reversal3
Lower other income taxes
Year Ended December 31, 2023
1
2
3
Deliveries to end-use customers were 282 bcf in 2023 and 315 bcf in 2022.
See Note 2, Regulatory Matters.
See Note 12, Income Taxes.
In Millions
$
378
$
151
8
(134)
9
$
34
26
14
10
(13)
5
(15)
12
(71)
4
1
42
(8)
(17)
(3)
(45)
(66)
315
$
67
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NorthStar Clean Energy Results of Operations
Presented in the following table are the detailed changes to NorthStar Clean Energy’s net income
available to common stockholders for 2023 versus 2022:
Year Ended December 31, 2022
Reason for the change
Higher earnings from renewable projects due primarily to Newport Solar achieving
commercial operations1
Higher renewable energy tax credits
Other income tax expense
Lower operating earnings, primarily at DIG
Year Ended December 31, 2023
1
See Note 18, Variable Interest Entities.
In Millions
$
34
$
46
7
(10)
(10)
$
67
Corporate Interest and Other Results of Operations
Presented in the following table are the detailed changes to corporate interest and other results for 2023
versus 2022:
Year Ended December 31, 2022
Reasons for the change
Gain on extinguishment of debt1
Higher interest earnings and other
Higher income tax expense due to higher pre-tax earnings
Higher interest charges
Lower discontinued operations
Year Ended December 31, 2023
1
See Note 4, Financings and Capitalization.
Cash Position, Investing, and Financing
In Millions
$
(152)
$
131
14
(26)
(19)
(3)
$
(55)
At December 31, 2023, CMS Energy had $248 million of consolidated cash and cash equivalents, which
included $21 million of restricted cash and cash equivalents. At December 31, 2023, Consumers had
$56 million of consolidated cash and cash equivalents, which included $21 million of restricted cash and
cash equivalents.
For specific components of net cash provided by operating activities, net cash used in investing activities,
and net cash provided by (used in) financing activities for 2022 versus 2021, see Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Cash Position, Investing, and
Financing, in the Form 10-K for the fiscal year ended December 31, 2022, filed February 9, 2023.
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Operating Activities
Presented in the following table are specific components of net cash provided by operating activities for
2023 versus 2022:
CMS Energy, including Consumers
Year Ended December 31, 2022
Reasons for the change
Lower net income
Non-cash transactions1
Favorable impact of changes in core working capital,2 due primarily to higher collections, higher
prices on gas sold to customers, and lower prices on gas purchased in 2023
Favorable impact of changes in other assets and liabilities, due primarily to recovery in 2023 of
2022 power supply costs3
Year Ended December 31, 2023
Consumers
Year Ended December 31, 2022
Reasons for the change
Lower net income
Non-cash transactions1
Favorable impact of changes in core working capital,2 due primarily to higher collections, higher
prices on gas sold to customers, and lower prices on gas purchased in 2023
Favorable impact of changes in other assets and liabilities, due primarily to recovery in 2023 of
2022 power supply costs3
Year Ended December 31, 2023
In Millions
$
855
$
(5)
(70)
1,413
116
$ 2,309
$
994
$
(78)
19
1,394
101
$ 2,430
1
2
3
Non-cash transactions comprise depreciation and amortization, changes in deferred income taxes and
investment tax credits, bad debt expense, and other non-cash operating activities and reconciling
adjustments.
Core working capital comprises accounts receivable, accrued revenue, inventories, accounts payable, and
accrued rate refunds.
For information regarding the underrecovery of power supply costs, see Note 2, Regulatory Matters.
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Investing Activities
Presented in the following table are specific components of net cash used in investing activities for 2023
versus 2022:
CMS Energy, including Consumers
Year Ended December 31, 2022
Reasons for the change
Higher capital expenditures
Purchase of Covert Generating Station1
Other investing activities, primarily higher costs to retire property and lower proceeds from the sale
of assets
Year Ended December 31, 2023
Consumers
Year Ended December 31, 2022
Reasons for the change
Higher capital expenditures
Purchase of Covert Generating Station1
Other investing activities, primarily higher costs to retire property and lower proceeds from the sale
of assets
Year Ended December 31, 2023
1
See Note 7, Plant, Property, and Equipment.
In Millions
$ (2,476)
$
(33)
(812)
(65)
$ (3,386)
$ (2,344)
$
(9)
(812)
(36)
$ (3,201)
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Financing Activities
Presented in the following table are specific components of net cash provided by financing activities for
2023 versus 2022:
CMS Energy, including Consumers
Year Ended December 31, 2022
Reasons for the change
Higher debt issuances
Higher debt retirements
Higher borrowings of notes payable
Higher issuances of common stock
Higher payments of dividends on common stock
Higher proceeds from sales of membership interests in VIEs to tax equity investors1
Higher contributions from noncontrolling interest
Other financing activities, primarily absence of a payment of a long-term contract liability, offset
partially by higher debt issuance costs
Year Ended December 31, 2023
Consumers
Year Ended December 31, 2022
Reasons for the change
Higher debt issuances
Higher debt retirements
Higher borrowings of notes payable
Higher borrowings from CMS Energy
Lower stockholder contribution from CMS Energy
Lower payments of dividends on common stock
Other financing activities
Year Ended December 31, 2023
1
See Note 18, Variable Interest Entities.
Capital Resources and Liquidity
In Millions
$ 1,327
$ 1,652
(2,026)
53
123
(35)
37
4
8
$ 1,143
$ 1,366
$
867
(1,626)
53
242
(210)
74
1
$
767
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 Item 8.
Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 4,
Financings and Capitalization—Dividend Restrictions. During the year ended December 31, 2023,
Consumers paid $695 million in dividends on its common stock to CMS Energy.
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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.
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 January 2024, Consumers issued $600 million of first mortgage bonds that mature in May 2029 and
bear interest at a rate of 4.600 percent. The proceeds of the bonds will be used for general corporate
purposes.
Also in January 2024, CMS Energy retired $250 million of its senior notes bearing an interest rate of
3.875 percent and an original maturity date of March 2024.
In 2023, 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 $1 billion in privately negotiated transactions, in
“at the market” offerings, or through forward sales transactions. There have been no sales of securities
under this program.
CMS Energy entered into forward sales transactions, under its previous equity offering program, that it
may either settle physically by issuing shares of its common stock at the then-applicable forward sale
price specified by the agreement or settle net by delivering or receiving 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 December 31, 2023, these contracts had an
aggregate sales price of $265 million, maturing through December 2024. In January 2024, CMS Energy
settled the remaining forward sale contracts issued under its previous equity offering program. For more
information on these forward sale contracts, see Notes to the Consolidated Financial Statements—Note 4,
Financings and Capitalization.
At December 31, 2023, CMS Energy had $526 million of its revolving credit facility available and
Consumers had $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 December 31, 2023, there were
$93 million commercial paper notes outstanding under this program. For additional details on
CMS Energy’s and Consumers’ secured revolving credit facilities and commercial paper program, see
Notes to the Consolidated Financial Statements—Note 4, Financings and Capitalization.
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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 December 31, 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
December 31, 2023, as presented in the following table:
CMS Energy, parent only
Debt to Capital1
Consumers
Debt to Capital2
Limit
Actual
< 0.70 to 1.0
0.58 to 1.0
< 0.65 to 1.0
0.49 to 1.0
1
2
Applies to CMS Energy’s revolving credit agreement and letter of credit reimbursement agreement.
Applies to Consumers’ revolving credit agreements.
Material Cash Requirements: Based on the present investment plan, during 2024, CMS Energy,
including Consumers, projects capital expenditures of $3.5 billion and Consumers projects capital
expenditures of $3.3 billion. CMS Energy’s 2024 contractual commitments comprise $2.4 billion of
purchase obligations and $1.7 billion of principal and interest payments on long-term debt. Consumers’
2024 contractual commitments comprise $2.3 billion of purchase obligations and $1.2 billion of principal
and interest payments on long-term debt.
Components of CMS Energy’s and Consumers’ cash management plan include controlling operating
expenses and capital expenditures and evaluating market conditions for financing and refinancing
opportunities. CMS Energy’s and Consumers’ present level of cash and expected cash flows from
operating activities, together with access to sources of liquidity, are anticipated to be sufficient to fund
contractual obligations and other material cash requirements for 2024 and beyond.
Capital Expenditures: Over the next five years, CMS Energy and Consumers expect to make substantial
capital investments. The companies may revise their forecast of capital expenditures periodically due to a
number of factors, including environmental regulations, MPSC approval or disapproval, business
opportunities, market volatility, economic trends, and the ability to access capital. Presented in the
following table are CMS Energy’s and Consumers’ estimated capital expenditures, including lease
commitments, for 2024 through 2028:
CMS Energy, including Consumers
Consumers
$
3.3
$
3.9
$
3.3
$
3.4
$
3.1
$
17.0
2024
2025
2026
2027
2028
Total
In Billions
NorthStar Clean Energy, including
subsidiaries
Total CMS Energy
Consumers
Electric utility operations
Gas utility operations
Total Consumers
0.6
4.5
2.6
1.3
3.9
$
$
$
0.3
3.6
2.0
1.3
3.3
$
$
$
0.4
3.8
2.1
1.3
3.4
$
$
$
0.2
3.3
1.7
$
18.7
1.9
1.2
3.1
$
$
10.7
6.3
17.0
0.2
3.5
2.1
1.2
3.3
$
$
$
$
$
$
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Other Material Cash Requirements: Presented in the following table are CMS Energy’s and Consumers’
material cash obligations from known contractual and other legal obligations:
December 31, 2023
CMS Energy, including Consumers
Long-term debt
Interest payments on long-term debt
Purchase obligations
AROs
Total obligations
Consumers
Long-term debt
Interest payments on long-term debt
Purchase obligations
AROs
Total obligations
In Billions
Payments Due
Less Than One Year
Total
$
$
$
$
1.0
0.7
2.4
0.1
4.2
0.7
0.5
2.3
0.1
3.6
$
$
15.6
13.9
10.7
2.7
42.9
$
11.3
8.6
10.0
2.6
$
32.5
Purchase obligations arise from long-term contracts for the purchase of commodities and related services,
and construction and service agreements. The commodities and related services include long-term PPAs,
natural gas and associated transportation, and coal and associated transportation. For more information on
CMS Energy’s and Consumers’ purchase obligations, see Item 8. Financial Statements and
Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and
Commitments—Contractual Commitments.
CMS Energy, Consumers, and certain of their subsidiaries enter into various arrangements in the normal
course of business to facilitate commercial transactions with third parties. These arrangements include
indemnities, surety bonds, letters of credit, and financial and performance guarantees. For additional
details on indemnity and guarantee arrangements, see Item 8. Financial Statements and Supplementary
Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and Commitments—
Guarantees. For additional details on letters of credit and CMS Energy’s forward sales contracts, see
Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—
Note 4, Financings and Capitalization—Issuance of Common Stock.
Outlook
Several business trends and uncertainties may affect CMS Energy’s and Consumers’ financial condition
and results of operations. These trends and uncertainties could have a material impact on CMS Energy’s
and Consumers’ consolidated income, cash flows, or financial position. For additional details regarding
these and other uncertainties, see Forward-looking Statements and Information; Item 1A. Risk Factors;
and Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial
Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments.
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
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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 generation.
The Clean Energy Plan was most recently revised and approved by the MPSC in June 2022. Under 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 Clean Energy Plan provides
for:
•
•
•
the retirement of the D.E. Karn coal-fueled generating units, totaling 515 MW of nameplate
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 MPSC authorized Consumers to issue securitization bonds to finance the recovery of and return on
the D.E. Karn coal-fueled generating units; Consumers issued these bonds in December 2023.
Additionally, the MPSC 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 Clean Energy Plan, Consumers:
•
•
purchased the Covert Generating Station, a natural gas-fueled generating facility with 1,200 MW
of nameplate capacity in Van Buren County, Michigan in May 2023
conducted a one-time competitive solicitation for up to 700 MW of capacity through PPAs from
sources able to deliver to Michigan’s Lower Peninsula beginning in 2025 (including up to
500 MW from dispatchable sources)
These actions are expected to help Consumers continue to provide controllable sources of electricity to
customers while expanding its investment in renewable energy. The Clean 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, Consumers plans to deploy
battery storage beginning in 2024, with 75 MW of energy storage expected by 2027 and an additional
475 MW by 2040. The 2023 Energy Law, enacted in November 2023, set more ambitious standards for
renewable energy and energy storage. Under Michigan’s integrated resource planning process,
Consumers is required to file proposed updates to its Clean Energy Plan before or in 2027 to meet these
accelerated timelines.
Under its Clean Energy Plan, Consumers bids new capacity competitively and expects to own and operate
approximately 50 percent of new capacity, with the remainder being built and owned by third parties.
Additionally, Consumers earns a return equal to its pre-tax weighted-average cost of capital on permanent
capital structure 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. Presented in the following illustration is the aggregate renewable capacity that
Consumers expects to add to its portfolio as a result of these agreements:
Additionally, as a result of its one-time solicitation, Consumers entered into a 20-year PPA under which it
will purchase 100 MW of capacity, energy and RECs from a battery storage facility to be constructed in
Branch County, Michigan. The facility is expected to be operational in 2025. Consumers continues to
evaluate the acquisition of additional capacity from intermittent resources and dispatchable,
non-intermittent clean capacity resources (including battery storage resources). Any contracts entered into
as a result of the one-time solicitation are subject to MPSC approval.
Renewable Energy Plan: The 2023 Energy Law raises the renewable energy standard from the present
15-percent requirement to 50 percent by 2030 and 60 percent by 2035. Consumers is required to submit
RECs, which represent proof that the associated electricity was generated from a renewable energy
resource, in an amount equal to at least the required percentage of Consumers’ electric sales volume each
year. Under its renewable energy plan, Consumers has met and expects to continue to meet its renewable
energy requirement each year with a combination of newly generated RECs and previously generated
RECs carried over from prior years.
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
under Consumers’ amended renewable energy plan. 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 2021
76
Capacity (MW)PPAOwned2023Actual20242025Beyond050010001500 Table of Contents
•
purchase of a 201-MW wind generation project in Gratiot County, Michigan; the project became
operational and Consumers took full ownership of the project in December 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 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 present 15-percent requirement. In September 2023, Consumers filed an
application to amend its renewable energy plan. Among other things, Consumers requested that the
MPSC remove the 1,000-MW limit on new wind and solar generation, which will allow Consumers to
meet growing customer demand for the program. Consumers competitively solicits 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, a 2022 request for proposals resulted in the execution of 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 was approved by the MPSC in
September 2023. Additionally, the request for proposals resulted in the selection of a solar generation
project that Consumers will develop and construct at its D.E. Karn generating site, with a capacity of up
to 85 MW. The facility is expected to be operational in 2026.
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.
Over the next five years, Consumers expects weather-normalized electric deliveries to remain relatively
stable compared to 2023. This outlook reflects the effects of energy waste reduction programs offset 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 December 31, 2023, electric deliveries under the ROA
program were at the ten-percent limit. Fewer than 300 of Consumers’ electric customers purchased
electric generation service under the ROA program.
In 2016, Michigan 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-year forward period. In 2017, the MPSC issued
an order establishing a state reliability mechanism for Consumers. Under this mechanism, if an alternative
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electric supplier does not demonstrate that it has procured its capacity requirements for the four-year
forward period, its customers will pay a set charge to the utility for capacity that is not provided by the
alternative electric supplier.
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 used to serve customers 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. In 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 claim of appeal of the Eastern District Court’s decision with the
U.S. Court of Appeals for the Sixth Circuit. Oral arguments occurred in December 2023.
Electric Rate Matters: Rate matters are critical to Consumers’ electric utility business. For additional
details on rate matters, see Item 8. Financial Statements and Supplementary Data—Notes to the
Consolidated Financial Statements—Note 2, Regulatory Matters and Note 3, Contingencies and
Commitments.
MPSC Distribution 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. Consumers responded to the MPSC’s order
in November 2022.
Additionally, as directed by the MPSC, the MPSC Staff has engaged a third-party auditor to review all
equipment and operations of the two utilities’ distribution systems; this audit began in August 2023. The
MPSC Staff released a report prepared by the third-party auditor to summarize the audit’s progress in
December 2023, and a final report is expected in late summer 2024. Consumers is committed to working
with the third-party auditor and the MPSC to continue improving electric reliability and safety in
Michigan.
2023 Electric Rate Case: In May 2023, Consumers filed an application with the MPSC seeking a rate
increase of $216 million, made up of two components. First, Consumers requested a $207 million annual
rate increase, based on an authorized return on equity of 10.25 percent for the projected 12-month period
ending February 28, 2025. The filing requested authority to recover costs related to new infrastructure
investment primarily in distribution system reliability and 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.
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In September 2023, Consumers revised its requested increase to $169 million, primarily to reflect the
delay of certain capital expenditures beyond the test year. Presented in the following table are the
components of the revised requested increase in revenue:
Projected 12-Month Period Ending February 28
Components of the requested rate increase
Investment in rate base
Operating and maintenance costs
Cost of capital
Sales and other revenue
Subtotal
Surcharge
Total
In Millions
2025
$
$
$
101
(14)
77
(4)
160
9
169
PSCR Plan: Consumers submitted its 2024 PSCR plan to the MPSC in September 2023 and, in
accordance with its proposed plan, self-implemented the 2024 PSCR charge beginning in January 2024.
Retention Incentive Program: Under its Clean Energy Plan, Consumers will retire the J.H. Campbell
coal-fueled generating units in 2025. Consumers implemented a retention incentive program to ensure
necessary staffing at the facility through retirement. The aggregate cost of the J.H. Campbell program
through 2025 is estimated to be $50 million; Consumers expects to recognize $10 million of retention
benefit costs in 2024. The MPSC has approved deferred accounting treatment for these costs; these
expenses are deferred as a regulatory asset. For additional details on this program, see Item 8. Financial
Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 19, Exit
Activities and Discontinued Operations.
Electric Environmental Outlook: Consumers’ electric operations are subject to various federal, state,
and local environmental laws and regulations. Consumers estimates that it will incur capital expenditures
of $240 million from 2024 through 2028 to continue to comply with RCRA, the Clean Air Act, and
numerous other environmental regulations. Consumers expects to recover these 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 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 tightens allowance budgets for electric
generating units in Michigan between 2023 and 2029 and changes the mechanism for allocating such
allowances on a year-over-year basis beginning in 2026. Consumers’ initial evaluation of this regulation
indicates that it will have 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 regulation, it is difficult to forecast the long-term impact.
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In 2015, the EPA lowered the NAAQS for ozone and made it more difficult to construct or modify power
plants and other emission sources in areas of the country that do not meet the ozone standard. As of
May 2023, three counties in western Michigan have been designated 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 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, including the installation of additional emission control
equipment
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 May 2023, the EPA released its proposed rule to address greenhouse gas emissions from existing
fossil-fuel-fired electric generating units. Under its Clean Energy Plan, Consumers will eliminate the use
of coal-fueled generation in 2025. Therefore, this proposed rule will not materially impact Consumers
over the remaining operating lives of these coal-fueled facilities. The proposed rule has requirements for
existing natural gas-fueled facilities that could have a material impact on Consumers’ natural gas-fueled
facilities. The EPA is scheduled to finalize the rule in April 2024.
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. Under its
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 this event, as its plans exceed the nationally 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. Consumers has already surpassed the 28-percent reduction milestone
for its owned electric generation and previously announced a goal of achieving net-zero carbon emissions
from its electric business by 2040. The 2023 Energy Law codifies much of the Governor’s goals. For
additional details on the 2023 Energy Law, see the Planet section of the Executive Overview.
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 frequency or intensity of storm
activity; increased precipitation; increased temperature; and changes in lake and river levels. Consumers
released a report addressing the physical risks of climate change on its infrastructure in 2022. Consumers
is taking steps to mitigate these risks as appropriate.
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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:
replace equipment
install additional emission control equipment
purchase emission allowances or credits (including potential greenhouse gas offset credits)
curtail operations
arrange for alternative sources of supply
purchase or build facilities that generate fewer emissions
•
•
•
•
•
•
• mothball, sell, or retire facilities that generate certain emissions
•
•
pursue energy efficiency or demand response measures more swiftly
take other steps to manage or lower the emission of greenhouse gases
Although associated capital or operating costs relating to greenhouse gas regulation or legislation could
be material and cost recovery cannot be assured, Consumers expects to recover these costs 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 rule adopts minimum
standards for the disposal of non-hazardous CCRs in CCR landfills and surface impoundments and
criteria for the beneficial use of CCRs. The rule also sets out conditions under which some CCR units
would be forced to cease receiving CCR wastewater and initiate closure. Due to continued litigation,
many aspects of the rule have been remanded to the EPA, resulting in more proposed and final rules.
Separately, Congress passed legislation in 2016 allowing participating states to develop permitting
programs for CCRs under RCRA Subtitle D. The EPA was granted authority to review these permitting
programs to determine if permits issued under the proposed program would be as protective as the federal
rule. Once approved, permits issued from an authorized state would replace the requirement to certify
compliance with each aspect of the CCR rule. In 2020, EGLE submitted a regulatory package for
Michigan’s permit program to the EPA for its review, which is still pending.
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 closure initiation deadline.
Consumers has historically been authorized to recover in electric rates costs related to coal ash disposal
sites.
Water: Multiple water-related regulations apply, or may apply, to Consumers.
The EPA regulates cooling water intake systems of existing electric generating plants under
Section 316(b) of the Clean Water Act. 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.
The EPA also regulates the discharge of wastewater through its effluent limitation guidelines for steam
electric generating plants. In 2020, the EPA revised previous guidelines related to the discharge of certain
wastewater, but 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
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extension to 2025 for its J.H. Campbell generating facility, which it plans to retire in 2025. In
March 2023, the EPA released a proposed rule seeking to replace its 2020 rule and corresponding effluent
limitation guidelines. Consumers is evaluating the proposed effluent limitation guidelines for its potential
impacts on its generating facilities.
In recent years, the EPA and the U.S. Army Corps of Engineers have proposed changes to the scope of
federal jurisdiction over bodies of water and to the frequency of dual jurisdiction in states with authority
to regulate the same waters; Michigan is one such state. A 2022 rule changed the definition of “Waters of
the United States,” which defines the scope 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.” Consumers does not expect adverse changes to its environmental strategy as a result of the
current interpretations and court decision.
Many of Consumers’ facilities maintain NPDES permits, which 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 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 2021, the U.S. Fish and
Wildlife Service announced its intent to regulate incidental take under the Migratory Bird Treaty Act.
Any resulting permitting and monitoring fees and/or restrictions on operations 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 Item 8. Financial Statements
and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and
Commitments—Consumers Electric Utility Contingencies—Electric Environmental Matters.
Consumers Gas Utility Outlook and Uncertainties
Gas Deliveries: Consumers’ gas customer deliveries are seasonal. The peak demand for natural gas
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 2023. This outlook reflects the effects of energy waste reduction programs offset 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
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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 Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated
Financial Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments.
2023 Gas Rate Case: In December 2023, Consumers filed an application with the MPSC seeking an
annual rate increase of $136 million based on a 10.25-percent authorized return on equity for the
projected 12-month period ending September 30, 2025. The filing requests authority to recover new
infrastructure investment and related costs that are expected to allow Consumers to continue to provide
safe, reliable, affordable, and increasingly cleaner natural gas service.
Presented in the following table are the components of the requested increase in revenue:
In Millions
2025
$
75
(14)
45
30
$
136
(14)
$
122
Projected 12-Month Period Ending September 30
Components of the requested rate increase
Investment in rate base
Operating and maintenance costs
Cost of capital
Sales and other revenue
Subtotal
Home products credit1
Total
1
Consumers has proposed to share voluntarily half of the gain to be recognized on the sale of its unregulated
appliance service plan program (discussed below).
Gain Sharing Application: In February 2024, Consumers signed an agreement to sell its unregulated
appliance service plan program to a non-affiliated company; this sale is expected to close in the first half
of 2024. Also in February 2024, Consumers filed an application requesting the MPSC’s approval to share
voluntarily with customers half of the gain, net of transaction costs, to be recognized on this sale. In
Consumers’ 2023 gas rate case, it has proposed sharing the gain with customers over five years in the
form of a surcharge credit.
GCR Plan: Consumers submitted its 2024-2025 GCR plan to the MPSC in December 2023 and, in
accordance with its proposed plan, expects to self-implement the 2024-2025 GCR charge beginning in
April 2024.
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 expanded requirements
for transmission pipelines took effect in 2020, with additional requirements released in 2023. There are
also proposed rules expanding requirements for gas distribution systems pending. 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.
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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.
Gas Environmental Outlook: Consumers expects to incur response activity costs at a number of sites,
including 23 former MGP sites. For additional details, see Item 8. Financial Statements and
Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and
Commitments—Consumers Gas Utility Contingencies—Gas Environmental Matters.
Consumers’ gas operations are subject to various federal, state, and local 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’ 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 some engines used at compressor stations. Consumers has determined that the revised CSAPR
regulation does not apply to Consumers’ natural gas compressor station engines.
In 2015, the EPA lowered the NAAQS for ozone and made it more difficult to construct or modify natural
gas compressor stations and other emission sources in areas of the country that do not meet the ozone
standard. As of May 2023, three counties in western Michigan have been designated as not meeting the
ozone standard. One of Consumers’ compressor stations is located in an ozone nonattainment area.
Consequently, Consumers has initiated plans to retrofit equipment at this compressor station to lower
NOx emissions and comply with a rule proposed by the State of Michigan, as required for a source
located in a moderate ozone nonattainment area. 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 and other applicable natural gas 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. Under its Methane
Reduction Plan, Consumers has set a goal of net-zero methane emissions from its natural gas delivery
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system by 2030. Consumers plans to reduce methane emissions from its system by about 80 percent, from
2012 baseline levels, 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. To date, Consumers has reduced methane
emissions by more than 25 percent.
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. Consumers’ Natural Gas Delivery Plan, a rolling ten-year
investment plan to deliver safe, reliable, clean, and affordable natural gas to customers, outlines ways in
which Consumers can make early progress toward these goals in a cost-effective manner, including
energy waste reduction, carbon offsets, and renewable natural gas supply.
Consumers has 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, and announcing plans to begin development of renewable natural gas facilities that will capture
methane from manure generated at Michigan-based farms and convert it into renewable natural gas.
Consumers is evaluating and monitoring newer technologies to determine their role in achieving
Consumers’ interim and long-term net-zero goals, including hydrogen, biofuels, and synthetic methane;
carbon capture sequestration systems; and other 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 1,658 MW of capacity, and to pursue
opportunities for the development of renewable generation projects.
During 2023, NorthStar Clean Energy sold a Class A membership interest in Newport Solar Holdings to
tax equity investors for $86 million. Newport Solar Holdings wholly owns Newport Solar, a 180-MW
solar generation project located in Jackson County, Arkansas; the project began commercial operation in
October 2023. All of the project’s nameplate capacity has been committed under a 15-year PPA.
NorthStar Clean Energy retained 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 membership classes in accordance with the ratios specified in the associated limited liability
company operating agreement; these ratios change over time and are not representative of the ownership
interest percentages of each membership class. For additional details, see Item 8. Financial Statements
and Supplementary Data—Notes to the Consolidated Financial Statements—Note 18, Variable Interest
Entities.
NorthStar Clean Energy’s operations may be subject to various federal, state, and local environmental
laws and regulations. Multiple 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 tightens allowance budgets for electric
generating units in 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 may incur increased
costs to purchase allowances or retrofit equipment.
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For additional details regarding the ozone NAAQS or CSAPR rule, see Consumers Electric Utility
Outlook and Uncertainties—Electric Environmental Outlook.
In May 2023, the EPA released its proposed rule to address greenhouse gas emissions from existing
fossil-fuel-fired and natural gas-fueled electric generating units. This proposed regulation could have a
material financial and operational impact on NorthStar Clean Energy, if the regulation ultimately applies
to its facilities. The EPA is scheduled to finalize the rule in April 2024.
Many of NorthStar Clean Energy’s facilities maintain NPDES permits, which are vital to the facilities’
operations. NorthStar Clean Energy applies for renewal of these permits every five years. Failure of
EGLE to renew any NPDES permit, a successful appeal against a permit, a change in the interpretation or
scope of NPDES permitting, or onerous terms contained in a permit could have a significant detrimental
effect on the operations of a facility.
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 ownership interests in facilities that involve
tax equity financing
representations, warranties, and indemnities provided by CMS Energy in connection with sales of
assets
delays or difficulties in obtaining environmental permits for facilities located in areas associated
with environmental justice concerns
For additional details regarding NorthStar Clean Energy’s uncertainties, see Item 8. Financial Statements
and Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and
Commitments—Guarantees.
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 Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated Financial
Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments.
Employee Separation Program: In April 2023, CMS Energy and Consumers announced a voluntary
separation program for non-union employees. For the year ended December 31, 2023, CMS Energy and
Consumers recorded a pre-tax charge of $33 million related to the program, under which more than
400 employees were approved for and accepted early separation.
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Critical Accounting Policies and Estimates
The following information is important to understand CMS Energy’s and Consumers’ results of
operations and financial condition. For additional accounting policies, see Item 8. Financial Statements
and Supplementary Data—Notes to the Consolidated Financial Statements—Note 1, Significant
Accounting Policies.
In the preparation of CMS Energy’s and Consumers’ consolidated financial statements, estimates and
assumptions are used that may affect reported amounts and disclosures. CMS Energy and Consumers use
accounting estimates for asset valuations, unbilled revenue, depreciation, amortization, financial and
derivative instruments, employee benefits, stock-based compensation, the effects of regulation,
indemnities, contingencies, and AROs. Actual results may differ from estimated results due to changes in
the regulatory environment, regulatory decisions, lawsuits, competition, and other factors. CMS Energy
and Consumers consider all relevant factors in making these assessments.
Accounting for the Effects of Industry Regulation: Because Consumers has regulated operations, it
uses regulatory accounting to recognize the effects of the regulators’ decisions on its financial statements.
Consumers continually assesses whether future recovery of its regulatory assets is probable by
considering communications and experience with its regulators and changes in the regulatory
environment. If Consumers determined that recovery of a regulatory asset were not probable, Consumers
would be required to write off the asset and immediately recognize the expense in earnings. For additional
information, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated
Financial Statements—Note 2, Regulatory Matters.
Contingencies: CMS Energy and Consumers make judgments regarding the future outcome of various
matters that give rise to contingent liabilities. For such matters, they record liabilities when they are
considered probable and reasonably estimable, based on all available information. In particular,
CMS Energy and Consumers are participating in various environmental remediation projects for which
they have recorded liabilities. The recorded amounts represent estimates that may take into account such
considerations as the number of sites, the anticipated scope, cost, and timing of remediation work, the
available technology, applicable regulations, and the requirements of governmental authorities. For
remediation projects in which the timing of estimated expenditures is considered reliably determinable,
CMS Energy and Consumers record the liability at its net present value, using a discount rate equal to the
interest rate on monetary assets that are essentially risk-free and have maturities comparable to that of the
environmental liability. The amount recorded for any contingency may differ from actual costs incurred
when the contingency is resolved. For additional details, see Item 8. Financial Statements and
Supplementary Data—Notes to the Consolidated Financial Statements—Note 3, Contingencies and
Commitments.
Derivative Instruments: CMS Energy and Consumers account for certain contracts as derivative
instruments. If a contract is a derivative and does not qualify for the normal purchases and sales
exception, it is recorded on the consolidated balance sheets at its fair value. For the FTRs at Consumers,
changes in fair value are deferred as regulatory assets or liabilities.
The criteria used to determine if an instrument qualifies for derivative accounting or for an exception
from derivative accounting are complex and often require judgment in application. Changes in business
strategies or market conditions, as well as a requirement to apply different interpretations of the derivative
accounting literature, could result in changes in accounting for a single contract or groups of contracts,
which could have a material impact on CMS Energy’s and Consumers’ financial statements. For
additional details on CMS Energy’s and Consumers’ derivatives and how the fair values of derivatives are
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determined, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated
Financial Statements—Note 5, Fair Value Measurements.
Income Taxes: The amount of income taxes paid by CMS Energy is subject to ongoing audits by federal,
state, and foreign tax authorities, which can result in proposed assessments. An estimate of the potential
outcome of any uncertain tax issue is highly judgmental. CMS Energy believes adequate reserves have
been provided for these exposures; however, future results may include favorable or unfavorable
adjustments to the estimated tax liabilities in the period the assessments are made or resolved or when
statutes of limitation on potential assessments expire. Additionally, CMS Energy’s judgment as to the
ability to recover its deferred tax assets may change. CMS Energy believes the valuation allowances
related to its deferred tax assets are adequate, but future results may include favorable or unfavorable
adjustments. As a result, CMS Energy’s effective tax rate may fluctuate significantly over time. For
additional details, see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated
Financial Statements—Note 12, Income Taxes.
Pension and OPEB: CMS Energy and Consumers provide retirement pension benefits to certain
employees under non-contributory DB Pension Plans, and they provide postretirement health and life
benefits to qualifying retired employees under an OPEB Plan.
CMS Energy and Consumers record liabilities for pension and OPEB on their consolidated balance sheets
at the present value of the future obligations, net of any plan assets. The calculation of the liabilities and
associated expenses requires the expertise of actuaries, and requires many assumptions, including:
•
•
•
•
•
life expectancies
discount rates
expected long-term rate of return on plan assets
rate of compensation increases
expected health care costs
A change in these assumptions could change significantly CMS Energy’s and Consumers’ recorded
liabilities and associated expenses.
Presented in the following table are estimates of credits and cash contributions through 2026 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 related to the participants of the DB Pension
Plans and OPEB Plan. CMS Energy and Consumers will, at a minimum, contribute to the plans as needed
to comply with federal funding requirements.
CMS Energy, including Consumers
2024
2025
2026
Consumers1
2024
2025
2026
1
DB Pension Plans
OPEB Plan
Credit
Contribution
Credit
Contribution
In Millions
$
$
$
$
(76)
(80)
(80)
(71)
(75)
(75)
—
—
—
—
—
—
$
$
$
$
(88)
(93)
(97)
(81)
(85)
(89)
—
—
—
—
—
—
Consumers’ pension and OPEB costs are recoverable through its general ratemaking process.
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Lowering the expected long-term rate of return on the assets of the DB Pension Plans by 25 basis points
would increase estimated pension cost for 2024 by $8 million for both CMS Energy and Consumers.
Lowering the PBO discount rates by 25 basis points would decrease estimated pension cost for 2024 by
$1 million for both CMS Energy and Consumers. Pension and OPEB costs above or below the amounts
used to set existing rates will be deferred as a regulatory asset or liability in accordance with Consumers’
postretirement benefits expense deferral mechanism; for more information, see Item 8. Financial
Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2,
Regulatory Matters.
Pension and OPEB plan assets are accounted for and disclosed at fair value. Fair value measurements
incorporate assumptions that market participants would use in pricing an asset or liability, including
assumptions about risk. Development of these assumptions may require judgment.
For additional details on postretirement benefits, including the fair value measurements for the assets of
the DB Pension Plans and OPEB Plan, see Item 8. Financial Statements and Supplementary Data—Notes
to the Consolidated Financial Statements—Note 10, Retirement Benefits.
Unbilled Revenues: Consumers’ customers are billed monthly in cycles having billing dates that do not
generally coincide with the end of a calendar month. This results in customers having received electricity
or natural gas that they have not been billed for as of the month-end. Consumers estimates its unbilled
revenues by applying an average billed rate to total unbilled deliveries for each customer class.
Consumers records unbilled revenues as accounts receivable and accrued revenue on its consolidated
balance sheet. For additional information on unbilled revenues, see Item 8. Financial Statements and
Supplementary Data—Notes to the Consolidated Financial Statements—Note 14, Revenue.
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.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
CMS Energy and Consumers are exposed to market risks including, but not limited to, changes in interest
rates, commodity prices, and investment security prices. They may enter into various risk management
contracts to mitigate exposure to these risks, including swaps, options, futures, and forward contracts.
CMS Energy and Consumers enter into these contracts using established policies and procedures, under
the direction of an executive oversight committee consisting of certain officers and a risk committee
consisting of those and other officers and business managers.
The following risk sensitivities illustrate the potential loss in fair value, cash flows, or future earnings
from financial instruments, assuming a hypothetical adverse change in market rates or prices of
ten percent. Potential losses could exceed the amounts shown in the sensitivity analyses if changes in
market rates or prices were to exceed ten percent.
Long-term Debt: CMS Energy and Consumers are exposed to interest-rate risk resulting from issuing
fixed-rate and variable-rate debt instruments. CMS Energy and Consumers use a combination of these
instruments, and may also enter into interest-rate swap agreements, in order to manage this risk and to
achieve a reasonable cost of capital.
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Presented in the following table is a sensitivity analysis of interest-rate risk on CMS Energy’s and
Consumers’ debt instruments (assuming an adverse change in market interest rates of ten percent):
December 31
Fixed-rate financing—potential loss in fair value
CMS Energy, including Consumers
Consumers
In Millions
2023
2022
$
751
534
$
711
482
The fair value losses in the above table could be realized only if CMS Energy and Consumers transferred
all of their fixed-rate financing to other creditors. The annual earnings exposure related to variable-rate
financing was immaterial for both CMS Energy and Consumers at December 31, 2023 and 2022,
assuming an adverse change in market interest rates of ten percent. For additional details on financial
instruments see Item 8. Financial Statements and Supplementary Data—Notes to the Consolidated
Financial Statements—Note 6, Financial Instruments
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Item 8.
Financial Statements and Supplementary Data
Index to Financial Statements
CMS Energy Consolidated Financial Statements ............................................................................
Consolidated Statements of Income ..............................................................................................
Consolidated Statements of Comprehensive Income ....................................................................
Consolidated Statements of Cash Flows .......................................................................................
Consolidated Balance Sheets ........................................................................................................
Consolidated Statements of Changes in Equity ............................................................................
Consumers Consolidated Financial Statements ...............................................................................
Consolidated Statements of Income ..............................................................................................
Consolidated Statements of Comprehensive Income ....................................................................
Consolidated Statements of Cash Flows .......................................................................................
Consolidated Balance Sheets ........................................................................................................
Consolidated Statements of Changes in Equity ............................................................................
Notes to the Consolidated Financial Statements ..............................................................................
1: Significant Accounting Policies .........................................................................................
2: Regulatory Matters .............................................................................................................
3: Contingencies and Commitments ......................................................................................
4: Financings and Capitalization ............................................................................................
5: Fair Value Measurements ..................................................................................................
6: Financial Instruments .........................................................................................................
7: Plant, Property, and Equipment .........................................................................................
8: Leases .................................................................................................................................
9: Asset Retirement Obligations ............................................................................................
10: Retirement Benefits ............................................................................................................
11: Stock-based Compensation ................................................................................................
12: Income Taxes .....................................................................................................................
13: Earnings Per Share—CMS Energy ....................................................................................
14: Revenue ..............................................................................................................................
15: Other Income and Other Expense ......................................................................................
16: Reportable Segments ..........................................................................................................
17: Related-party Transactions—Consumers ...........................................................................
18: Variable Interest Entities ....................................................................................................
19: Exit Activities and Discontinued Operations .....................................................................
Reports of Independent Registered Public Accounting Firm (PCAOB ID 238) .............................
CMS Energy ..................................................................................................................................
Consumers .....................................................................................................................................
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92
94
95
98
100
102
102
103
104
106
108
109
109
112
118
124
132
134
135
140
144
146
157
160
164
165
169
170
175
176
178
180
180
184
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CMS Energy Corporation
Consolidated Statements of Income
Years Ended December 31
Operating Revenue
Operating Expenses
Fuel for electric generation
Purchased and interchange power
Purchased power – related parties
Cost of gas sold
Maintenance and other operating expenses
Depreciation and amortization
General taxes
Total operating expenses
Operating Income
Other Income (Expense)
Non-operating retirement benefits, net
Other income
Other expense
Total other income
Interest Charges
Interest on long-term debt
Interest expense – related parties
Other interest expense
Allowance for borrowed funds used during construction
Total interest charges
Income Before Income Taxes
Income Tax Expense
Income From Continuing Operations
Income From Discontinued Operations, Net of Tax of $—, $1, and
$170
Net Income
Loss Attributable to Noncontrolling Interests
Net Income Attributable to CMS Energy
Preferred Stock Dividends
In Millions, Except Per Share Amounts
2023
2022
2021
$ 7,462
$ 8,596
$ 7,329
561
1,375
75
902
1,687
1,180
447
6,227
1,235
180
195
(13)
362
616
12
18
(3)
643
954
147
807
1
808
(79)
887
10
905
1,928
76
1,256
1,669
1,126
412
7,372
1,224
205
19
(27)
197
509
12
—
(2)
519
902
93
809
4
813
(24)
837
10
593
1,665
77
735
1,610
1,114
389
6,183
1,146
165
30
(18)
177
481
12
10
(3)
500
823
95
728
602
1,330
(23)
1,353
5
Net Income Available to Common Stockholders
$
877
$
827
$ 1,348
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Years Ended December 31
Basic Earnings Per Average Common Share
In Millions, Except Per Share Amounts
2023
2022
2021
Income from continuing operations per average common share available
to common stockholders
$
3.01
$
2.84
$
2.58
Income from discontinued operations per average common share available
to common stockholders
Basic earnings per average common share
Diluted Earnings Per Average Common Share
—
$
3.01
$
0.01
2.85
2.08
4.66
$
Income from continuing operations per average common share available
to common stockholders
$
3.01
$
2.84
$
2.58
Income from discontinued operations per average common share available
to common stockholders
Diluted earnings per average common share
—
$
3.01
$
0.01
2.85
2.08
4.66
$
The accompanying notes are an integral part of these statements.
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CMS Energy Corporation
Consolidated Statements of Comprehensive Income
Years Ended December 31
Net Income
Retirement Benefits Liability
Net gain arising during the period, net of tax of $2, $—, and $6
Settlement arising during the period, net of tax of $— for all periods
Amortization of net actuarial loss, net of tax of $—, $1, and $2
Amortization of prior service credit, net of tax of $— for all periods
Derivatives
Unrealized gain on derivative instruments, net of tax of $—, $1, and $—
Reclassification adjustments included in net income, net of tax of $—,
$—, and $1
Other Comprehensive Income
Comprehensive Income
Comprehensive Loss Attributable to Noncontrolling Interests
Comprehensive Income Attributable to CMS Energy
The accompanying notes are an integral part of these statements.
In Millions
2023
2022
2021
$
808
$
813
$ 1,330
5
—
2
(1)
—
—
6
1
—
4
(1)
2
1
7
19
1
5
(1)
2
1
27
814
(79)
893
$
820
(24)
844
1,357
(23)
$ 1,380
$
94
Table of Contents
CMS Energy Corporation
Consolidated Statements of Cash Flows
Years Ended December 31
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operating
activities
Depreciation and amortization
Deferred income taxes and investment tax credits
Bad debt expense
Postretirement benefits contributions
Gain from sale of EnerBank
Other non-cash operating activities and reconciling adjustments
Net cash used in discontinued operations
Changes in assets and liabilities
Accounts receivable and accrued revenue
Inventories
Accounts payable and accrued rate refunds
Other current assets and liabilities
Other non-current assets and liabilities
Net cash provided by operating activities
Cash Flows from Investing Activities
In Millions
2023
2022
2021
$
808
$
813
$ 1,330
1,180
1,126
1,114
157
34
(12)
—
(274)
—
241
185
(136)
(21)
147
89
50
(12)
(5)
(93)
—
(677)
(450)
4
14
(4)
249
22
(12)
(657)
(70)
(111)
(103)
(93)
153
13
(16)
2,309
855
1,819
Capital expenditures (excludes assets placed under finance lease)
(2,407)
(2,374)
(2,076)
Covert Generating Station acquisition
Net proceeds from sale of EnerBank
Net cash provided by discontinued operations
Cost to retire property and other investing activities
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from issuance of debt
Retirement of debt
Increase in notes payable
Issuance of common stock
Issuance of preferred stock, net of issuance costs
Payment of dividends on common and preferred stock
Proceeds from the sale of membership interest in VIE to tax equity investor
Contribution from noncontrolling interest
Net cash used in discontinued operations
Other financing costs
Net cash provided by (used in) financing activities
(812)
—
—
—
5
—
—
898
78
(167)
(107)
(133)
(3,386)
(2,476)
(1,233)
3,551
(2,132)
73
192
—
(579)
86
6
—
(54)
1,143
1,899
(106)
20
69
—
(544)
49
2
—
(62)
1,327
335
(235)
—
26
224
(508)
—
1
(84)
(54)
(295)
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Table of Contents
Years Ended December 31
Net Increase (Decrease) in Cash and Cash Equivalents, Including
Restricted Amounts
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of
Period
In Millions
2023
2022
2021
66
(294)
182
476
291
185
Cash and Cash Equivalents, Including Restricted Amounts, End of
Period
$
248
$
182
$
476
Other Cash Flow Activities and Non-cash Investing and Financing Activities
Cash transactions
Interest paid (net of amounts capitalized)
Income taxes paid
Non-cash transactions
Capital expenditures not paid
$
607
$
490
$
489
15
1
16
$
265
$
228
$
196
The accompanying notes are an integral part of these statements.
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Table of Contents
CMS Energy Corporation
Consolidated Balance Sheets
ASSETS
December 31
Current Assets
Cash and cash equivalents
Restricted cash and cash equivalents
$
Accounts receivable and accrued revenue, less allowance of $21 in 2023 and $27 in
2022
Accounts receivable – related parties
Inventories at average cost
Gas in underground storage
Materials and supplies
Generating plant fuel stock
Deferred property taxes
Regulatory assets
Prepayments and other current assets
Total current assets
Plant, Property, and Equipment
Plant, property, and equipment, gross
Less accumulated depreciation and amortization
Plant, property, and equipment, net
Construction work in progress
Total plant, property, and equipment
Other Non-current Assets
Regulatory assets
Accounts receivable
Investments
Postretirement benefits
Other
Total other non-current assets
Total Assets
In Millions
2023
2022
$
227
21
933
11
587
267
84
426
203
80
164
18
1,564
16
840
212
65
384
57
113
2,839
3,433
33,135
9,007
24,128
944
25,072
30,491
8,960
21,531
1,182
22,713
3,683
3,595
22
76
1,468
357
5,606
23
71
1,208
310
5,207
$ 33,517
$ 31,353
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Table of Contents
LIABILITIES AND EQUITY
December 31
Current Liabilities
Current portion of long-term debt and finance leases
$
Notes payable
Accounts payable
Accounts payable – related parties
Accrued rate refunds
Accrued interest
Accrued taxes
Regulatory liabilities
Other current liabilities
Total current liabilities
Non-current Liabilities
Long-term debt
Non-current portion of finance leases
Regulatory liabilities
Postretirement benefits
Asset retirement obligations
Deferred investment tax credit
Deferred income taxes
Other non-current liabilities
Total non-current liabilities
Commitments and Contingencies (Notes 2 and 3)
Equity
Common stockholders’ equity
Common stock, authorized 350.0 shares in both periods; outstanding 294.4 shares
in 2023 and 291.3 shares in 2022
Other paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total common stockholders’ equity
Cumulative redeemable perpetual preferred stock, Series C, authorized
9.2 depositary shares; outstanding 9.2 depositary shares in both periods
Total stockholders’ equity
Noncontrolling interests
Total equity
Total Liabilities and Equity
The accompanying notes are an integral part of these statements.
99
In Millions
2023
2022
980
93
802
7
54
142
612
56
149
$
1,099
20
928
8
—
122
538
104
166
2,895
2,985
14,508
62
3,894
106
771
126
2,615
415
22,497
3
5,705
(46)
1,658
7,320
224
7,544
581
8,125
13,122
68
3,796
108
746
129
2,407
397
20,773
3
5,490
(52)
1,350
6,791
224
7,015
580
7,595
$ 33,517
$ 31,353
Table of Contents
CMS Energy Corporation
Consolidated Statements of Changes in Equity
Years Ended December 31
2023
2022
2021
2023
2022
2021
In Millions, Except Number of Shares in Thousands and Per Share Amounts
Number of Shares
Total Equity at Beginning of Period
Common Stock
At beginning and end of period
Other Paid-in Capital
At beginning of period
Common stock issued
Common stock repurchased
Common stock reacquired
$ 7,595
$ 7,188
$ 6,077
3
3
3
291,268
289,758
288,940
3,355
1,704
(119)
(64)
(151)
(43)
997
(157)
(22)
5,490
222
(7)
—
5,406
5,365
93
(9)
—
50
(9)
—
At end of period
Accumulated Other Comprehensive Loss
294,440
291,268
289,758
5,705
5,490
5,406
At beginning of period
Retirement benefits liability
At beginning of period
Net gain arising during the period
Settlement arising during the period
Amortization of net actuarial loss
Amortization of prior service credit
At end of period
Derivative instruments
At beginning of period
Unrealized gain on derivative instruments
Reclassification adjustments included in net income
At end of period
At end of period
Retained Earnings
At beginning of period
Net income attributable to CMS Energy
Dividends declared on common stock
Dividends declared on preferred stock
At end of period
Cumulative Redeemable Perpetual Preferred Stock, Series C
At beginning of period
Preferred stock issued, net of issuance costs
At end of period
(52)
(52)
5
—
2
(1)
(46)
—
—
—
—
(46)
1,350
887
(569)
(10)
1,658
224
—
224
(59)
(56)
1
—
4
(1)
(52)
(3)
2
1
—
(52)
1,057
837
(534)
(10)
1,350
224
—
224
(86)
(80)
19
1
5
(1)
(56)
(6)
2
1
(3)
(59)
214
1,353
(505)
(5)
1,057
—
224
224
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Years Ended December 31
Noncontrolling Interests
At beginning of period
In Millions, Except Number of Shares in Thousands and Per Share Amounts
Number of Shares
2023
2022
2021
2023
2022
2021
Sale of membership interest in VIE to tax equity investor
Contribution from noncontrolling interest
Loss attributable to noncontrolling interests
Distributions and other changes in noncontrolling interests
At end of period
Total Equity at End of Period
Dividends declared per common share
580
86
6
(79)
(12)
581
557
49
2
(24)
(4)
580
581
—
1
(23)
(2)
557
$ 8,125
$ 7,595
$ 7,188
$ 1.9500
$ 1.8400
$ 1.7400
Dividends declared per preferred stock Series C depositary share
$ 1.0500
$ 1.0500
$ 0.5688
The accompanying notes are an integral part of these statements.
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Consumers Energy Company
Consolidated Statements of Income
Years Ended December 31
Operating Revenue
Operating Expenses
Fuel for electric generation
Purchased and interchange power
Purchased power – related parties
Cost of gas sold
Maintenance and other operating expenses
Depreciation and amortization
General taxes
Total operating expenses
Operating Income
Other Income (Expense)
Non-operating retirement benefits, net
Other income
Other expense
Total other income
Interest Charges
Interest on long-term debt
Interest expense – related parties
Other interest expense
Allowance for borrowed funds used during construction
Total interest charges
Income Before Income Taxes
Income Tax Expense
Net Income
Preferred Stock Dividends
In Millions
2023
2022
2021
$ 7,166
$ 8,151
$ 7,021
435
1,331
75
897
1,586
1,137
437
5,898
1,268
171
49
(12)
208
415
20
16
(3)
448
1,028
161
867
2
662
1,867
76
1,243
1,582
1,088
400
6,918
1,233
195
17
(25)
187
325
12
—
(2)
335
1,085
140
945
2
463
1,599
77
726
1,531
1,077
373
5,846
1,175
155
23
(18)
160
294
12
8
(3)
311
1,024
156
868
2
Net Income Available to Common Stockholder
$
865
$
943
$
866
The accompanying notes are an integral part of these statements.
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Table of Contents
Consumers Energy Company
Consolidated Statements of Comprehensive Income
Years Ended December 31
Net Income
Retirement Benefits Liability
Net gain (loss) arising during the period, net of tax of $—, $5, and $1
Amortization of net actuarial loss, net of tax of $—, $—, and $1
Other Comprehensive Income
Comprehensive Income
The accompanying notes are an integral part of these statements.
In Millions
2023
2022
2021
$
867
$
945
$
868
(1)
1
—
15
2
17
2
2
4
$
867
$
962
$
872
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Consumers Energy Company
Consolidated Statements of Cash Flows
Years Ended December 31
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operating
activities
Depreciation and amortization
Deferred income taxes and investment tax credits
Bad debt expense
Postretirement benefits contributions
Other non-cash operating activities and reconciling adjustments
Changes in assets and liabilities
Accounts and notes receivable and accrued revenue
Inventories
Accounts payable and accrued rate refunds
Other current assets and liabilities
Other non-current assets and liabilities
Net cash provided by operating activities
Cash Flows from Investing Activities
In Millions
2023
2022
2021
$
867
$
945
$
868
1,137
156
34
(9)
(123)
219
186
(127)
(35)
125
2,430
1,088
134
50
(9)
(87)
(660)
(447)
(9)
18
(29)
994
1,077
154
22
(9)
(64)
(103)
(90)
140
27
(40)
1,982
Capital expenditures (excludes assets placed under finance lease)
(2,248)
(2,239)
(2,052)
Covert Generating Station acquisition
Cost to retire property and other investing activities
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from issuance of debt
Retirement of debt
Increase in notes payable
Increase (decrease) in notes payable – related parties
Stockholder contribution
Payment of dividends on common and preferred stock
Other financing costs
Net cash provided by financing activities
Net Increase (Decrease) in Cash and Cash Equivalents, Including
Restricted Amounts
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of
Period
(812)
(141)
—
(105)
—
(133)
(3,201)
(2,344)
(2,185)
2,666
(1,654)
73
(75)
475
(697)
(21)
767
(4)
60
1,799
(28)
20
(317)
685
(771)
(22)
1,366
16
44
335
(27)
—
85
575
(724)
(32)
212
9
35
Cash and Cash Equivalents, Including Restricted Amounts, End of
Period
$
56
$
60
$
44
104
Years Ended December 31
Other Cash Flow Activities and Non-cash Investing and Financing Activities
Cash transactions
Interest paid (net of amounts capitalized)
Income taxes paid (refunds received), net
Non-cash transactions
Capital expenditures not paid
The accompanying notes are an integral part of these statements.
In Millions
2023
2022
2021
$
417
$
309
$
298
31
(2)
(10)
$
264
$
210
$
192
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Consumers Energy Company
Consolidated Balance Sheets
ASSETS
December 31
Current Assets
Cash and cash equivalents
Restricted cash and cash equivalents
$
Accounts receivable and accrued revenue, less allowance of $21 in 2023 and $27 in
2022
Accounts and notes receivable – related parties
Inventories at average cost
Gas in underground storage
Materials and supplies
Generating plant fuel stock
Deferred property taxes
Regulatory assets
Prepayments and other current assets
Total current assets
Plant, Property, and Equipment
Plant, property, and equipment, gross
Less accumulated depreciation and amortization
Plant, property, and equipment, net
Construction work in progress
Total plant, property, and equipment
Other Non-current Assets
Regulatory assets
Accounts receivable
Accounts and notes receivable – related parties
Postretirement benefits
Other
Total other non-current assets
Total Assets
In Millions
2023
2022
$
35
21
909
11
587
257
80
426
203
65
43
17
1,524
10
840
206
59
384
57
96
2,594
3,236
31,723
8,796
22,927
845
23,772
29,342
8,791
20,551
994
21,545
3,683
3,595
28
95
1,367
313
5,486
29
99
1,126
286
5,135
$ 31,852
$ 29,916
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LIABILITIES AND EQUITY
December 31
Current Liabilities
In Millions
2023
2022
Current portion of long-term debt and finance leases
$
731
$
1,000
Notes payable
Notes payable – related parties
Accounts payable
Accounts payable – related parties
Accrued rate refunds
Accrued interest
Accrued taxes
Regulatory liabilities
Other current liabilities
Total current liabilities
Non-current Liabilities
Long-term debt
Long-term debt – related parties
Non-current portion of finance leases
Regulatory liabilities
Postretirement benefits
Asset retirement obligations
Deferred investment tax credit
Deferred income taxes
Other non-current liabilities
Total non-current liabilities
93
—
764
13
54
110
614
56
128
20
75
864
15
—
90
556
104
147
2,563
2,871
10,037
424
39
3,894
77
739
126
2,789
364
18,489
9,192
—
45
3,796
79
722
129
2,585
342
16,890
Commitments and Contingencies (Notes 2 and 3)
Equity
Common stockholder’s equity
Common stock, authorized 125.0 shares; outstanding 84.1 shares in both periods
Other paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total common stockholder’s equity
Cumulative preferred stock, $4.50 series, authorized 7.5 shares; outstanding
0.4 shares in both periods
Total equity
Total Liabilities and Equity
The accompanying notes are an integral part of these statements.
841
7,759
(15)
2,178
10,763
841
7,284
(15)
2,008
10,118
37
37
10,800
10,155
$ 31,852
$ 29,916
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Consumers Energy Company
Consolidated Statements of Changes in Equity
Years Ended December 31
Total Equity at Beginning of Period
Common Stock
At beginning and end of period
Other Paid-in Capital
At beginning of period
Stockholder contribution
At end of period
Accumulated Other Comprehensive Loss
Retirement benefits liability
At beginning of period
Net gain (loss) arising during the period
Amortization of net actuarial loss
At end of period
Retained Earnings
At beginning of period
Net income
Dividends declared on common stock
Dividends declared on preferred stock
At end of period
Cumulative Preferred Stock
At beginning and end of period
Total Equity at End of Period
The accompanying notes are an integral part of these statements.
In Millions
2023
2022
2021
$ 10,155
$ 9,279
$ 8,556
841
841
841
7,284
475
7,759
6,599
685
7,284
6,024
575
6,599
(15)
(1)
1
(15)
(32)
15
2
(15)
(36)
2
2
(32)
2,008
1,834
1,690
867
(695)
(2)
945
(769)
(2)
868
(722)
(2)
2,178
2,008
1,834
37
37
37
$ 10,800
$ 10,155
$ 9,279
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CMS Energy Corporation
Consumers Energy Company
Notes to the Consolidated Financial Statements
1: Significant Accounting Policies
Principles of Consolidation: CMS Energy and Consumers prepare their consolidated financial
statements in conformity with GAAP. CMS Energy’s consolidated financial statements comprise
CMS Energy, Consumers, NorthStar Clean Energy, and all other entities in which CMS Energy has a
controlling financial interest or is the primary beneficiary. Consumers’ consolidated financial statements
comprise Consumers and all other entities in which it has a controlling financial interest. CMS Energy
uses the equity method of accounting for investments in companies and partnerships that are not
consolidated, where they have significant influence over operations and financial policies but are not the
primary beneficiary. CMS Energy and Consumers eliminate intercompany transactions and balances.
Use of Estimates: CMS Energy and Consumers are required to make estimates using assumptions that
may affect reported amounts and disclosures. Actual results could differ from those estimates.
Cash and Cash Equivalents and Restricted 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 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.
Contingencies: CMS Energy and Consumers record estimated loss contingencies on their consolidated
financial statements when it is probable that a loss has been incurred and when the amount of loss can be
reasonably estimated. For environmental remediation projects in which the timing of estimated
expenditures is considered reliably determinable, CMS Energy and Consumers record the liability at its
net present value, using a discount rate equal to the interest rate on monetary assets that are essentially
risk-free and have maturities comparable to that of the environmental liability. Unless regulatory
accounting applies, CMS Energy and Consumers expense legal fees as incurred; fees incurred but not yet
billed are accrued based on estimates of work performed.
Debt Issuance Costs, Discounts, Premiums, and Refinancing Costs: Upon the issuance of long-term
debt, CMS Energy and Consumers defer issuance costs, discounts, and premiums and amortize those
amounts over the terms of the associated debt. Debt issuance costs are presented as a direct deduction
from the carrying amount of long-term debt on the balance sheet. Upon the refinancing of long-term debt,
Consumers, as a regulated entity, defers any remaining unamortized issuance costs, discounts, and
premiums associated with the refinanced debt and amortizes those amounts over the term of the newly
issued debt. For the non-regulated portions of CMS Energy’s business, any remaining unamortized
issuance costs, discounts, and premiums associated with extinguished debt are charged to earnings.
Derivative Instruments: In order to support ongoing operations, CMS Energy and Consumers may enter
into contracts for the future purchase and sale of various commodities, such as electricity, natural gas, and
coal. These forward contracts are generally long-term in nature and result in physical delivery of the
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commodity at a contracted price. Most of these contracts are not subject to derivative accounting for one
or more of the following reasons:
•
•
•
they do not have a notional amount (that is, a number of units specified in a derivative instrument,
such as MWh of electricity or bcf of natural gas)
they qualify for the normal purchases and sales exception
they cannot be net settled due in part to the absence of an active market for the commodity
Consumers also uses FTRs to manage price risk related to electricity transmission congestion. An FTR is
a financial instrument that entitles its holder to receive compensation or requires its holder to remit
payment for congestion-related transmission charges. Consumers accounts for FTRs as derivatives and
changes in the fair value of FTRs are deferred as regulatory assets or liabilities. For details regarding
CMS Energy’s and Consumers’ derivative instruments recorded at fair value, see Note 5, Fair Value
Measurements.
EPS: CMS Energy calculates basic and diluted EPS using the weighted-average number of shares of
common stock and dilutive potential common stock outstanding during the period. Potential common
stock, for purposes of determining diluted EPS, includes the effects of nonvested stock awards, forward
equity sales, and convertible securities. CMS Energy computes the effect on potential common stock
using the treasury stock method. Potentially dilutive common shares issuable upon conversion of the
convertible senior notes are determined using the if-converted method for calculating diluted EPS.
Diluted EPS excludes the impact of antidilutive securities, which are those securities resulting in an
increase in EPS or a decrease in loss per share. For EPS computations, see Note 13, Earnings Per Share—
CMS Energy.
Impairment of Long-lived Assets and Equity Method Investments: CMS Energy and Consumers
perform tests of impairment if certain triggering events occur that indicate the carrying amount of an asset
may not be recoverable or that there has been a decline in value that may be other than temporary.
CMS Energy and Consumers evaluate long-lived assets held in use for impairment by calculating the
undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. If
the undiscounted future cash flows are less than the carrying amount, CMS Energy and Consumers
recognize an impairment loss equal to the amount by which the carrying amount exceeds the fair value.
CMS Energy and Consumers estimate the fair value of the asset using quoted market prices, market prices
of similar assets, or discounted future cash flow analyses.
CMS Energy also assesses equity method investments for impairment whenever there has been a decline
in value that is other than temporary. This assessment requires CMS Energy to determine the fair value of
the equity method investment. CMS Energy determines fair value using valuation methodologies,
including discounted cash flows, and assesses the ability of the investee to sustain an earnings capacity
that justifies the carrying amount of the investment. CMS Energy records an impairment if the fair value
is less than the carrying amount and the decline in value is considered to be other than temporary.
Investment Tax Credits: CMS Energy and its subsidiaries use the flow-through method of accounting
for investment tax credits. Under the flow-through method, the credit is recognized as a reduction to
income tax expense when the related plant, property, and equipment is placed into service. For its
regulated utility assets, Consumers amortizes its investment tax credits over the life of the related property
in accordance with regulatory treatment.
Inventory: CMS Energy and Consumers use the weighted-average cost method for valuing working gas,
recoverable base gas in underground storage facilities, and materials and supplies inventory. CMS Energy
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and Consumers also use this method for valuing coal inventory, and they classify these amounts as
generating plant fuel stock on their consolidated balance sheets.
CMS Energy and Consumers account for RECs and emission allowances as inventory and use the
weighted-average cost method to remove amounts from inventory. RECs and emission allowances are
used to satisfy compliance obligations related to the generation of power. CMS Energy and Consumers
classify these amounts within other assets on their consolidated balance sheets.
CMS Energy and Consumers evaluate inventory for impairment as required to ensure that its carrying
value does not exceed the lower of cost or net realizable value.
MISO Transactions: MISO requires the submission of hourly day-ahead and real-time bids and offers
for energy at locations across the MISO region. CMS Energy and Consumers account for MISO
transactions on a net hourly basis in each of the real-time and day-ahead markets, netted across all MISO
energy market locations. CMS Energy and Consumers record net hourly purchases in purchased and
interchange power and net hourly sales in operating revenue on their consolidated statements of income.
They record net billing adjustments upon receipt of settlement statements, record accruals for future net
purchases and sales adjustments based on historical experience, and reconcile accruals to actual expenses
and sales upon receipt of settlement statements.
Property Taxes: Property taxes are based on the taxable value of CMS Energy’s and Consumers’ real
and personal property assessed by local taxing authorities. CMS Energy and Consumers record property
tax expense over the fiscal year of the taxing authority for which the taxes are levied. The deferred
property tax balance represents the amount of CMS Energy’s and Consumers’ accrued property tax that
will be recognized over future governmental fiscal periods.
Other: For additional accounting policies, see:
• Note 2, Regulatory Matters
• Note 7, Plant, Property, and Equipment
• Note 8, Leases
• Note 9, Asset Retirement Obligations
• Note 10, Retirement Benefits
• Note 12, Income Taxes
• Note 13, Earnings Per Share—CMS Energy
• Note 14, Revenue
• Note 18, Variable Interest Entities
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2: Regulatory Matters
Regulatory matters are critical to Consumers. The Michigan Attorney General, ABATE, the MPSC Staff,
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
GCR processes. Intervenors also participate in certain FERC matters, including FERC’s regulation of
certain wholesale rates that affect Consumers’ power supply costs. 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 and FERC 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.
Regulatory Assets and Liabilities
Consumers is subject to the actions of the MPSC and FERC and therefore prepares its consolidated
financial statements in accordance with the provisions of regulatory accounting. A utility must apply
regulatory accounting when its rates are designed to recover specific costs of providing regulated
services. Under regulatory accounting, Consumers records regulatory assets or liabilities for certain
transactions that would have been treated as expense or revenue by non-regulated businesses.
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Presented in the following table are the regulatory assets and liabilities on Consumers’ consolidated
balance sheets:
December 31
Regulatory assets
Current
2022 PSCR underrecovery1
Energy waste reduction plan incentive2
Retention incentive program3
Other
Total current regulatory assets
Non-current
Costs of coal-fueled electric generating units to be retired1
Securitized costs1
Postretirement benefits4
ARO3
2022 PSCR underrecovery1
MGP sites1
Unamortized loss on reacquired debt1
Decommissioning costs3
Energy waste reduction plan incentive2
Retention incentive program3
Postretirement benefits expense deferral mechanism3
Energy waste reduction plan3
Ludington overhaul contract dispute3
Other
Total non-current regulatory assets
Total regulatory assets
Regulatory liabilities
Current
Income taxes, net
Reserve for customer refunds
Other
Total current regulatory liabilities
Non-current
Cost of removal
Income taxes, net
Renewable energy grant
Renewable energy plan
Energy waste reduction plan
Postretirement benefits expense deferral mechanism
Other
Total non-current regulatory liabilities
Total regulatory liabilities
113
In Millions
2023
2022
$
126
$
54
12
11
203
$
—
47
2
8
57
$
$
$
$
$
$
$
$
$
1,265
$
1,258
778
741
328
126
99
96
83
58
27
24
19
13
26
843
856
281
—
108
100
24
55
31
—
10
—
29
3,683
3,886
$
$
3,595
3,652
49
$
2
5
48
47
9
56
$
104
2,545
$
1,220
2,426
1,267
43
29
25
12
20
3,894
3,950
$
$
45
32
6
—
20
3,796
3,900
Table of Contents
1
2
3
4
The MPSC has provided a specific return on these regulatory assets.
These regulatory assets have arisen from an alternative revenue program and are not associated with
incurred costs or capital investments. Therefore, the MPSC has provided for recovery without a return.
These regulatory assets represent incurred costs for which the MPSC has provided recovery without a
return on investment.
This regulatory asset is included in rate base, thereby providing a return.
Regulatory Assets
2022 PSCR Underrecovery: As a result of rising fuel prices during 2022, Consumers’ power supply
costs for 2022 were significantly higher than those projected in its 2022 PSCR plan. At the end of 2022,
Consumers had recorded $401 million of under-recovered power supply costs. In February 2023, the
MPSC authorized Consumers to recover the 2022 underrecovery amount over three years, providing
immediate relief to electric customers.
Energy Waste Reduction Plan Incentive: The energy waste reduction incentive mechanism provides a
financial incentive if the energy savings of Consumers’ customers exceed annual targets established by
the MPSC. Consumers accounts for this program as an alternative-revenue program that meets the criteria
for recognizing revenue related to the incentive as soon as energy savings exceed the annual targets
established by the MPSC.
In November 2023, the MPSC approved a settlement agreement authorizing Consumers to collect
$55 million during 2024 as an incentive for exceeding its statutory savings targets in 2022. Consumers
recognized incentive revenue under this program of $55 million in 2022.
Consumers also exceeded its statutory savings targets in 2023, achieved certain other goals, and will
request the MPSC’s approval to collect $58 million, the maximum performance incentive, in the energy
waste reduction reconciliation to be filed in May 2024. Consumers recognized incentive revenue under
this program of $58 million in 2023.
Retention Incentive Program: To ensure necessary staffing at the D.E. Karn and J.H. Campbell coal-
fueled generating units through their retirement, Consumers established retention incentive programs. The
MPSC has approved deferred accounting treatment for the retention and severance costs incurred under
these programs and has allowed for recovery over three years. For additional details regarding the
retention incentive program, see Note 19, Exit Activities and Discontinued Operations.
Costs of Coal-fueled Electric Generating Units to be Retired: In June 2022, the MPSC approved
Consumers’ Clean Energy Plan, under which Consumers plans to retire the J.H. Campbell coal-fueled
generating units in 2025. 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, through 2040, the units’
original retirement date. 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.
Securitized Costs: The MPSC has issued securitization financing orders authorizing Consumers to issue
securitization bonds in order to finance the recovery of the remaining book value of three smaller natural
gas-fueled electric generating units that Consumers retired in 2015, seven smaller coal-fueled electric
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generating units that Consumers retired in 2016, and the D.E. Karn coal-fueled electric generating units
that Consumers retired in June 2023. Consumers has removed from plant, property, and equipment and
recorded as a regulatory asset the book value of these units. Consumers is amortizing the regulatory asset
over the life of the related securitization bonds, which it issued through subsidiaries in 2014 and 2023.
For additional details regarding the securitization bonds, see Note 4, Financings and Capitalization—
Securitization Bonds.
Postretirement Benefits: As part of the ratemaking process, the MPSC allows Consumers to recover the
costs of postretirement benefits. Accordingly, Consumers defers the net impact of actuarial losses and
gains, prior service costs and credits, and settlements associated with postretirement benefits as a
regulatory asset or liability. The asset or liability will decrease as the deferred items are amortized and
recognized as components of net periodic benefit cost. For details about settlements and the amortization
periods, see Note 10, Retirement Benefits.
ARO: The recovery of the underlying asset investments and related removal and monitoring costs of
recorded AROs is approved by the MPSC in depreciation rate cases. Consumers records a regulatory asset
and a regulatory liability for timing differences between the recognition of AROs for financial reporting
purposes and the recovery of these costs from customers. The recovery period approximates the useful
life of the assets to be removed.
MGP Sites: Consumers is incurring environmental remediation and other response activity costs at
23 former MGP facilities. The MPSC allows Consumers to recover from its natural gas customers over a
ten-year period the costs incurred to remediate the MGP sites. For additional information, see Note 3,
Contingencies and Commitments—Consumers Gas Utility Contingencies—Gas Environmental Matters.
Unamortized Loss on Reacquired Debt: Under regulatory accounting, any unamortized discount,
premium, or expense related to debt redeemed with the proceeds of new debt is capitalized and amortized
over the life of the new debt.
Decommissioning Costs: In Consumers’ electric depreciation and general rate cases, the MPSC has
authorized Consumers to remove from depreciation rates the costs of decommissioning the D.E. Karn
coal-fueled electric generating units, and instead defer those costs as a regulatory asset to be recovered
through 2031. Additionally, ash disposal costs related to Consumers’ retired coal-fueled generating units
may be deferred as a regulatory asset and collected over a ten-year period. In its 2022 order approving
Consumers’ Clean Energy Plan, the MPSC authorized similar treatment for the decommissioning and ash
disposal costs associated with the J.H. Campbell coal-fueled generating units that will be retired in 2025.
Postretirement Benefits Expense Deferral Mechanism: In Consumers’ general rate cases, 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 rates, respectively, beginning in January 2023
for the electric utility and October 2023 for the gas utility.
Energy Waste Reduction Plan: The MPSC allows Consumers to collect surcharges from customers to
fund its energy waste reduction plan. The amount of spending incurred in excess of surcharges collected
is recorded as a regulatory asset and amortized as surcharges are collected from customers over the plan
period. The amount of surcharges collected in excess of spending incurred is recorded as a regulatory
liability and amortized as costs are incurred.
Ludington Overhaul Contract Dispute: The MPSC has authorized Consumers to defer as a regulatory
asset costs associated with repairing or replacing defective work performed by TAES during a major
overhaul and upgrade of Ludington. Consumers will defer such costs while litigation with TAES and
Toshiba moves forward; such costs will be offset by potential future litigation proceeds received from
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TAES or Toshiba. Consumers will have the opportunity to seek appropriate recovery and ratemaking
treatment for amounts recorded as a regulatory asset following resolution of the litigation. For additional
details on the contract dispute, see Note 3, Contingencies and Commitments—Consumers Electric Utility
Contingencies.
Regulatory Liabilities
Income Taxes, Net: Consumers records regulatory assets and liabilities to reflect the difference between
deferred income taxes recognized for financial reporting purposes and amounts previously reflected in
Consumers’ rates. This net balance will decrease over the remaining life of the related temporary
differences and flow through income tax expense. The majority of the net regulatory liability recorded
related to income taxes is associated with plant assets that are subject to normalization, which is governed
by the Internal Revenue Code, and will be returned to customers over the remaining book life of the
related plant assets. For additional details on deferred income taxes, see Note 12, Income Taxes.
Reserve for Customer Refunds: In December 2022, the MPSC issued an order authorizing Consumers
to refund $22 million voluntarily to utility customers. During 2023, the MPSC approved Consumers’
requests that the refund take the form of contributions to programs that assist vulnerable electric and gas
customers and incremental vegetation management. Additionally, in the settlement of its 2022 electric
rate case, Consumers agreed to refund voluntarily $15 million of 2022 revenues to utility customers
through a one-time bill credit and to fund $10 million in contributions to programs that directly assist
vulnerable customers with utility bills.
Cost of Removal: The MPSC allows Consumers to collect amounts from customers to fund future asset
removal activities. This regulatory liability is reduced as costs are incurred to remove the assets at the end
of their useful lives.
Renewable Energy Grant: In 2013, Consumers received a $69 million renewable energy grant for Lake
Winds® Energy Park, which began operations in 2012. This grant reduces Consumers’ cost of complying
with Michigan’s renewable portfolio standard and, accordingly, reduces the overall renewable energy
surcharge to be collected from customers. The regulatory liability recorded for the grant will be amortized
over the life of Lake Winds® Energy Park. Consumers presents the amortization as a reduction to
maintenance and other operating expenses on its consolidated statements of income.
Renewable Energy Plan: Consumers has collected surcharges to fund its renewable energy plan.
Amounts not yet spent under the plan are recorded as a regulatory liability, which is amortized as
incremental costs are incurred to operate and depreciate Consumers’ renewable generation facilities and
to purchase RECs under renewable energy purchase agreements. Incremental costs represent costs
incurred in excess of amounts recovered through the PSCR process.
Consumers Electric and Gas Utility
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; Consumers provided this information in August 2023. As
directed in the order, the MPSC Staff analyzed this information and made recommendations, including
continued monitoring of Consumers’ performance in these areas and penalties for failure to comply with
MPSC service rules.
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In October 2023, the MPSC issued a show-cause order directing Consumers to provide further
information on consecutive estimated billings, the provision of actual meter readings, and new service
installation issues. Consumers cannot predict the outcome of this matter, but it could be subject to
regulatory penalties that are not expected to have a material effect on Consumers’ results of operations
and Consumers could be subject to increased regulatory scrutiny.
Consumers Electric Utility
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. The new rates became effective January 20, 2023.
Consumers Gas Utility
2022 Gas Rate Case: In December 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 August 2023, the MPSC approved a settlement
agreement authorizing an annual rate increase of $95 million, based on a 9.9-percent authorized return on
equity, effective October 1, 2023. The MPSC also authorized the use of a cost deferral mechanism that
will allow Consumers to defer for future recovery or refund pension and OPEB expense above or below
the amounts used to set existing rates.
Power Supply Cost Recovery and Gas Cost Recovery
The PSCR and GCR ratemaking processes are designed to allow Consumers to recover all of its power
supply and purchased natural gas costs if incurred under reasonable and prudent policies and practices.
The MPSC reviews these costs, policies, and practices in annual plan and reconciliation proceedings.
Consumers adjusts its PSCR and GCR billing charges monthly, subject to ceiling factor limitations, in
order to minimize the underrecovery or overrecovery amount in the annual reconciliations.
Underrecoveries represent power supply and purchased natural gas costs that will be recovered from
customers; overrecoveries represent previously collected revenues that will be refunded to customers.
Presented in the following table are the assets and liabilities for PSCR and GCR underrecoveries and
overrecoveries reflected on Consumers’ consolidated balance sheets:
December 31
Assets
PSCR underrecoveries
GCR underrecoveries
Accounts receivable and accrued revenue
Liabilities
PSCR overrecoveries
GCR overrecoveries
Accrued rate refunds
117
In Millions
2023
2022
$ —
$
401
—
8
$ —
$
409
$
$
10
44
54
$ —
—
$ —
Table of Contents
PSCR Plans and Reconciliations: In September 2023, the MPSC issued an order in Consumers’ 2021
PSCR reconciliation, authorizing recovery of $2.1 billion of power costs and authorizing Consumers to
reflect in its 2022 PSCR reconciliation the overrecovery of $7 million.
In March 2023, Consumers filed its 2022 PSCR reconciliation, requesting full recovery of $2.5 billion of
power costs and authorization to reflect in its 2023 PSCR reconciliation the underrecovery of
$404 million. In November 2023, Consumers revised its reconciliation, requesting authorization to reflect
in its 2023 PSCR reconciliation the underrecovery of $401 million.
Consumers submitted its 2023 PSCR plan to the MPSC in September 2022 and self-implemented a
2023 PSCR charge in accordance with that plan in January 2023. As a result of significantly higher-than-
projected power costs during 2022, Consumers subsequently 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, providing immediate relief to electric customers. The
MPSC approved Consumers’ 2023 PSCR plan in August 2023.
GCR Plans and Reconciliations: In March 2023, the MPSC approved a settlement agreement in
Consumers’ 2021-2022 GCR reconciliation, authorizing recovery of $0.7 billion of gas costs and
authorizing Consumers to reflect in its 2022-2023 GCR reconciliation the underrecovery of $9 million.
In June 2023, Consumers filed its 2022-2023 GCR reconciliation, requesting full recovery of $1.1 billion
of gas costs and authorization to reflect in its 2023-2024 GCR reconciliation the underrecovery of
$15 million.
Consumers submitted its 2023-2024 GCR plan to the MPSC in December 2022 and self-implemented its
proposed 2023-2024 GCR charge in April 2023.
3: 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 stating 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 establishing 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 is valid through 2025.
At December 31, 2023, CMS Energy had a recorded liability of $45 million for its remaining obligations
for environmental remediation. CMS Energy calculated this liability based on discounted projected costs,
using a discount rate of 4.34 percent and an inflation rate of one percent on annual operating and
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maintenance costs. The undiscounted amount of the remaining obligation is $57 million. CMS Energy
expects to pay the following amounts for long-term leachate disposal and operating and maintenance
costs in each of the next five years:
2024
2025
2026
2027
2028
In Millions
CMS Energy
Long-term leachate disposal and operating and maintenance
costs
$
4
$
4
$
4
$
4
$
4
CMS Energy’s estimate of response activity costs and the timing of expenditures could change if there are
changes in circumstances or assumptions used in calculating the liability. Although a liability for its
present estimate of remaining response activity costs has been recorded, CMS Energy cannot predict the
ultimate financial impact or outcome of this matter.
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 its liability for NREPA sites for which it can
estimate a range of loss to be between $2 million and $4 million. At December 31, 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 had 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 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 its share of the total liability for known CERCLA sites to
be between $3 million and $8 million. Various factors, including the number and creditworthiness of
potentially responsible parties involved with each site, affect Consumers’ share of the total liability. At
December 31, 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
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nature and extent of contamination, and legal and regulatory requirements, could affect its estimates of
NREPA and CERCLA liability.
Ludington Overhaul Contract Dispute: Consumers and DTE Electric, co-owners of Ludington, are
parties to a 2010 engineering, procurement, and construction agreement with TAES, under which TAES
contracted to perform a major overhaul and upgrade of Ludington. The overhauled Ludington units are
operational, but TAES’ work has been defective and non-conforming. Consumers and DTE Electric have
demanded that TAES provide a comprehensive plan to resolve those matters, 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, under a parent guaranty it provided. TAES has not provided a comprehensive plan or otherwise
met its performance obligations.
In order to enforce the contract, Consumers and DTE Electric filed a complaint against TAES and
Toshiba in the U.S. District Court for the Eastern District of Michigan in April 2022. In June 2022, TAES
and Toshiba 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, if liability and
damages were proven. In September 2022, the court denied the motion to dismiss filed by TAES and
Toshiba. The parties are engaged in ongoing litigation, including discovery, pursuant to a court-ordered
schedule. Consumers believes the counterclaims filed by TAES and Toshiba 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.
Toshiba has announced that, through a common stock purchase, TBJH became the majority shareholder
and new parent company of Toshiba. TBJH is a subsidiary of a Japanese private equity firm. Consumers
and DTE Electric continue to monitor this development, but do not believe that this affects their rights
under the parent guaranty provided by Toshiba.
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 moves forward; such costs will be offset by
potential future litigation proceeds received from TAES or Toshiba. 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, but cannot predict the financial impact or outcome
of such proceedings.
J.H. Campbell 3 Plant Retirement Contract Dispute: In May 2022, Consumers filed a complaint
against Wolverine 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 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 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’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’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.
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Consumers Gas Utility Contingencies
Gas Environmental Matters: Consumers expects to incur remediation and other response activity costs
at a number of sites under NREPA. These sites include 23 former MGP facilities. Consumers operated the
facilities on these sites for some part of their operating lives. For some of these sites, Consumers has no
present ownership interest or may own only a portion of the original site.
At December 31, 2023, Consumers had a recorded liability of $62 million for its remaining obligations
for these sites. Consumers expects to pay the following amounts for remediation and other response
activity costs in each of the next five years:
Consumers
Remediation and other response activity costs
2024
2025
2026
2027
2028
In Millions
$
2
$
1
$
7
$ 10
$ 25
Consumers periodically reviews these cost estimates. Any significant change in the underlying
assumptions, such as an increase in the number of sites, changes in remediation techniques, or legal and
regulatory requirements, could affect Consumers’ estimates of annual response activity costs and the
MGP liability.
Pursuant to orders issued by the MPSC, Consumers defers its MGP-related remediation costs and
recovers them from its customers over a ten-year period. At December 31, 2023, Consumers had a
regulatory asset of $99 million related to the MGP sites.
Consumers estimates that its liability to perform remediation and other response activities at NREPA sites
other than the MGP sites could reach $1 million. At December 31, 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.
Guarantees
Presented in the following table are CMS Energy’s and Consumers’ guarantees at December 31, 2023:
Guarantee Description
CMS Energy, including Consumers
Indemnity obligations from sale of
membership interests in VIEs1
Indemnity obligations from stock and asset
sale agreements2
Guarantee3
Consumers
Guarantee3
Issue Date Expiration Date
Maximum
Obligation
In Millions
Carrying
Amount
various
indefinite
$
304
$
various
2011
indefinite
indefinite
153
30
2011
indefinite
$
30
$
—
1
—
—
1
These obligations arose from the sale of membership interests in NWO Holdco, Aviator Wind, and
Newport Solar Holdings 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
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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, Aviator Wind, and Newport Solar Holdings, see
Note 18, Variable Interest Entities.
These obligations arose from stock and asset sale agreements under which CMS Energy or a subsidiary of
CMS Energy indemnified the purchaser for losses resulting from various matters, including claims related
to taxes. The maximum obligation amount is mostly related to an Equatorial Guinea tax claim.
This 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.
2
3
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 2, Regulatory Matters, there are certain other
lawsuits and administrative proceedings before various courts and governmental agencies, as well as
unasserted claims that may result in such proceedings, arising in the ordinary course of business to which
CMS Energy, Consumers, and certain other subsidiaries of CMS Energy are parties. These other lawsuits,
proceedings, and unasserted claims may involve personal injury, property damage, contracts,
environmental matters, federal and state taxes, rates, licensing, employment, and other matters. Further,
CMS Energy and Consumers occasionally self-report certain regulatory non-compliance matters that may
or may not eventually result in administrative proceedings. CMS Energy and Consumers believe that the
outcome of any one of these proceedings and potential claims will not have a material negative effect on
their consolidated results of operations, financial condition, or liquidity.
Contractual Commitments
Purchase Obligations: Purchase obligations arise from long-term contracts for the purchase of
commodities and related services, and construction and service agreements. The commodities and related
services include long-term PPAs, natural gas and associated transportation, and coal and associated
transportation. Related-party PPAs are between Consumers and certain affiliates of NorthStar Clean
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Energy. Presented in the following table are CMS Energy’s and Consumers’ contractual purchase
obligations at December 31, 2023 for each of the periods shown:
Payments Due
Total
2024
2025
2026
2027
2028
In Millions
Beyond
2028
$ 7,204 $
711 $
792 $
783 $
787 $
702 $ 3,429
3,491
1,720
885
301
207
150
228
$ 10,695 $ 2,431 $ 1,677 $ 1,084 $
994 $
852 $ 3,657
$ 2,506 $
342 $
402 $
416 $
410 $
371 $
565
206
4,492
60
309
44
346
30
337
31
346
14
317
27
2,837
$ 7,204 $
711 $
792 $
783 $
787 $
702 $ 3,429
2,802
1,615
648
266
168
82
23
CMS Energy, including Consumers
Total PPAs
Other
Total purchase obligations
Consumers
PPAs
MCV PPA
Related-party PPAs
Other PPAs
Total PPAs
Other
Total purchase obligations
$ 10,006 $ 2,326 $ 1,440 $ 1,049 $
955 $
784 $ 3,452
MCV PPA: Consumers has a PPA with the MCV Partnership giving Consumers the right to purchase up
to 1,240 MW of capacity and energy produced by the MCV Facility through May 2030. The MCV PPA
provides for:
•
•
•
•
a capacity charge of $10.14 per MWh of available capacity through March 2025 and
$5.00 per MWh of available capacity from March 2025 through the termination date of the PPA
a fixed energy charge of $6.30 per MWh for on-peak hours and $6.00 for off-peak hours
a variable energy charge based on the MCV Partnership’s cost of production for energy delivered
to Consumers
a $5 million annual contribution by the MCV Partnership to a renewable resources program
through March 2025
Capacity and energy charges under the MCV PPA were $340 million in 2023, $519 million in 2022, and
$348 million in 2021.
Other PPAs: Consumers has PPAs expiring through 2048 with various counterparties. The majority of the
PPAs have capacity and energy charges for delivered energy. Capacity and energy charges under these
PPAs were $498 million in 2023, $510 million in 2022, and $338 million in 2021. In addition,
CMS Energy and Consumers account for several of their PPAs as leases. See Note 8, Leases for more
information about CMS Energy’s and Consumers’ lease obligations.
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4: Financings and Capitalization
Presented in the following table is CMS Energy’s long-term debt at December 31:
CMS Energy, including Consumers
CMS Energy, parent only
Senior notes
Interest Rate
(%)
Maturity
2023
2022
In Millions
3.875
3.600
3.000
2.950
3.450
4.700
4.875
$
2024
2025
2026
2027
2027
2043
2044
$
250
250
300
275
350
250
300
250
250
300
275
350
250
300
$
1,975
$
1,975
Convertible senior notes
3.375
2028
Junior subordinated notes1
Total CMS Energy, parent only
CMS Energy subsidiaries
Consumers
NorthStar Clean Energy, including subsidiaries
Term loan facility
Total principal amount outstanding
Current amounts
Unamortized discounts
Unamortized issuance costs
Total long-term debt
4.750 2
3.750 3
5.625
5.875
5.875
2050
2050
2078
2078
2079
variable
2023
$
$
800
800
500
400
200
280
630
—
—
500
400
200
280
630
$
$
2,010
4,785
$
$
2,010
3,985
10,863
$
10,277
$
—
15,648
(975)
(30)
(135)
$
100
14,362
(1,090)
(30)
(120)
$
14,508
$
13,122
1
2
3
These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s
existing and future senior indebtedness.
On June 1, 2030, and every five years thereafter, the notes will reset to an interest rate equal to the five-year
treasury rate plus 4.116 percent.
On December 1, 2030, and every five years thereafter, the notes will reset to an interest rate equal to the
five-year treasury rate plus 2.900 percent.
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Presented in the following table is Consumers’ long-term debt at December 31:
Interest Rate
(%)
Maturity
2023
2022
In Millions
Consumers
First mortgage bonds
$
2023
2023
2024
2024
2026
2027
2027
2028
2028
2029
2029
2032
2032
2032
2033
2035
2037
2037
2038
2040
2040
2042
2043
2045
2046
2047
2048
2049
2050
2050
2051
2052
2052
2052
2057
2060
2064
2069
2070
2070
$
—
—
250
52
115
100
35
425
300
500
50
95
350
100
700
175
140
335
215
50
50
263
425
250
450
350
550
550
300
550
575
300
450
50
185
525
250
76
134
127
300
325
250
52
—
100
35
—
300
—
—
—
350
100
—
175
—
335
215
50
50
263
425
250
450
350
550
550
300
550
575
300
450
50
185
525
250
76
134
127
0.350
3.375
3.125
3.190
5.240
3.680
3.390
4.650
3.800
4.900
5.070
5.170
3.600
3.180
4.625
5.800
5.380
3.520
4.010
6.170
4.970
4.310
3.950
4.100
3.250
3.950
4.050
4.350
3.750
3.100
3.500
2.650
4.200
3.860
4.280
2.500
4.350
variable 1
variable 1
variable 1
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Tax-exempt revenue bonds
Interest Rate
(%)
Maturity
0.875 2
1.800 3
2035
2049
2014 Securitization bonds
2023 Securitization bonds
3.421 4 2025-2029 5
2028-2031 5
5.342 6
Term loan facility
variable
2024
Total principal amount outstanding
Current amounts
Long-term debt – related parties7 principal amount
outstanding
Unamortized discounts
Unamortized issuance costs
Total long-term debt
2050-2060
In Millions
2023
10,397
35
75
110
141
646
787
—
11,294
(725)
(431)
(28)
(73)
10,037
$
$
$
$
$
$
2022
8,997
35
75
110
170
—
170
1,000
10,277
(991)
—
(27)
(67)
9,192
$
$
$
$
$
$
1
2
3
4
5
6
7
The variable-rate bonds bear interest quarterly at a rate of three-month SOFR minus 0.038 percent, subject
to a zero-percent floor. At December 31, 2023, the interest rates were 5.346 percent for bonds due
September 2069, 5.329 percent for bonds due May 2070, and 5.368 percent for bonds due October 2070.
The interest rate for all variable-rate bonds at December 31, 2022 was zero percent. The holders of these
variable-rate bonds may put them to Consumers for redemption on certain dates prior to their stated
maturity, including dates within one year of December 31, 2023.
The interest rate on these tax-exempt revenue bonds will reset on October 8, 2026.
The interest rate on these tax-exempt revenue bonds will reset on October 1, 2024.
The weighted-average interest rate for Consumers’ securitization bonds issued through its subsidiary,
Consumers 2014 Securitization Funding, was 3.421 percent at December 31, 2023 and 3.343 percent at
December 31, 2022.
Principal and interest payments are made semiannually.
The weighted-average interest rate for Consumers’ securitization bonds issued through its subsidiary,
Consumers 2023 Securitization Funding, was 5.342 percent at December 31, 2023.
Long-term debt – related parties reflects Consumers’ outstanding debt held by its parent as a result of
CMS Energy’s repurchase of Consumers’ first mortgage bonds.
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CMS Energy’s Purchase of Consumers’ First Mortgage Bonds: Presented in the following table is
Consumers’ long-term debt—related parties at December 31, 2023:
First mortgage bonds due 2060
First mortgage bonds due 2052
First mortgage bonds due 2050
First mortgage bonds due 2050
First mortgage bonds due 2051
First mortgage bonds due 2048
Total principal amount outstanding
Unamortized discounts
Unamortized issuance costs
Total long-term debt — related parties
Principal
(In Millions)
Interest Rate
(%)
2.500
2.650
3.750
3.100
3.500
4.050
$
163
106
23
52
27
60
$
431
(3)
(4)
$
424
During 2023, CMS Energy purchased these Consumers’ first mortgage bonds for $293 million. On a
consolidated basis, CMS Energy’s repurchase of Consumers’ first mortgage bonds was accounted for as a
debt extinguishment and resulted in a pre-tax gain of $131 million. Interest expense related to the
repurchased bonds was $5 million for the year ended December 31, 2023.
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Financings: Presented in the following table is a summary of major long-term debt issuances during
2023:
Principal
(In Millions)
Interest Rate
(%)
Issuance Date Maturity Date
CMS Energy, parent only
Convertible senior notes
Total CMS Energy, parent only
NorthStar Clean Energy, including
subsidiaries
Term loan facility1
Total NorthStar Clean Energy, including
subsidiaries
Consumers
First mortgage bonds
First mortgage bonds
First mortgage bonds
First mortgage bonds
First mortgage bonds
First mortgage bonds
First mortgage bonds
2023 Securitization bonds2
2023 Securitization bonds2
Total Consumers
Total CMS Energy
$
$
$
$
$
800
800
85
85
425
700
115
50
95
140
500
250
396
$
$
2,671
3,556
3.375
May 2023
May 2028
variable
February 2023 November 2023
4.650
January 2023
March 2028
4.625 February 2023
May 2033
May 2026
May 2029
May 2032
May 2037
5.240
5.070
5.170
5.380
4.900
May 2023
May 2023
May 2023
May 2023
August 2023
February 2029
5.550 December 2023
March 2028
5.210 December 2023 September 2031
1
2
In December 2022, a subsidiary of NorthStar Clean Energy entered into a $185 million unsecured term loan
credit agreement. Under this credit agreement, a subsidiary of NorthStar Clean Energy borrowed
$85 million in 2023.
For additional details on the securitization, see Note 2, Regulatory Matters— Securitized Costs.
In January 2024, Consumers issued $600 million of first mortgage bonds that mature in May 2029 and
bear interest at a rate of 4.600 percent. The proceeds of the bonds will be used for general corporate
purposes.
Issuance of Convertible 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 $12 million at December 31, 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
will be subject to adjustment for anti-dilutive events and fundamental change and redemption provisions
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as described in the related indenture. At December 31, 2023, the conversion price for the notes was
$73.97 per share of common stock.
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 of the conversion price then
in effect for at least 20 trading days during any 30 consecutive 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 price equal to 100 percent of 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
2023:
NorthStar Clean Energy, including
subsidiaries
Term loan facility
Total NorthStar Clean Energy, including
subsidiaries
Consumers
Term loan facility
First mortgage bonds
First mortgage bonds
Total Consumers
Principal
(In Millions)
Interest Rate
(%) Retirement Date Maturity Date
variable November 2023 November 2023
$
$
185
185
$
1,000
variable
February 2023
January 2024
300
325
$
1,625
0.350
3.375
June 2023
June 2023
August 2023
August 2023
In January 2024, CMS Energy retired $250 million of its senior notes bearing an interest rate of
3.875 percent and an original maturity date of March 2024.
Regulatory Authorization for Financings: Consumers is required to maintain FERC authorization for
financings. Its current authorization ends on March 31, 2025. Any long-term issuances during the
authorization period are exempt from FERC’s competitive bidding and negotiated placement
requirements.
First Mortgage Bonds: Consumers secures its first mortgage bonds by a mortgage and lien on
substantially all of its property. Consumers’ ability to issue first mortgage bonds is restricted by certain
provisions in the First Mortgage Bond Indenture and the need for regulatory approvals under federal law.
Restrictive issuance provisions in the First Mortgage Bond Indenture include achieving a two-times
interest coverage ratio and having sufficient unfunded net property additions.
Securitization Bonds: Certain regulatory assets held by Consumers’ subsidiaries, Consumers
2014 Securitization Funding and Consumers 2023 Securitization Funding, collateralize Consumers’
securitization bonds. Consumers 2014 Securitization Funding and Consumers 2023 Securitization
Funding are distinct subsidiaries. The bondholders of each entity have no recourse to the other’s assets or
the assets of Consumers. Consumers collects securitization surcharges to cover the principal and interest
on the bonds as well as certain other qualified costs. The surcharges collected by Consumers on behalf of
each entity are remitted to that subsidiary’s account and are not available to creditors of Consumers or
creditors of Consumers’ affiliates other than the subsidiary that issued the bonds.
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Debt Maturities: At December 31, 2023, the aggregate annual maturities for long-term debt for the next
five years, based on stated maturities or earlier put dates, were:
CMS Energy, including Consumers
Long-term debt
CMS Energy, parent only
Consumers
Total CMS Energy1
Consumers
Long-term debt
2024
2025
2026
2027
2028
In Millions
$
$
250
725
975
$
$
250
116
366
$
$
300
237
537
$
$
625
263
888
$
800
843
$ 1,643
$
725
$
116
$
237
$
263
$
843
Credit Facilities: The following credit facilities with banks were available at December 31, 2023:
Expiration Date
CMS Energy, parent only
December 14, 20271
September 22, 2024
NorthStar Clean Energy, including
subsidiaries
September 25, 20252
Consumers3
December 14, 2027
November 18, 2025
Amount of
Facility
Amount
Borrowed
Letters of Credit
Outstanding
In Millions
Amount
Available
$
550
50
$
37
$
1,100
250
$
$
$
—
—
—
—
—
$
$
$
$
24
50
526
—
37
$
—
27
48
$
1,073
202
1
2
3
There were no borrowings under this facility during the year ended December 31, 2023.
This letter of credit facility is available to Aviator Wind Equity Holdings. For more information regarding
Aviator Wind Equity Holdings, see Note 18, Variable Interest Entities.
Obligations under these facilities are secured by first mortgage bonds of Consumers. There were
no borrowings under these facilities during the year ended December 31, 2023.
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 December 31, 2023, there were $93 million of commercial paper notes outstanding under this program
with a weighted-average annual interest rate of 5.609 percent, recorded as current notes payable on the
consolidated balance sheets of CMS Energy and Consumers.
In December 2023, 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 Term
SOFR minus 0.100 percent. At December 31, 2023, there were no outstanding borrowings under the
agreement.
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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. There were no trade payables outstanding
under the program in accounts payable on CMS Energy’s and Consumers’ consolidated balance sheets at
December 31, 2023, and less than $1 million at December 31, 2022.
Dividend Restrictions: At December 31, 2023, payment of dividends by CMS Energy on its common
stock was limited to $7.3 billion under provisions of the Michigan Business Corporation Act of 1972.
Under the provisions of its articles of incorporation, at December 31, 2023, Consumers had $2.1 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 year ended December 31, 2023, Consumers paid $695 million in dividends on its common
stock to CMS Energy.
Capitalization: The authorized capital stock of CMS Energy consists of:
•
•
350 million shares of CMS Energy Common Stock, par value $0.01 per share
10 million shares of CMS Energy Preferred Stock, par value $0.01 per share
Issuance of Common Stock: In 2023, 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 $1 billion in privately
negotiated transactions, in “at the market” offerings, or through forward sales transactions. There have
been no sales of securities under this program.
In November 2023, CMS Energy partially settled a forward contract, issued under its previous equity
offering program, by issuing shares of its common stock at a weighted-average price of $68.05 per share,
resulting in net proceeds of $178 million.
Presented in the following table are details of CMS Energy’s forward sales contracts under its equity
offering program at December 31, 2023:
Contract Date
August 3, 2022
August 24, 2022
August 29, 2022
Maturity Date
Number of Shares
Initial December 31, 2023
December 31, 2024
December 31, 2024
December 31, 2024
328,207
1,677,938
1,783,388
$
67.59
69.46
68.18
$
68.37
70.91
69.54
Forward Price Per Share
Under these contracts, CMS Energy may either settle physically by issuing shares of its common stock at
the then-applicable forward sale price specified by the agreement or settle net by delivering or receiving
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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 December 31, 2023,
CMS Energy would not have been required to deliver shares or pay cash. In January 2024, CMS Energy
settled the remaining forward sale contracts issued under its previous equity offering program by issuing
shares at a weighted average price of $70.31 per share, resulting in net proceeds of $266 million.
Preferred Stock: CMS Energy’s Series C preferred stock is traded on the New York Stock Exchange
under the symbol CMS PRC. Depositary shares represent a 1/1000th interest in a share of its Series C
preferred stock. The Series C preferred stock has no maturity or mandatory redemption date and is not
redeemable at the option of the holders. CMS Energy may, at its option, redeem the Series C preferred
stock, in whole or in part, at any time on or after July 15, 2026. The Series C preferred stock ranks senior
to CMS Energy’s common stock with respect to dividend rights and distribution rights upon liquidation.
Presented in the following table are details of CMS Energy’s Series C preferred stock at
December 31, 2023 and 2022:
Depositary
Share
Optional
Redemption
Price
Depositary
Share Par
Value
Number of
Depositary
Shares
Authorized
Number of
Depositary
Shares
Outstanding
Cumulative, redeemable perpetual
$
25
$
25
9,200,000
9,200,000
Preferred Stock of Subsidiary: Consumers’ preferred stock is traded on the New York Stock Exchange
under the symbol CMS-PB. Presented in the following table are details of Consumers’ preferred stock at
December 31, 2023 and 2022:
Cumulative, with no mandatory redemption
Optional
Redemption
Price
Number of
Shares
Authorized
Number of
Shares
Outstanding
$
110
7,500,000
373,148
Par Value
$
100
5: 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.
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•
Level 3 inputs are unobservable inputs that reflect CMS Energy’s or Consumers’ own
assumptions about how market participants would value their assets and liabilities.
CMS Energy and Consumers classify fair value measurements within the fair value hierarchy based on
the lowest level of input that is significant to the fair value measurement in its entirety.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Presented in the following table are CMS Energy’s and Consumers’ assets and liabilities recorded at fair
value on a recurring basis:
December 31
Assets1
Cash equivalents
Restricted cash equivalents
Nonqualified deferred
compensation plan assets
Derivative instruments
Total assets
Liabilities1
Nonqualified deferred
compensation plan liabilities
Total liabilities
CMS Energy, including Consumers
2023
2022
$
$
$
$
18
21
30
2
71
30
30
$
$
$
$
—
18
24
2
44
24
24
In Millions
Consumers
2023
2022
$
$
$
$
—
21
22
2
45
22
22
$
$
$
$
—
17
18
2
37
18
18
1
All assets and liabilities were classified as Level 1 with the exception of derivative contracts, which were
classified as Level 3.
Cash Equivalents: Cash equivalents and restricted cash equivalents consist of money market funds with
daily liquidity.
Nonqualified Deferred Compensation Plan Assets and Liabilities: The nonqualified deferred
compensation plan assets consist of mutual funds, which are bought and sold only at the discretion of plan
participants.The assets 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 3.
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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6: 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 5, Fair Value
Measurements.
December 31, 2023
December 31, 2022
In Millions
Fair Value
Level
1
2
Carrying
Amount
3
Fair Value
Level
Total
1
2
3
Total
CMS Energy, including Consumers
Carrying
Amount
Assets
Long-term
receivables1
$
11 $
11 $ — $ — $ 11
$
14 $
14 $ — $ — $ 14
Liabilities
Long-term
debt2
Long-term
payables3
Consumers
Assets
Long-term
15,483
14,305
1,103
11,186
2,016
14,212
12,384
987
8,741
2,656
11
11
—
—
11
9
7
—
—
7
receivables1
$
11 $
11 $ — $ — $ 11
$
14 $
14 $ — $ — $ 14
Notes
receivable –
related
party4
Liabilities
Long-term
debt5
Long-term
debt –
related party
Long-term
payables
97
97
—
—
97
101
101
—
—
101
10,762
9,757
—
7,741
2,016
10,183
8,728
—
6,172
2,556
424
303
5
5
—
—
303
—
—
5
—
—
—
—
—
—
—
—
—
—
1
2
3
4
5
Includes current portion of long-term accounts receivable and notes receivable of $6 million at
December 31, 2023 and $7 million at December 31, 2022.
Includes current portion of long-term debt of $975 million at December 31, 2023 and $1,090 million at
December 31, 2022.
Includes current portion of long-term payables of $2 million at December 31, 2022.
Includes current portion of notes receivable – related party of $7 million at December 31, 2023 and 2022.
Includes current portion of long-term debt of $725 million at December 31, 2023 and $991 million at
December 31, 2022.
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Notes receivable – related party represents Consumers’ portion of the 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.
7: Plant, Property, and Equipment
Presented in the following table are details of CMS Energy’s and Consumers’ plant, property, and
equipment:
December 31
CMS Energy, including Consumers
Plant, property, and equipment, gross
Consumers
NorthStar Clean Energy
Independent power production1
Assets under finance leases2
Other
Plant, property, and equipment, gross
Construction work in progress
Accumulated depreciation and amortization
Total plant, property, and equipment3
Consumers
Plant, property, and equipment, gross
Electric
Generation
Distribution
Other
Assets under finance leases2
Gas
Distribution
Transmission
Underground storage facilities4
Other
Assets under finance leases2
Other non-utility property
Plant, property, and equipment, gross
Construction work in progress
Accumulated depreciation and amortization
Total plant, property, and equipment2
Estimated
Depreciable
Life in Years
In Millions
2023
2022
3 – 125
$
31,723
$
29,342
3 – 40
1,387
1,124
3 – 5
24
1
24
1
$
33,135
$
30,491
944
(9,007)
1,182
(8,960)
$
25,072
$
22,713
15 – 125
$
6,511
$
5,780
15 – 75
5 – 55
20 – 85
17 – 75
27 – 75
5 – 55
3 – 51
11,339
1,355
97
7,452
2,806
1,295
815
15
38
10,590
1,374
126
6,951
2,440
1,197
835
20
29
$
31,723
$
29,342
845
994
(8,796)
(8,791)
$
23,772
$
21,545
1
2
A portion of independent power production assets are leased to others under operating leases. For
information regarding CMS Energy’s operating leases of owned assets, see Note 8, Leases.
For information regarding the amortization terms of CMS Energy’s and Consumers’ assets under finance
leases, see Note 8, Leases.
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3
4
Consumers’ plant additions were $3.1 billion for the year ended December 31, 2023 and $2.3 billion for the
year ended December 31, 2022. Consumers’ plant retirements, which include the impact of transfers to held
for sale, were $856 million for the year ended December 31, 2023 and $290 million for the year ended
December 31, 2022. Consumers plans to retire the J.H. Campbell coal-fueled generating units in 2025.
Accordingly, in 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 regulatory asset. For additional details, see Note 2, Regulatory Matters.
Underground storage includes base natural gas of $26 million at December 31, 2023 and 2022. Base natural
gas is not subject to depreciation.
Asset Acquisition: In May 2023, Consumers purchased the Covert Generating Station, a natural gas-
fueled generating facility with 1,200 MW of nameplate capacity in Van Buren County, Michigan for
$810 million. In August 2023, Consumers paid an additional $2 million as a result of a post-closing
adjustment required under the purchase agreement.
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. The remainder of
the purchase price was allocated among various working capital accounts.
Intangible Assets: Included in net plant, property, and equipment are intangible assets. Presented in the
following table are details about Consumers’ intangible assets:
Description
Consumers
Software development
Rights of way
Franchises and consents
Leasehold improvements
Other intangibles
Total
December 31, 2023
December 31, 2022
Amortization
Life in Years
Gross Cost1
Accumulated
Amortization
Gross Cost1
Accumulated
Amortization
In Millions
3 – 15
50 – 85
5 – 50
various2
various
$
772
229
16
11
24
$
543
$
64
11
7
15
846
218
16
9
25
$
593
61
10
6
16
$ 1,052
$
640
$ 1,114
$
686
1
2
Consumers’ intangible asset additions were $80 million for the year ended December 31, 2023 and
$116 million for the year ended December 31, 2022. Consumers’ intangible asset retirements were
$142 million for the year ended December 31, 2023 and $104 million for the year ended
December 31, 2022.
Leasehold improvements are amortized over the life of the lease, which may change whenever the lease is
renewed or extended.
Capitalization: CMS Energy and Consumers record plant, property, and equipment at original cost when
placed into service. The cost includes labor, material, applicable taxes, overhead such as pension and
other benefits, and AFUDC, if applicable. Consumers’ plant, property, and equipment is generally
recoverable through its general ratemaking process.
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With the exception of utility property for which the remaining book value has been securitized,
mothballed utility property stays in rate base and continues to be depreciated at the same rate as before the
mothball period. When utility property is retired or otherwise disposed of in the ordinary course of
business, Consumers records the original cost to accumulated depreciation, along with associated cost of
removal, net of salvage. CMS Energy and Consumers recognize gains or losses on the retirement or
disposal of non-regulated assets in income. Consumers records cost of removal collected from customers,
but not spent, as a regulatory liability.
Software: CMS Energy and Consumers capitalize the costs to purchase and develop internal-use
computer software. These costs are expensed evenly over the estimated useful life of the internal-use
computer software. If computer software is integral to computer hardware, then its cost is capitalized and
depreciated with the hardware.
AFUDC: Consumers capitalizes AFUDC on regulated major construction projects. AFUDC represents
the estimated cost of debt and authorized return-on-equity funds used to finance construction additions.
Consumers records the offsetting credit as a reduction of interest for the amount representing the
borrowed funds component and as other income for the equity funds component on the consolidated
statements of income. When construction is completed and the property is placed in service, Consumers
depreciates and recovers the capitalized AFUDC from customers over the life of the related asset.
Presented in the following table are Consumers’ average AFUDC capitalization rates:
Years Ended December 31
Electric
Gas
2023
6.5%
5.8
2022
6.2%
5.6
2021
6.2%
5.6
Assets Under Finance Leases: Presented in the following table are further details about changes in
CMS Energy’s and Consumers’ assets under finance leases:
Years Ended December 31
CMS Energy, including Consumers
Balance at beginning of period
Additions
Net retirements and other adjustments
Balance at end of period
Consumers
Balance at beginning of period
Additions
Net retirements and other adjustments
Balance at end of period
In Millions
2023
2022
$
170
$
$
$
—
(34)
136
$
146
$
—
(34)
$
112
$
332
44
(206)
170
332
20
(206)
146
Assets under finance leases are presented as gross amounts. CMS Energy and Consumers’ accumulated
amortization of assets under finance leases was $64 million at December 31, 2023 and $88 million at
December 31, 2022.
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Depreciation and Amortization: Presented in the following table are further details about
CMS Energy’s and Consumers’ accumulated depreciation and amortization:
Years Ended December 31
CMS Energy, including Consumers
Utility plant assets
Non-utility plant assets
Consumers
Utility plant assets
Non-utility plant assets
In Millions
2023
2022
$
8,790
$
8,785
217
175
$
8,790
$
8,785
6
6
Consumers depreciates utility property on an asset-group basis, in which it applies a single MPSC-
approved depreciation rate to the gross investment in a particular class of property within the electric and
gas segments. Consumers performs depreciation studies periodically to determine appropriate group lives.
Presented in the following table are the composite depreciation rates for Consumers’ segment properties:
Years Ended December 31
Electric utility property
Gas utility property
Other property
2023
3.8%
2.8
7.8
2022
3.7%
2.9
8.9
2021
3.9%
2.9
9.4
CMS Energy and Consumers record property repairs and minor property replacement as maintenance
expense. CMS Energy and Consumers record planned major maintenance activities as operating expense
unless the cost represents the acquisition of additional long-lived assets or the replacement of an existing
long-lived asset.
Presented in the following table are the components of CMS Energy’s and Consumers’ depreciation and
amortization expense:
Years Ended December 31
CMS Energy, including Consumers
Depreciation expense – plant, property, and equipment
Amortization expense
Software
Other intangible assets
Securitized regulatory assets
Total depreciation and amortization expense
Consumers
Depreciation expense – plant, property, and equipment
Amortization expense
Software
Other intangible assets
Securitized regulatory assets
Total depreciation and amortization expense
138
2023
2022
2021
In Millions
$
1,050
$
990
$
975
92
5
33
103
5
28
108
4
27
1,180
$
1,126
$
1,114
1,007
$
952
$
938
92
5
33
1,137
$
103
5
28
1,088
$
108
4
27
1,077
$
$
$
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Presented in the following table is Consumers’ estimated amortization expense on intangible assets for
each of the next five years:
Consumers
Intangible asset amortization expense
2024
2025
2026
2027
2028
In Millions
$
89
$
88
$
87
$
81
$
73
Jointly Owned Regulated Utility Facilities
Presented in the following table are Consumers’ investments in jointly owned regulated utility facilities at
December 31, 2023:
In Millions, Except Ownership Share
Ownership share
Utility plant in service
Accumulated provision for depreciation
Plant under construction
Net investment
J.H. Campbell Unit 3
93.3%
$ 1,752
(812)
1
Ludington
51.0%
$
619
(227)
5
$
941
$
397
Other
various
443
(97)
11
357
$
$
Consumers includes its share of the direct expenses of the jointly owned plants in operating expenses.
Consumers shares operation, maintenance, and other expenses of these jointly owned utility facilities in
proportion to each participant’s undivided ownership interest. Consumers is required to provide only its
share of financing for the jointly owned utility facilities.
Consumers plans to retire the J.H. Campbell coal-fueled generating units and, in 2022, removed an
amount representing the projected remaining book value of the electric generating units upon their
retirement from total plant, property, and equipment and recorded it as a regulatory asset on its
consolidated balance sheets. For additional details, see Note 2, Regulatory Matters.
Consumers is engaged in ongoing litigation with Wolverine Power related to Consumers’ authority to
decide to retire the J.H. Campbell 3 coal-fueled generating unit under the unit’s Joint Ownership and
Operating Agreement. For additional details on this dispute, see Note 3, Contingencies and Commitments
—J.H. Campbell 3 Plant Retirement Contract Dispute.
Consumers and DTE Electric are engaged in ongoing litigation with TAES and Toshiba related to the
2010 engineering, procurement, and construction agreement with TAES, under which TAES contracted to
perform a major overhaul and upgrade of Ludington. For additional details on this dispute, see Note 3,
Contingencies and Commitments—Ludington Overhaul Contract Dispute.
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8: Leases
Lessee
CMS Energy and Consumers lease various assets from third parties, including coal-carrying railcars, real
estate, service vehicles, and gas pipeline capacity. In addition, CMS Energy and Consumers account for
several of their PPAs as leases.
CMS Energy and Consumers do not record right-of-use assets or lease liabilities on their consolidated
balance sheets for rentals with lease terms of 12 months or less, most of which are for the lease of real
estate and service vehicles. Lease expense for these rentals is recognized on a straight-line basis over the
lease term.
CMS Energy and Consumers include future payments for all renewal options, fair market value
extensions, and buyout provisions reasonably certain of exercise in their measurement of lease right-of-
use assets and lease liabilities. In addition, certain leases for service vehicles contain end-of-lease
adjustment clauses based on proceeds received from the sale or disposition of the vehicles. CMS Energy
and Consumers also include executory costs in the measurement of their right-of-use assets and lease
liabilities, except for maintenance costs related to their coal-carrying railcar leases.
Most of Consumers’ PPAs contain provisions at the end of the initial contract terms to renew the
agreements annually under mutually agreed-upon terms at the time of renewal. Energy and capacity
payments that vary depending on quantities delivered are recognized as variable lease costs when
incurred. Consumers accounts for a PPA with one of CMS Energy’s equity method subsidiaries as a
finance lease.
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Presented in the following table is information about CMS Energy’s and Consumers’ lease right-of-use
assets and lease liabilities:
December 31
Operating leases
Right-of-use assets1
Lease liabilities
Current lease liabilities2
Non-current lease liabilities3
Finance leases
Right-of-use assets
Lease liabilities4
Current lease liabilities
Non-current lease liabilities
Weighted-average remaining lease term (in years)
Operating leases
Finance leases
Weighted-average discount rate
Operating leases
Finance leases5
In Millions, Except as Noted
CMS Energy, including
Consumers
Consumers
2023
2022
2023
2022
$
26
$
31
$
23
$
27
4
22
71
5
62
19
19
4
27
82
9
68
20
18
4
19
48
5
39
18
11
4
23
58
9
45
18
10
5.2%
5.3
4.0%
5.2
5.3%
1.5
3.9%
1.6
1
2
3
4
5
CMS Energy’s and Consumers’ operating right-of-use lease assets are reported as other non-current assets
on their consolidated balance sheets.
The current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other
current liabilities on their consolidated balance sheets.
The non-current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other
non-current liabilities on their consolidated balance sheets.
Includes related-party lease liabilities of $24 million, of which less than $1 million was current, at
December 31, 2023 and 2022.
This rate excludes the impact of Consumers’ pipeline agreements and long-term PPAs accounted for as
finance leases. The required capacity payments under these agreements, when compared to the underlying
fair value of the leased assets, result in effective interest rates that exceed market rates for leases with
similar terms.
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CMS Energy and Consumers report operating, variable, and short-term lease costs as operating expenses
on their consolidated statements of income, except for certain amounts that may be capitalized to other
assets. Presented in the following table is a summary of CMS Energy’s and Consumers’ total lease costs:
Years Ended December 31
CMS Energy, including Consumers
Operating lease costs
Finance lease costs
Amortization of right-of-use assets
Interest on lease liabilities
Variable lease costs
Short-term lease costs
Total lease costs
Consumers
Operating lease costs
Finance lease costs
Amortization of right-of-use assets
Interest on lease liabilities
Variable lease costs
Short-term lease costs
Total lease costs
In Millions
2023
2022
$
6
$
6
9
15
107
14
12
14
93
23
$
151
$
148
$
5
$
6
8
13
107
14
12
14
93
22
$
147
$
147
Presented in the following table is supplemental cash flow information related to CMS Energy’s and
Consumers’ lease liabilities:
Years Ended December 31
CMS Energy, including Consumers
Cash paid for amounts included in the measurement of lease liabilities
Cash used in operating activities for operating leases
Cash used in operating activities for finance leases
Cash used in financing activities for finance leases
Lease liabilities arising from obtaining right-of-use assets
Operating leases
Finance leases
Consumers
Cash paid for amounts included in the measurement of lease liabilities
Cash used in operating activities for operating leases
Cash used in operating activities for finance leases
Cash used in financing activities for finance leases
Lease liabilities arising from obtaining right-of-use assets
Operating leases
Finance leases
142
In Millions
2023
2022
$
$
$
$
6
15
8
1
—
6
13
8
1
—
6
14
13
10
36
6
14
12
10
12
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Presented in the following table are the minimum rental commitments under CMS Energy’s and
Consumers’ non-cancelable leases:
December 31, 2023
CMS Energy, including Consumers
2024
2025
2026
2027
2028
2029 and thereafter
Total minimum lease payments
Less discount
Present value of minimum lease payments
Consumers
2024
2025
2026
2027
2028
2029 and thereafter
Total minimum lease payments
Less discount
Present value of minimum lease payments
Lessor
In Millions
Finance Leases
Operating
Leases
Pipelines
and PPAs
Other
Total
$
$
$
$
$
$
5
4
3
2
1
30
45
19
26
5
4
2
2
1
24
38
15
23
$
$
$
$
$
$
13
13
13
13
13
26
91
62
29
13
13
13
13
13
26
91
62
29
$
$
$
$
$
$
6
3
4
1
1
66
81
43
38
5
2
2
—
—
8
17
2
15
$
$
$
$
19
16
17
14
14
92
172
105
67
18
15
15
13
13
34
$
108
64
44
$
CMS Energy and Consumers are the lessor under power sales and natural gas delivery agreements that are
accounted for as leases.
CMS Energy has power sales agreements that are accounted for as operating leases. In addition to fixed
payments, these agreements have variable payments based on energy delivered. For the year ended
December 31, 2023, lease revenue from these power sales agreements was $116 million, which included
variable lease payments of $74 million. For the year ended December 31, 2022, lease revenue from these
power sales agreements was $240 million, which included variable lease payments of $191 million.
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Presented in the following table are the minimum rental payments to be received under CMS Energy’s
non-cancelable operating leases:
December 31, 2023
2024
2025
2026
Total minimum lease payments
In Millions
$
43
44
18
$
105
Consumers has a natural gas transportation agreement with a subsidiary of CMS Energy that extends
through 2038, related to a pipeline owned by Consumers. This agreement is accounted for as a direct
finance lease and will automatically extend annually unless terminated by either party. The effects of the
lease are eliminated on CMS Energy’s consolidated financial statements.
Minimum rental payments to be received under Consumers’ direct financing lease are less than $1 million
for each of the next five years and $6 million for the years thereafter. The lease receivable was $6 million
as of December 31, 2023, which does not include unearned income of $5 million.
9: Asset Retirement Obligations
CMS Energy and Consumers record the fair value of the cost to remove assets at the end of their useful
lives, if there is a legal obligation to remove them. If a reasonable estimate of fair value cannot be made in
the period in which the ARO is incurred, such as for assets with indeterminate lives, the liability is
recognized when a reasonable estimate of fair value can be made. CMS Energy and Consumers have not
recorded liabilities associated with the closure of certain gas wells that have an indeterminate life.
CMS Energy and Consumers have not recorded liabilities for assets that have immaterial cumulative
disposal costs, such as substation batteries.
CMS Energy and Consumers calculate the fair value of ARO liabilities using an expected present-value
technique that reflects assumptions about costs and inflation, and uses a credit-adjusted risk-free rate to
discount the expected cash flows. CMS Energy’s ARO liabilities are primarily at Consumers.
Presented below are the categories of assets that CMS Energy and Consumers have legal obligations to
remove at the end of their useful lives and for which they have an ARO liability recorded:
ARO Description
In-Service Date
Long-Lived Assets
Closure of coal ash disposal areas
Gas distribution cut, purge, and cap
Asbestos abatement
Closure of renewable generation assets
Gas wells plug and abandon
various
various
1973
various
various
Generating plants coal ash areas
Gas distribution mains and services
Electric and gas utility plant
Wind and solar generation facilities
Gas transmission and storage
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Presented in the following tables are the changes in CMS Energy’s and Consumers’ ARO liabilities:
32
1
33
11
14
3
3
1
Company and ARO Description
CMS Energy, including Consumers
Consumers
Renewable generation assets
Total CMS Energy
Consumers
Coal ash disposal areas
$
Gas distribution cut, purge, and cap
ARO
Liability
12/31/2022
Incurred
Settled Accretion
$
722
$
24
4
7
$
(28) $
—
$
746
$
11
$
(28) $
In Millions
ARO
Liability
12/31/2023
Cash Flow
Revisions
$
$
9
—
9
$
739
32
$
771
$ —
$
(15) $
$ —
$
Asbestos abatement
Renewable generation assets
Gas wells plug and abandon
Total Consumers
Company and ARO Description
CMS Energy, including Consumers
Consumers
Renewable generation assets
Total CMS Energy
Consumers
Coal ash disposal areas
Gas distribution cut, purge, and cap
Asbestos abatement
Renewable generation assets
Gas wells plug and abandon
Total Consumers
272
287
39
95
29
(1)
10
—
—
9
268
290
51
102
28
$
739
In Millions
ARO
Liability
12/31/2022
—
—
4
—
4
1
—
—
—
1
(10)
(1)
—
(2)
(11)
(1)
—
(7)
$
722
$
$
(28) $
32
$
ARO
Liability
12/31/2021
Incurred
Settled Accretion
Cash Flow
Revisions1
$
605
$
23
$
628
$
1
—
1
$
(39) $
—
$
(39) $
$ —
$
(20) $
$
157
282
38
93
35
27
1
28
7
15
2
2
1
$
128
$
722
—
24
$
128
$
746
$
128
$
—
—
—
—
272
287
39
95
29
$
605
$
$
(39) $
27
$
128
$
722
1
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.
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10: Retirement Benefits
Benefit Plans: CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to
employees under a number of different plans. These plans include:
•
•
•
•
•
•
non-contributory, qualified DB Pension Plans (closed to new non-union participants as of
July 1, 2003 and closed to new union participants as of September 1, 2005)
a non-contributory, qualified DCCP for employees hired on or after July 1, 2003
benefits to certain management employees under a non-contributory, nonqualified DB SERP
(closed to new participants as of March 31, 2006)
a non-contributory, nonqualified DC SERP for certain management employees hired or promoted
on or after April 1, 2006
a contributory, qualified defined contribution 401(k) plan
health care and life insurance benefits under an OPEB Plan
DB Pension Plans: Participants in the pension plans include present and former employees of
CMS Energy and Consumers, including certain present and former affiliates and subsidiaries. Pension
plan trust assets are not distinguishable by company. Effective December 31, 2017, CMS Energy’s and
Consumers’ then-existing pension plan was amended to include only retired and former employees
already covered; this amended plan is referred to as DB Pension Plan B. Also effective
December 31, 2017, active employees were moved to a newly created pension plan, referred to as
DB Pension Plan A, whose benefits mirror those provided under DB Pension Plan B. Maintaining
separate plans for the two groups allows CMS Energy and Consumers to employ a more targeted
investment strategy and provides additional opportunities to mitigate risk and volatility.
DCCP: CMS Energy and Consumers provide an employer contribution to the DCCP 401(k) plan for
employees hired on or after July 1, 2003. The contribution ranges from five percent to ten percent of base
pay, depending on years of service and employee class. Employees are not required to contribute in order
to receive the plan’s employer contribution. DCCP expense for CMS Energy, including Consumers, was
$51 million for the year ended December 31, 2023, $48 million for the year ended December 31, 2022,
and $41 million for the year ended December 31, 2021. DCCP expense for Consumers was $50 million
for the year ended December 31, 2023, $48 million for the year ended December 31, 2022, and
$41 million for the year ended December 31, 2021.
DB SERP: The DB SERP is a nonqualified plan as defined by the Internal Revenue Code. DB SERP
benefits are paid from a rabbi trust established in 1988. The trust assets are not considered plan assets
under ASC 715. DB SERP rabbi trust earnings are taxable. Presented in the following table are the fair
values of trust assets and ABO for CMS Energy’s and Consumers’ DB SERP:
Years Ended December 31
CMS Energy, including Consumers
Trust assets
ABO
Consumers
Trust assets
ABO
146
In Millions
2023
2022
$
$
$
$
132
115
98
83
137
118
101
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Neither CMS Energy nor Consumers made any contributions to the DB SERP in 2023 or 2022.
DC SERP: On April 1, 2006, CMS Energy and Consumers implemented a DC SERP and froze further
new participation in the DB SERP. The DC SERP provides participants benefits ranging from
five percent to 15 percent of total compensation. The DC SERP requires a minimum of five years of
participation before vesting. CMS Energy’s and Consumers’ contributions to the plan, if any, are placed
in a grantor trust. For CMS Energy and Consumers, trust assets were $14 million at December 31, 2023
and $12 million at December 31, 2022. DC SERP assets are included in other non-current assets on
CMS Energy’s and Consumers’ consolidated balance sheets. CMS Energy’s and Consumers’ DC SERP
expense was $1 million for the years ended December 31, 2023 and 2022, and $2 million for the year
ended December 31, 2021.
401(k) Plan: The 401(k) plan employer match equals four to six percent of employee eligible
contributions based on an employee’s wages and class. The total 401(k) plan cost for CMS Energy,
including Consumers, was $41 million for the year ended December 31, 2023, $44 million for the year
ended December 31, 2022, and $31 million for the year ended December 31, 2021. The total 401(k) plan
cost for Consumers was $40 million for the year ended December 31, 2023, $43 million for the year
ended December 31, 2022, and $31 million for the year ended December 31, 2021.
OPEB Plan: Participants in the OPEB Plan include all regular full-time employees covered by the
employee health care plan on the day before retirement from either CMS Energy or Consumers at age 55
or older with at least 10 full years of applicable continuous service. Regular full-time employees who
qualify for disability retirement under the DB Pension Plans or are disabled and covered by the DCCP
and who have 15 years of applicable continuous service may also participate in the OPEB Plan. Retiree
health care costs were based on the assumption that costs would increase 8.00 percent in 2024 and
6.50 percent in 2023 for those under 65 and would increase 8.50 percent in 2024 and 6.75 percent in 2023
for those over 65. The rate of increase was assumed to decline to 4.75 percent by 2032 and thereafter for
all retirees.
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Assumptions: Presented in the following table are the weighted-average assumptions used in
CMS Energy’s and Consumers’ retirement benefit plans to determine benefit obligations and net periodic
benefit cost:
December 31
CMS Energy, including Consumers
Weighted average for benefit obligations1
Discount rate2
DB Pension Plan A
DB Pension Plan B
DB SERP
OPEB Plan
Rate of compensation increase
DB Pension Plan A
DB SERP3
Weighted average for net periodic benefit cost1
Service cost discount rate2,4
DB Pension Plan A
DB SERP
OPEB Plan
Interest cost discount rate2,4
DB Pension Plan A
DB Pension Plan B
DB SERP
OPEB Plan
Expected long-term rate of return on plan assets5
DB Pension Plans
OPEB Plan
Rate of compensation increase
DB Pension Plan A
DB SERP
2023
2022
2021
5.05%
5.24%
3.02%
4.95
4.94
5.02
3.60
—
5.14
5.13
5.21
3.60
5.50
2.79
2.78
2.99
3.60
5.50
5.27%
3.09%
2.83%
5.18
5.31
5.12
5.06
5.06
5.10
7.20
7.20
3.60
5.50
3.09
3.23
2.44
2.21
2.21
2.45
6.50
6.50
3.60
5.50
2.84
3.03
1.97
1.70
1.72
1.99
6.75
6.75
3.50
5.50
1
2
3
4
The mortality assumption for benefit obligations was based on the Pri-2012 Mortality Table, with
improvement scale MP-2021. The mortality assumption for net periodic benefit cost was based on the
Pri-2012 Mortality Table, with improvement scale MP-2021 for 2023 and 2022 and improvement scale
MP-2020 for 2021.
The discount rate reflects the rate at which benefits could be effectively settled and is equal to the
equivalent single rate resulting from a yield-curve analysis. This analysis incorporated the projected benefit
payments specific to CMS Energy’s and Consumers’ DB Pension Plans and OPEB Plan and the yields on
high-quality corporate bonds rated Aa or better.
The DB SERP no longer requires rate of compensation increase as the last active participant retired in
2023.
CMS Energy and Consumers have elected to use a full-yield-curve approach in the estimation of service
cost and interest cost; this approach applies individual spot rates along the yield curve to future projected
benefit payments based on the time of payment.
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5
CMS Energy and Consumers determined the long-term rate of return using historical market returns, the
present and expected future economic environment, the capital market principles of risk and return, and the
expert opinions of individuals and firms with financial market knowledge. CMS Energy and Consumers
considered the asset allocation of the portfolio in forecasting the future expected total return of the
portfolio. The goal was to determine a long-term rate of return that could be incorporated into the planning
of future cash flow requirements in conjunction with the change in the liability. Annually, CMS Energy and
Consumers review for reasonableness and appropriateness the forecasted returns for various classes of
assets used to construct an expected return model. CMS Energy’s and Consumers’ expected long-term rate
of return on the assets of the DB Pension Plans was 7.20 percent in 2023. The actual return (loss) on the
assets of the DB Pension Plans was 12.6 percent in 2023, (15.9) percent in 2022, and 12.0 percent in 2021.
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:
DB Pension Plans and DB SERP
OPEB Plan
2023
2022
2021
2023
2022
2021
In Millions
Years Ended December 31
CMS Energy, including Consumers
Net periodic cost (credit)
Service cost
Interest cost
Settlement loss
$
29
$
112
—
$
41
84
1
53
63
1
$
12 $
44
—
$
17
28
—
18
23
—
Expected return on plan assets
(220)
(206)
(208)
(103)
(115)
(109)
Amortization of:
Net loss
Prior service cost (credit)
Settlement loss
Net periodic cost (credit)
Consumers
Net periodic credit
Service cost
Interest cost
Expected return on plan assets
Amortization of:
Net loss
Prior service cost (credit)
Settlement loss
Net periodic credit
12
4
11
40
4
9
100
4
6
12
(41)
—
1
(51)
—
8
(53)
—
$
(52) $
(27) $
19
$
(76) $
(120) $
(113)
$
28
$
105
(208)
11
4
11
$
39
79
51
59
(194)
(197)
37
4
9
96
4
6
$
11 $
42
(95)
12
(40)
—
$
17
27
17
23
(107)
(102)
—
(50)
—
8
(51)
—
$
(49) $
(26) $
19
$
(70) $
(113) $
(105)
In Consumers’ 2022 electric and gas rate cases, 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 rates, respectively, beginning in January 2023 for the electric utility and October 2023 for the
gas utility. At December 31, 2023, CMS Energy, including Consumers, had deferred $11 million of
pension credits and $23 million of OPEB costs under this mechanism.
CMS Energy and Consumers amortize net gains and losses in excess of ten percent of the greater of the
PBO or the MRV over the average remaining service period for DB Pension Plan A and the OPEB Plan
and over the average remaining life expectancy of participants for DB Pension Plan B. For DB Pension
Plan A, the estimated period of amortization of gains and losses was eight years for the years ended
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December 31, 2023, 2022, and 2021. For DB Pension Plan B, the estimated period of amortization of
gains and losses was 17 years for the year ended December 31, 2023, and 18 years for the years ended
December 31, 2022 and 2021. For the OPEB Plan, the estimated amortization period was nine years for
the years ended December 31, 2023, 2022, and 2021.
Prior service cost (credit) amortization is established in the year in which the prior service cost (credit)
first occurred, and is based on the same amortization period for all future years until the prior service cost
(credit) is fully amortized. CMS Energy and Consumers had new prior service costs for OPEB in 2020.
The estimated period of amortization of these new prior service costs is eight years.
CMS Energy and Consumers determine the MRV for the assets of the DB Pension Plans as the fair value
of plan assets on the measurement date, adjusted by the gains or losses that will not be admitted into the
MRV until future years. CMS Energy and Consumers reflect each year’s gain or loss in the MRV in equal
amounts over a five-year period beginning on the date the original amount was determined. CMS Energy
and Consumers determine the MRV for OPEB Plan assets as the fair value of assets on the measurement
date.
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Reconciliations: Presented in the following table are reconciliations of the funded status of
CMS Energy’s and Consumers’ retirement benefit plans with their retirement benefit plans’ liabilities:
DB Pension Plans
DB SERP
OPEB Plan
2023
2022
2023
2022
2023
2022
In Millions
Years Ended December 31
CMS Energy, including Consumers
Benefit obligation at beginning of
period
Service cost
Interest cost
Plan amendments
Actuarial loss (gain)
Benefits paid
Benefit obligation at end of
period
Plan assets at fair value at
beginning of period
Actual return on plan assets
Company contribution
Actual benefits paid
Plan assets at fair value at end of
period
Funded status
Consumers
Benefit obligation at beginning of
period
Service cost
Interest cost
Plan amendments
Actuarial loss (gain)
Benefits paid
Benefit obligation at end of
period
Plan assets at fair value at
beginning of period
Actual return on plan assets
Company contribution
Actual benefits paid
Plan assets at fair value at end of
period
Funded status
$ 2,169
$ 3,070
$
117
$
149
$
889
$ 1,166
29
106
—
52 1
(161)
41
81
—
(811) 1
(212)
—
6
—
1
(10)
—
3
—
(25)
(10)
12
44
—
9 1
(54)
17
28
—
(274) 1
(48)
$ 2,195
$ 2,169
$
114
$
117
$
900
$
889
$ 2,820
$ 3,599
$ —
$ —
$ 1,446
$ 1,787
345
—
(161)
(567)
—
(212)
—
10
(10)
—
10
(10)
165
—
(52)
(294)
—
(47)
$ 3,004
$ 2,820
$ —
$ —
$ 1,559
$ 1,446
$
809 2 $
651 2
$
(114) $
(117)
$
659
$
557
$
85
—
4
—
1
(7)
$
109
$
856
$ 1,122
—
2
—
(19)
(7)
11
42
—
10 1
(52)
17
27
—
(265) 1
(45)
$
83
$
85
$
867
$
856
$ —
$ —
$ 1,350
$ 1,668
—
7
(7)
—
7
(7)
154
—
(51)
(273)
—
(45)
$ —
$ —
$ 1,453
$ 1,350
$
(83) $
(85)
$
586
$
494
1
2
The actuarial losses for 2023 for the DB Pension Plans and OPEB Plan were primarily the result of lower
discount rates. The actuarial gains for 2022 for the DB Pension Plans and OPEB Plan were primarily the
result of higher discount rates.
The total funded status of the DB Pension Plans attributable to Consumers, based on an allocation of
expenses, was $781 million at December 31, 2023 and $632 million at December 31, 2022.
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Presented in the following table is the classification of CMS Energy’s and Consumers’ retirement benefit
plans’ assets and liabilities:
December 31
CMS Energy, including Consumers
Non-current assets
DB Pension Plans
OPEB Plan
Current liabilities
DB SERP
Non-current liabilities
DB SERP
Consumers
Non-current assets
DB Pension Plans
OPEB Plan
Current liabilities
DB SERP
Non-current liabilities
DB SERP
In Millions
2023
2022
$
$
809
659
651
557
10
10
104
107
$
$
781
586
632
494
7
76
7
78
The ABO for the DB Pension Plans was $2.0 billion at December 31, 2023 and 2022. At
December 31, 2023 and 2022, the PBO and ABO did not exceed plan assets for any of the defined benefit
pension plans.
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Items Not Yet Recognized as a Component of Net Periodic Benefit Cost: Presented in the following
table are the amounts recognized in regulatory assets and AOCI that have not been recognized as
components of net periodic benefit cost. For additional details on regulatory assets see Note 2, Regulatory
Matters.
December 31
CMS Energy, including Consumers
Regulatory assets
Net loss
Prior service cost (credit)
Regulatory assets
AOCI
Net loss (gain)
Prior service cost (credit)
Total amounts recognized in regulatory assets and AOCI
Consumers
Regulatory assets
Net loss
Prior service cost (credit)
Regulatory assets
AOCI
Net loss
In Millions
DB Pension Plans and
DB SERP
OPEB Plan
2023
2022
2023
2022
$
634
$
724
$
191
$
251
16
21
(100)
(140)
$
650
$
745
$
91
$
111
65
1
69
1
(3)
(2)
2
(3)
$
716
$
815
$
86
$
110
$
634
$
724
$
191
$
251
16
21
(100)
(140)
$
650
$
745
$
91
$
111
20
20
—
91
—
$
111
Total amounts recognized in regulatory assets and AOCI
$
670
$
765
$
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Plan Assets: Presented in the following tables are the fair values of the assets of CMS Energy’s
DB Pension Plans and OPEB Plan, by asset category and by level within the fair value hierarchy. For
additional details regarding the fair value hierarchy, see Note 5, Fair Value Measurements.
DB Pension Plans
December 31, 2023
December 31, 2022
Total
Level 1
Level 2
Total
Level 1
In Millions
CMS Energy, including Consumers
Cash and short-term investments
$
178
$
178
$ —
Mutual funds
Pooled funds
Total
47
47
—
$
225
$
225
$ —
2,779
$ 3,004
$
$
122
263
385
$
$
122
263
385
2,435
$ 2,820
In Millions
OPEB Plan
December 31, 2023
December 31, 2022
Total
Level 1
Level 2
Total
Level 1
CMS Energy, including Consumers
Cash and short-term investments
$
U.S. government and agencies securities
Corporate debt
State and municipal bonds
Foreign corporate bonds
Common stocks
Mutual funds
Pooled funds
Total
$
82
16
67
1
15
161
60
82
—
—
—
—
161
60
$
402
$
303
$
1,157
$ 1,559
$ —
$
16
67
1
15
—
—
99
$
$
28
—
—
—
—
69
754
851
$
28
—
—
—
—
69
754
851
595
$ 1,446
Cash and Short-term Investments: Cash and short-term investments consist of money market funds with
daily liquidity.
U.S. Government and Agencies Securities: U.S. government and agencies securities consist of
U.S. Treasury notes and other debt securities backed by the U.S. government and related agencies. These
securities are valued based on quoted market prices.
Corporate Debt: Corporate debt investments consist of investment grade bonds of U.S. issuers from
diverse industries. These securities are valued based on quoted market prices, when available, or yields
available on comparable securities of issuers with similar credit ratings.
State and Municipal Bonds: State and municipal bonds are valued using a matrix-pricing model that
incorporates Level 2 market-based information. The fair value of the bonds is derived from various
observable inputs, including benchmark yields, reported securities trades, broker/dealer quotes, bond
ratings, and general information on market movements for investment grade state and municipal securities
normally considered by market participants when pricing such debt securities.
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Foreign Corporate Bonds: Foreign corporate debt securities are valued based on quoted market prices,
when available, or on yields available on comparable securities of issuers with similar credit ratings.
Common Stocks: Common stocks in the OPEB Plan consist of equity securities that are actively managed
and tracked to the S&P 500 Index and MSCI All Country World ex-US. These securities are valued at
their quoted closing prices.
Mutual Funds: Mutual funds represent shares in registered investment companies that are priced based on
the daily quoted net asset values that are publicly available and are the basis for transactions to buy or sell
shares in the funds.
Pooled Funds: Pooled funds include both common and collective trust funds as well as special funds that
contain only employee benefit plan assets from two or more unrelated benefit plans. These funds
primarily consist of U.S. and foreign equity securities, but also include U.S. and foreign fixed-income
securities and multi-asset investments. Since these investments are valued at their net asset value as a
practical expedient, they are not classified in the fair value hierarchy.
Asset Allocations: Presented in the following table are the investment components of the assets of
CMS Energy’s DB Pension Plans and OPEB Plan as of December 31, 2023:
Fixed-income securities
Equity securities
Real asset investments
Return-seeking fixed income
Liquid alternative investments
Cash and cash equivalents
DB Pension Plans
OPEB Plan
42.0%
38.0
9.0
6.0
4.0
1.0
40.0%
42.0
8.0
5.0
4.0
1.0
100.0%
100.0%
CMS Energy’s target 2023 asset allocation for the assets of the DB Pension Plans was 40-percent fixed
income, 38-percent equity, 11-percent real assets, 7-percent return-seeking fixed income, and 4-percent
liquid alternatives.
CMS Energy established union and non-union VEBA trusts to fund future retiree health and life insurance
benefits known as OPEB. These trusts are funded through the ratemaking process for Consumers and
through direct contributions from the non-utility subsidiaries. CMS Energy’s target 2023 asset allocation
for OPEB trusts was 40-percent fixed income, 38-percent equity, 11-percent real assets, 7-percent return-
seeking fixed income, and 4-percent liquid alternatives.
The goal of these target allocations was to maximize the long-term return on plan assets, while
maintaining a prudent level of risk. The level of acceptable risk is a function of the liabilities of the plans.
Equity investments are diversified mostly across the S&P 500 Index, with lesser allocations to the
S&P MidCap and SmallCap Indexes and Foreign Equity Funds. Fixed-income investments are diversified
across investment grade instruments of government and corporate issuers, as well as high-yield and global
bond funds. Return-seeking fixed-income investments are diversified exposure to high-yield bonds,
emerging market debt, and bank loans. Real asset investments are diversified across core real estate and
real estate investment trusts. Liquid alternatives are investments in private funds comprised of different
and independent hedge funds with various investment strategies. CMS Energy uses annual liability
measurements, quarterly portfolio reviews, and periodic asset/liability studies to evaluate the need for
adjustments to the portfolio allocations.
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Contributions: Contributions comprise required amounts and discretionary contributions. Neither
CMS Energy nor Consumers made any contributions in 2023 or 2022, or plans to contribute to the
DB Pension Plans or OPEB Plan in 2024. Actual future contributions will depend on future investment
performance, discount rates, and various factors related to the participants of the DB Pension Plans and
OPEB Plan. CMS Energy and Consumers will, at a minimum, contribute to the plans as needed to comply
with federal funding requirements.
Benefit Payments: Presented in the following table are the expected benefit payments for each of the
next five years and the five-year period thereafter:
CMS Energy, including Consumers
2024
2025
2026
2027
2028
2029-2033
Consumers
2024
2025
2026
2027
2028
2029-2033
DB Pension
Plans DB SERP
In Millions
OPEB
Plan
$
$
$
$
158
160
159
159
159
785
148
151
150
150
150
741
$
$
10
10
10
10
9
43
7
7
7
7
6
55
57
58
60
61
315
53
54
56
57
59
29
301
Collective Bargaining Agreements: At December 31, 2023, unions represented 44 percent of
CMS Energy’s employees and 45 percent of Consumers’ employees. The UWUA represents Consumers’
operating, maintenance, construction, and customer contact center employees. The USW represents
Zeeland plant employees. The UWUA and USW agreements expire in 2025.
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11: Stock-based Compensation
CMS Energy and Consumers provide a PISP to officers, employees, and non-employee directors based on
their contributions to the successful management of the company. The PISP has a ten-year term, expiring
in May 2030.
In 2023, all awards were in the form of restricted stock or restricted stock units. The PISP also allows for
unrestricted common stock, stock options, stock appreciation rights, phantom shares, performance units,
and incentive options, none of which was granted in 2023, 2022, or 2021.
Shares awarded or subject to stock options, phantom shares, or performance units may not exceed
6.5 million shares from June 2020 through May 2030. CMS Energy and Consumers may issue awards of
up to 4,960,465 shares of common stock under the PISP as of December 31, 2023. Shares for which
payment or exercise is in cash, as well as shares that expire, terminate, or are canceled or forfeited, may
be awarded or granted again under the PISP.
All awards under the PISP vest fully upon death. Upon a change of control of CMS Energy or termination
under an officer separation agreement, the awards will vest in accordance with specific officer
agreements. If stated in the award, for restricted stock recipients who terminate employment due to
retirement or disability, a pro-rata portion of the award will vest upon termination, with any market-based
award also contingent upon the outcome of the market condition and any performance-based award
contingent upon the outcome of the performance condition. The pro-rata portion is equal to the portion of
the service period served between the award grant date and the employee’s termination date. The
remaining portion of the awards will be forfeited. All awards for directors vest fully upon retirement.
Restricted shares may be forfeited if employment terminates for any other reason or if the minimum
service requirements are not met, as described in the award document.
Restricted Stock Awards: Restricted stock awards for employees under the PISP are in the form of
performance-based, market-based, and time-lapse restricted stock. Award recipients receive shares of
CMS Energy common stock that have dividend and voting rights. The dividends on time-lapse restricted
stock are paid in cash or in CMS Energy common stock. The dividends on performance-based and
market-based restricted stock are paid in restricted shares equal to the value of the dividends. These
additional restricted shares are subject to the same vesting conditions as the underlying restricted stock
shares.
Performance-based restricted stock vesting is contingent on meeting at least a 36-month service
requirement and a performance condition. The performance condition is based on an adjusted measure of
CMS Energy’s EPS growth relative to a peer group over a three-year period. The awards granted in 2023,
2022, and 2021 require a 38-month service period. Market-based restricted stock vesting is generally
contingent on meeting a three-year service requirement and a market condition. The market condition is
based on a comparison of CMS Energy’s total shareholder return with the median total shareholder return
of a peer group over the same three-year period. Depending on the outcome of the performance condition
or the market condition, a recipient may earn a total award ranging from zero to 200 percent of the initial
grant. Time-lapse restricted stock generally vests after a service period of three years.
Restricted Stock Units: In 2023, 2022, and 2021, CMS Energy and Consumers granted restricted stock
units to certain non-employee directors who elected to defer their restricted stock awards. The restricted
stock units generally vest after a service period of one year or, if earlier, at the next annual meeting. The
restricted stock units will be distributed to the recipients as shares in accordance with the directors’
deferral agreements. Restricted stock units do not have voting rights, but do have dividend rights. In lieu
of cash dividend payments, the dividends on restricted stock units are paid in additional units equal to the
value of the dividends. These additional restricted stock units are subject to the same vesting and
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distribution conditions as the underlying restricted stock units. No restricted stock units were forfeited
during 2023.
Presented in the following tables is the activity for restricted stock and restricted stock units under the
PISP:
Year Ended December 31, 2023
CMS Energy, including Consumers
Consumers
Number of
Shares
Weighted-Average
Grant Date Fair Value
per Share
Number of
Shares
Weighted-Average
Grant Date Fair Value
per Share
Nonvested at beginning of period
1,029,523
$
60.13
978,146
$
60.15
Granted
Restricted stock
Restricted stock units
Vested
Restricted stock
Restricted stock units
Forfeited – restricted stock
502,039
19,082
(313,344)
(15,211)
(63,987)
52.62
50.32
51.54
52.60
53.57
474,917
18,315
(302,177)
(14,523)
(60,312)
Nonvested at end of period
1,158,102
$
59.50
1,094,366
$
52.42
50.34
51.48
52.55
53.45
59.50
Year Ended December 31, 2023
Granted
Time-lapse awards
Market-based awards
Performance-based awards
Restricted stock units
Dividends on market-based awards
Dividends on performance-based awards
Dividends on restricted stock units
Additional performance-based shares based on
achievement of condition
Total granted
CMS Energy, including
Consumers
Consumers
115,591
147,453
153,383
15,545
14,825
15,608
3,537
55,179
521,121
108,216
139,255
145,008
14,925
14,038
14,787
3,390
53,613
493,232
CMS Energy and Consumers charge the fair value of the restricted stock awards to expense over the
required service period and charge the fair value of the restricted stock units to expense immediately. For
performance-based awards, CMS Energy and Consumers estimate the number of shares expected to vest
at the end of the performance period based on the probable achievement of the performance objective.
Performance-based and market-based restricted stock awards have graded vesting features for retirement-
eligible employees, and CMS Energy and Consumers recognize expense for those awards on a graded
vesting schedule over the required service period. Expense for performance-based and market-based
restricted stock awards for non-retirement-eligible employees and time-lapse awards is recognized on a
straight-line basis over the required service period.
The fair value of performance-based and time-lapse restricted stock and restricted stock units is based on
the price of CMS Energy’s common stock on the grant date. The fair value of market-based restricted
stock awards is calculated on the grant date using a Monte Carlo simulation. CMS Energy and Consumers
base expected volatilities on the historical volatility of the price of CMS Energy common stock. The risk-
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free rate for valuation of the market-based restricted stock awards was based on the three-year
U.S. Treasury yield at the award grant date.
Presented in the following table are the most significant assumptions used to estimate the fair value of the
market-based restricted stock awards:
Years Ended December 31
Expected volatility
Expected dividend yield
Risk-free rate
2023
2022
2021
30.3%
27.3%
27.6%
2.9
3.9
2.8
1.4
2.8
0.2
Presented in the following table is the weighted-average grant-date fair value of all awards under the
PISP:
Years Ended December 31
CMS Energy, including Consumers
Weighted-average grant-date fair value per share
Restricted stock granted
Restricted stock units granted
Consumers
Weighted-average grant-date fair value per share
Restricted stock granted
Restricted stock units granted
In Millions
2023
2022
2021
$ 52.62
$ 48.69
$ 43.52
50.32
56.13
54.11
$ 52.42
$ 48.57
$ 42.85
50.34
56.07
53.93
Presented in the following table are amounts related to restricted stock awards and restricted stock units:
Years Ended December 31
CMS Energy, including Consumers
Fair value of shares that vested during the year
Compensation expense recognized
Income tax benefit recognized
Consumers
Fair value of shares that vested during the year
Compensation expense recognized
Income tax benefit recognized
In Millions
2023
2022
2021
$
$
$
$
20
28
3
19
26
2
$
$
27
26
—
25
25
—
25
22
1
24
21
1
At December 31, 2023, $29 million of total unrecognized compensation cost was related to restricted
stock for CMS Energy, including Consumers, and $27 million of total unrecognized compensation cost
was related to restricted stock for Consumers. CMS Energy and Consumers expect to recognize this cost
over a weighted-average period of two years.
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12: Income Taxes
CMS Energy and its subsidiaries file a consolidated U.S. federal income tax return as well as a Michigan
Corporate Income Tax return for the unitary business group and various other state unitary group
combined income tax returns. Income taxes are allocated based on each company’s separate taxable
income in accordance with the CMS Energy tax sharing agreement.
Presented in the following table is the difference between actual income tax expense on continuing
operations and income tax expense computed by applying the statutory U.S. federal income tax rate:
Years Ended December 31
CMS Energy, including Consumers
Income from continuing operations before income taxes
Income tax expense at statutory rate
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect1
Renewable energy tax credits
TCJA excess deferred taxes2
Taxes attributable to noncontrolling interests
Accelerated flow-through of regulatory tax benefits3
Other, net
Income tax expense
Effective tax rate
Consumers
In Millions, Except Tax Rate
2023
2022
2021
$
954
200
$
902
189
$
823
173
31
(58)
(40)
17
—
(3)
$
147
$
51
(51)
(65)
5
(39)
3
93
39
(44)
(50)
5
(28)
—
95
$
15.4%
10.3%
11.5%
Income from continuing operations before income taxes
$ 1,028
$ 1,085
$ 1,024
Income tax expense at statutory rate
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect1
Renewable energy tax credits
TCJA excess deferred taxes2
Accelerated flow-through of regulatory tax benefits3
Other, net
Income tax expense
Effective tax rate
216
36
(46)
(40)
—
(5)
161
$
228
59
(46)
(65)
(39)
3
140
$
215
54
(37)
(50)
(28)
2
156
$
15.7%
12.9%
15.2%
1
2
3
CMS 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.
In 2020, the MPSC authorized Consumers to accelerate the amortization of the gas portion of its regulatory
liability associated with unprotected, non-property-related excess deferred income taxes resulting from the
TCJA. This portion of the regulatory liability was fully amortized in 2022.
In 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 were fully amortized in 2022.
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Presented in the following table are the significant components of income tax expense on continuing
operations:
Years Ended December 31
CMS Energy, including Consumers
Current income taxes
Federal
State and local
Deferred income taxes
Federal
State and local
Deferred income tax credit
Tax expense
Consumers
Current income taxes
Federal
State and local
Deferred income taxes
Federal
State and local
Deferred income tax credit
Tax expense
In Millions
2023
2022
2021
$
$
5
1
6
$
$
107
38
$
145
$
(4)
$
147
$
$
$
3
2
5
$
$
117
43
6
—
6
4
65
69
18
93
$
(1)
1
$ —
49
49
98
(3)
95
$
$
(2) $
(13)
$
8
6
50
66
15
2
103
54
$
160
$
116
$
157
(4)
18
(3)
$
161
$
140
$
156
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Presented in the following table are the principal components of deferred income tax assets (liabilities)
recognized:
December 31
CMS Energy, including Consumers
Deferred income tax assets
Tax loss and credit carryforwards
Net regulatory tax liability
Reserves and accruals
Total deferred income tax assets
Valuation allowance
Total deferred income tax assets, net of valuation allowance
Deferred income tax liabilities
Plant, property, and equipment
Employee benefits
Gas inventory
Securitized costs
Other
Total deferred income tax liabilities
Total net deferred income tax liabilities
Consumers
Deferred income tax assets
Net regulatory tax liability
Tax loss and credit carryforwards
Reserves and accruals
Total deferred income tax assets
Deferred income tax liabilities
Plant, property, and equipment
Employee benefits
Gas inventory
Securitized costs
Other
Total deferred income tax liabilities
Total net deferred income tax liabilities
In Millions
2023
2022
$
$
428
305
28
385
318
35
$
761
$
738
(2)
(2)
$
759
$
736
$ (2,520) $ (2,515)
(473)
(66)
(194)
(121)
(433)
(53)
(39)
(103)
$ (3,374) $ (3,143)
$ (2,615) $ (2,407)
$
$
305
175
27
318
145
28
$
507
$
491
$ (2,498) $ (2,458)
(459)
(66)
(194)
(79)
(423)
(53)
(39)
(103)
$ (3,296) $ (3,076)
$ (2,789) $ (2,585)
Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary
differences between the tax basis of assets or liabilities and the reported amounts on CMS Energy’s and
Consumers’ consolidated financial statements.
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Presented in the following table are the tax loss and credit carryforwards at December 31, 2023:
CMS Energy, including Consumers
State net operating loss carryforwards
Local net operating loss carryforwards
General business credits
Total tax attributes
Consumers
State net operating loss carryforwards
General business credits
Total tax attributes
In Millions
Tax Attribute
Expiration
$
69 2030 – 2033
3 2024 – 2040
356 2035 – 2043
$
428
$
53 2030 – 2033
122 2035 – 2043
$
175
CMS Energy has provided a valuation allowance of $2 million for the local tax loss carryforward.
CMS Energy and Consumers expect to utilize fully their tax loss and credit carryforwards for which no
valuation allowance has been provided. It is reasonably possible that further adjustments will be made to
the valuation allowances within one year.
Presented in the following table is a reconciliation of the beginning and ending amount of uncertain tax
benefits:
Years Ended December 31
CMS Energy, including Consumers
Balance at beginning of period
Additions for current-year tax positions
Additions for prior-year tax positions
Reductions for prior-year tax positions
Balance at end of period
Consumers
Balance at beginning of period
Additions for current-year tax positions
Additions for prior-year tax positions
Reductions for prior-year tax positions
Balance at end of period
In Millions
2023
2022
2021
$
$
$
28
1
—
(3)
$
27
$
1
1
(1)
26
$
28
$
36
$
34
$
1
2
(3)
3
1
(2)
$
36
$
36
$
25
2
—
—
27
31
3
—
—
34
If recognized, all of these uncertain tax benefits would affect CMS Energy’s and Consumers’ annual
effective tax rates in future years. One uncertain tax benefit relates to the methodology of state
apportionment for Consumers’ electricity sales to MISO. The Michigan Tax Tribunal heard oral
arguments on this methodology during 2022. A final conclusion is not anticipated in the next 12 months.
CMS Energy and Consumers recognize accrued interest and penalties, where applicable, as part of
income tax expense. CMS Energy, including Consumers, recognized no interest or penalties for each of
the years ended December 31, 2023, 2022, or 2021.
The amount of income taxes paid is subject to ongoing audits by federal, state, local, and foreign tax
authorities, which can result in proposed assessments. CMS Energy’s federal income tax returns for 2020
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and subsequent years remain subject to examination by the IRS. CMS Energy’s Michigan Corporate
Income Tax returns for 2013-2016 and 2019 and subsequent years remain subject to examination by the
State of Michigan. CMS Energy’s and Consumers’ estimate of the potential outcome for any uncertain tax
issue is highly judgmental. CMS Energy and Consumers believe that their accrued tax liabilities at
December 31, 2023 were adequate for all years.
13: 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:
Years Ended December 31
Income available to common stockholders
Income from continuing operations
Less loss attributable to noncontrolling interests
Less preferred stock dividends
Income from continuing operations available to common stockholders – basic
and diluted
Average common shares outstanding
Weighted-average shares – basic
Add dilutive nonvested stock awards
Add dilutive forward equity sale contracts
Weighted-average shares – diluted
Income from continuing operations per average common share available to
common stockholders
Basic
Diluted
Nonvested Stock Awards
In Millions, Except Per Share Amounts
2023
2022
2021
$
$
807
(79)
10
809
(24)
10
$
728
(23)
5
$
876
$
823
$
746
291.2
289.5
289.0
0.5
—
0.3
0.2
0.5
—
291.7
290.0
289.5
$
3.01
3.01
$
2.84
2.84
$
2.58
2.58
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
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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 4, Financings and Capitalization.
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 EPS. 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 year ended December 31, 2023.
For further details on CMS Energy’s convertible senior notes, see Note 4, Financings and Capitalization.
14: Revenue
Presented in the following tables are the components of operating revenue:
Revenue recognized from contracts with customers
$
4,686
$
2,394
$
Year Ended December 31, 2023
CMS Energy, including Consumers
Consumers utility revenue
Other
Leasing income
Financing income
Consumers alternative-revenue programs
Total operating revenue – CMS Energy
Consumers
Consumers utility revenue
Residential
Commercial
Industrial
Other
Electric
Utility Gas Utility
In Millions
NorthStar
Clean
Energy1 Consolidated
$
4,686
$
2,394
$
—
$
7,080
—
—
—
10
49
—
6
20
181
181
116
—
—
181
$
7,261
116
16
69
$
4,745
$
2,420
$
297
$
7,462
$
2,236
$
1,619
1,550
660
240
4,686
10
49
—
$
489
60
226
2,394
6
20
—
$
$
3,855
2,039
720
466
7,080
16
69
1
Revenue recognized from contracts with customers
$
Financing income
Alternative-revenue programs
Other non-segment revenue
Total operating revenue – Consumers
$
4,745
$
2,420
$
7,166
1
Amounts represent NorthStar Clean Energy’s operating revenue from independent power production and its
sales of energy commodities.
165
Revenue recognized from contracts with customers
$
5,395
$
2,720
$
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Year Ended December 31, 2022
CMS Energy, including Consumers
Consumers utility revenue
Other
Leasing income
Financing income
Consumers alternative-revenue programs
Consumers revenues to be refunded
Total operating revenue – CMS Energy
Consumers
Consumers utility revenue
Residential
Commercial
Industrial
Other
Electric
Utility Gas Utility
In Millions
NorthStar
Clean
Energy1 Consolidated
$
5,395
$
2,720
$
—
$
8,115
—
—
—
10
43
(29)
—
6
14
(8)
205
205
240
—
—
—
205
$
8,320
240
16
57
(37)
$
5,419
$
2,732
$
445
$
8,596
$
2,523
$
1,879
$
1,733
792
347
559
75
207
4,402
2,292
867
554
Revenue recognized from contracts with customers
$
5,395
$
2,720
$
8,115
Financing income
Alternative-revenue programs
Revenues to be refunded
10
43
(29)
6
14
(8)
16
57
(37)
Total operating revenue – Consumers
$
5,419
$
2,732
$
8,151
1
Amounts represent NorthStar Clean Energy’s operating revenue from independent power production and its
sales of energy commodities.
166
Revenue recognized from contracts with customers
$ 4,915
$ 2,046
$
Table of Contents
Year Ended December 31, 2021
CMS Energy, including Consumers
Consumers utility revenue
Other
Leasing income
Financing income
Consumers alternative-revenue programs
Total operating revenue – CMS Energy
Consumers
Consumers utility revenue
Residential
Commercial
Industrial
Other
Electric
Utility
Gas
Utility
In Millions
NorthStar
Clean
Energy1 Consolidated
$ 4,915
$ 2,046
$
—
—
—
10
33
—
5
12
—
114
114
194
—
—
$
6,961
114
$
7,075
194
15
45
$ 4,958
$ 2,063
$
308
$
7,329
$ 2,402
$ 1,396
$
3,798
1,573
624
316
396
54
200
1,969
678
516
Revenue recognized from contracts with customers
$ 4,915
$ 2,046
$
6,961
Financing income
Alternative-revenue programs
Total operating revenue – Consumers
10
33
5
12
15
45
$ 4,958
$ 2,063
$
7,021
1
Amounts represent NorthStar Clean Energy’s operating revenue from independent power production and its
sales of energy commodities.
Electric and Gas Utilities
Consumers Utility Revenue: Consumers recognizes revenue primarily from the sale of electric and gas
utility services at tariff-based rates regulated by the MPSC. Consumers’ customer base consists of a mix
of residential, commercial, and diversified industrial customers. Consumers’ tariff-based sales
performance obligations are described below.
• Consumers has performance obligations for the service of standing ready to deliver electricity or
natural gas to customers, and it satisfies these performance obligations over time. Consumers
recognizes revenue at a fixed rate as it provides these services. These arrangements generally do
not have fixed terms and remain in effect as long as the customer consumes the utility service.
The rates are set by the MPSC through the rate-making process and represent the stand-alone
selling price of Consumers’ service to stand ready to deliver.
• Consumers has performance obligations for the service of delivering the commodity of electricity
or natural gas to customers, and it satisfies these performance obligations upon delivery.
Consumers recognizes revenue at a price per unit of electricity or natural gas delivered, based on
the tariffs established by the MPSC. These arrangements generally do not have fixed terms and
remain in effect as long as the customer consumes the utility service. The rates are set by the
MPSC through the rate-making process and represent the stand-alone selling price of a bundled
product comprising the commodity, electricity or natural gas, and the service of delivering such
commodity.
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In some instances, Consumers has specific fixed-term contracts with large commercial and industrial
customers to provide electricity or gas at certain tariff rates or to provide gas transportation services at
contracted rates. The amount of electricity and gas to be delivered under these contracts and the
associated future revenue to be received are generally dependent on the customers’ needs. Accordingly,
Consumers recognizes revenues at the tariff or contracted rate as electricity or gas is delivered to the
customer. Consumers also has other miscellaneous contracts with customers related to pole and other
property rentals, appliance service plans, and utility contract work. Generally, these contracts are short
term or evergreen in nature.
Accounts Receivable and Unbilled Revenues: Accounts receivable comprise trade receivables and
unbilled receivables. CMS Energy and Consumers record their accounts receivable at cost 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 $34 million for the year ended
December 31, 2023, $50 million for the year ended December 31, 2022, and $22 million for the year
ended December 31, 2021. Uncollectible accounts expense for the year ended December 31, 2022
included a commitment to contribute $10 million to directly assist vulnerable customers with utility bills.
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 $494 million at December 31, 2023 and $663 million at December 31, 2022.
Alternative-revenue Programs: Consumers accounts for its energy waste reduction incentive
mechanism and financial compensation mechanism as alternative-revenue programs. Consumers
recognizes revenue related to the energy waste reduction incentive as soon as energy savings exceed the
annual targets established by the MPSC and recognizes revenue related to the financial compensation
mechanism as payments are made on MPSC-approved PPAs. For additional information on these
mechanisms, see Note 2, Regulatory Matters.
Consumers does not reclassify revenue from its alternative-revenue program to revenue from contracts
with customers at the time the amounts are collected from customers.
Revenues to Be Refunded: In December 2022, the MPSC issued an order authorizing Consumers to
refund $22 million voluntarily to utility customers. Additionally, in the settlement of its 2022 electric rate
case, Consumers agreed to refund voluntarily $15 million of 2022 revenues to utility customers through a
one-time bill credit. For additional information, see Note 2, Regulatory Matters.
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15: Other Income and Other Expense
Presented in the following table are the components of other income and other expense at CMS Energy
and Consumers:
Years Ended December 31
CMS Energy, including Consumers
Other income
Gain on extinguishment of debt1
Interest income
Allowance for equity funds used during construction
Income from equity method investees
All other
Total other income – CMS Energy
Consumers
Other income
Interest income
Interest income - related parties
Allowance for equity funds used during construction
All other
Total other income – Consumers
CMS Energy, including Consumers
Other expense
Donations
Civic and political expenditures
All other
Total other expense – CMS Energy
Consumers
Other expense
Donations
Civic and political expenditures
All other
Total other expense – Consumers
3
8
10
9
30
2
5
8
8
In Millions
2023
2022
2021
$
131
$ —
$ —
37
7
7
13
5
6
3
5
$
195
$
19
$
$
25
$
5
7
12
49
(1)
(5)
(7)
$
$
$
2
5
6
4
$
17
$
23
$
$
(9)
(6)
(12)
(6)
(5)
(7)
$
(13) $
(27) $
(18)
$
$
(1)
(5)
(6)
$
(9)
(6)
(10)
(6)
(5)
(7)
$
(12) $
(25) $
(18)
1
For information regarding the gain on extinguishment of debt, see Note 4, Financings and Capitalization—
CMS Energy’s Purchase of Consumers’ First Mortgage Bonds.
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16: Reportable Segments
Reportable segments consist of business units defined by the products and services they offer.
CMS Energy and Consumers evaluate the performance of each segment based on its contribution to net
income available to CMS Energy’s common stockholders.
Accounting policies for CMS Energy’s and Consumers’ segments are as described in Note 1, Significant
Accounting Policies. The consolidated financial statements reflect the assets, liabilities, revenues, and
expenses of the individual segments when appropriate. Accounts are allocated among the segments when
common accounts are attributable to more than one segment. The allocations are based on certain
measures of business activities, such as revenue, labor dollars, customers, other operating and
maintenance expense, construction expense, leased property, taxes, or functional surveys. For example,
customer receivables are allocated based on revenue, and pension provisions are allocated based on labor
dollars.
Inter-segment sales and transfers are accounted for at current market prices and are eliminated in
consolidated net income available to common stockholders by segment. Inter-segment sales and transfers
were immaterial for all periods presented.
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:
Years Ended December 31
CMS Energy, including Consumers
Operating revenue
Electric utility
Gas utility
NorthStar Clean Energy
Total operating revenue – CMS Energy
Consumers
Operating revenue
Electric utility
Gas utility
Other reconciling items
Total operating revenue – Consumers
CMS Energy, including Consumers
Depreciation and amortization
Electric utility
Gas utility
NorthStar Clean Energy
Other reconciling items
Total depreciation and amortization – CMS Energy
Consumers
Depreciation and amortization
Electric utility
Gas utility
Other reconciling items
Total depreciation and amortization – Consumers
In Millions
2023
2022
2021
$ 4,745
$ 5,419
$ 4,958
2,420
297
2,732
445
2,063
308
$ 7,462
$ 8,596
$ 7,329
$ 4,745
$ 5,419
$ 4,958
2,420
1
2,732
—
2,063
—
$ 7,166
$ 8,151
$ 7,021
$
$
$
797
338
43
2
757
330
38
1
772
304
37
1
$ 1,180
$ 1,126
$ 1,114
$
$
$
797
338
2
757
330
1
772
304
1
$ 1,137
$ 1,088
$ 1,077
171
In Millions
2023
2022
2021
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
7
7
281
158
2
202
643
285
161
2
3
3
218
116
3
182
519
218
116
1
10
10
207
104
6
183
500
207
104
—
$
448
$
335
$
311
$
109
$
117
$
67
98
4
(22)
32
3
(51)
$
147
$
93
$
39
(2)
(59)
95
$
$
67
98
(4)
161
$
109
$
117
32
(1)
140
$
39
—
156
$
Table of Contents
Years Ended December 31
CMS Energy, including Consumers
Income from equity method investees1
NorthStar Clean Energy
Total income from equity method investees – CMS Energy
CMS Energy, including Consumers
Interest charges
Electric utility
Gas utility
NorthStar Clean Energy
Other reconciling items
Total interest charges – CMS Energy
Consumers
Interest charges
Electric utility
Gas utility
Other reconciling items
Total interest charges – Consumers
CMS Energy, including Consumers
Income tax expense (benefit)
Electric utility
Gas utility
NorthStar Clean Energy
Other reconciling items
Total income tax expense – CMS Energy
Consumers
Income tax expense (benefit)
Electric utility
Gas utility
Other reconciling items
Total income tax expense – Consumers
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Table of Contents
Years Ended December 31
CMS Energy, including Consumers
Net income (loss) available to common stockholders
Electric utility
Gas utility
NorthStar Clean Energy
Other reconciling items
Total net income available to common stockholders – CMS Energy
Consumers
Net income (loss) available to common stockholder
Electric utility
Gas utility
Other reconciling items
Total net income available to common stockholder – Consumers
CMS Energy, including Consumers
Plant, property, and equipment, gross
Electric utility2
Gas utility2
NorthStar Clean Energy
Other reconciling items
Total plant, property, and equipment, gross – CMS Energy
Consumers
Plant, property, and equipment, gross
Electric utility2
Gas utility2
Other reconciling items
Total plant, property, and equipment, gross – Consumers
CMS Energy, including Consumers
Investments in equity method investees1
NorthStar Clean Energy
Total investments in equity method investees – CMS Energy
In Millions
2023
2022
2021
$
$
$
550
315
67
(55)
567
378
34
(152)
565
302
23
458
$
877
$
827
$ 1,348
$
$
550
315
—
$
567
378
(2)
565
302
(1)
$
865
$
943
$
866
$ 19,302
$ 17,870
$ 18,147
12,383
11,443
10,601
1,420
30
1,148
30
1,122
23
$ 33,135
$ 30,491
$ 29,893
$ 19,302
$ 17,870
$ 18,147
12,383
11,443
10,601
38
29
23
$ 31,723
$ 29,342
$ 28,771
$
$
76
76
$
$
71
71
$
$
71
71
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Years Ended December 31
CMS Energy, including Consumers
Total assets
Electric utility2
Gas utility2
NorthStar Clean Energy
Other reconciling items
Total assets – CMS Energy
Consumers
Total assets
Electric utility2
Gas utility2
Other reconciling items
Total assets – Consumers
CMS Energy, including Consumers
Capital expenditures3
Electric utility4
Gas utility4
NorthStar Clean Energy
Other reconciling items
Total capital expenditures – CMS Energy
Consumers
Capital expenditures3
Electric utility4
Gas utility4
Other reconciling items
Total capital expenditures – Consumers
In Millions
2023
2022
2021
$ 19,358
$ 17,907
$ 16,493
12,353
11,873
10,517
1,604
202
1,464
109
1,312
431
$ 33,517
$ 31,353
$ 28,753
$ 19,417
$ 17,968
$ 16,555
12,397
11,918
10,564
38
30
21
$ 31,852
$ 29,916
$ 27,140
$ 2,081
$ 1,265
$ 1,153
1,041
1,008
156
2
113
7
989
17
2
$ 3,280
$ 2,393
$ 2,161
$ 2,081
$ 1,265
$ 1,153
1,041
23
1,008
7
989
2
$ 3,145
$ 2,280
$ 2,144
1
2
3
4
Consumers had no equity method investments.
Amounts include a portion of Consumers’ other common assets attributable to both the electric and gas
utility businesses.
Amounts include assets placed under finance lease.
Amounts include a portion of Consumers’ capital expenditures for plant and equipment attributable to both
the electric and gas utility businesses.
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17: Related-party Transactions—Consumers
Consumers enters into a number of transactions with related parties in the normal course of business.
These transactions include but are not limited to:
•
•
•
purchases of electricity from affiliates of NorthStar Clean Energy
payments to and from CMS Energy related to parent company overhead costs
payments of principal and interest when due to CMS Energy related to borrowings under certain
credit agreements and CMS Energy’s repurchase of Consumers’ first mortgage bonds
Transactions involving power supply purchases from certain affiliates of NorthStar Clean Energy are
based on avoided costs under PURPA, state law, and competitive bidding. The payment of parent
company overhead costs is based on the use of accepted industry allocation methodologies. These
payments are for costs that occur in the normal course of business.
Presented in the following table is Consumers’ expense recorded from related-party transactions for the
years ended December 31:
Description
Related Party
2023
2022
2021
Purchases of capacity and energy
Affiliates of NorthStar Clean Energy
$
75
$
76
$
77
In Millions
Amounts payable to related parties for purchased power and other services were $19 million at
December 31, 2023 and $20 million at December 31, 2022. Accounts receivable from related parties were
$9 million at December 31, 2023 and $8 million at December 31, 2022.
CMS Energy has a demand note payable to the DB SERP rabbi trust. The demand note bears interest at an
annual rate of 4.10 percent and has a maturity date of 2028. The portion of the demand note attributable to
Consumers was recorded as a note receivable – related party on Consumers’ consolidated balance sheets
at December 31, 2023 and 2022.
Consumers has a natural gas transportation agreement with a subsidiary of CMS Energy that extends
through 2038, related to a pipeline owned by Consumers. For additional details about the agreement, see
Note 8, Leases.
During 2023, CMS Energy repurchased certain of Consumers’ first mortgage bonds. For more
information about these repurchases, see Note 4, Financings and Capitalization—CMS Energy’s Purchase
of Consumers’ First Mortgage Bonds.
In November 2023, an unregulated subsidiary of Consumers sold certain non-utility renewable
development projects to NorthStar Clean Energy for $20 million, the projects’ net book value; there was
no gain or loss recognized on this sale.
In December 2023, Consumers renewed a short-term credit agreement with CMS Energy, permitting
Consumers to borrow up to $500 million. For additional details about the agreement, see Note 4,
Financings and Capitalization—Short-term Borrowings.
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18: Variable Interest Entities
Consolidated VIEs: During 2023, NorthStar Clean Energy sold a Class A membership interest in
Newport Solar Holdings to tax equity investors for $86 million. Newport Solar Holdings wholly owns
Newport Solar, a 180-MW solar generation project located in Jackson County, Arkansas; the project
began commercial operation in October 2023.
NorthStar Clean Energy holds a Class B membership interest in NWO Holdco, which wholly owns
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 Newport Solar Holdings, 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 these entities’
income and cash flows are not distributed among their investors based on ownership interest percentages,
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.
Newport Solar Holdings, 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 these entities. However, NorthStar Clean Energy manages and controls
the entities’ operating activities. 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 Newport Solar Holdings, NWO Holdco, Aviator Wind Equity
Holdings, and Aviator Wind and presents the Class A membership interests and 49 percent of Aviator
Wind Equity Holdings as noncontrolling interests.
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Presented in the following table are the carrying values of the VIEs’ assets and liabilities included on
CMS Energy’s consolidated balance sheets:
December 31
Current
Cash and cash equivalents
Accounts receivable
Prepayments and other current assets
Non-current
Plant, property, and equipment, net
Construction work in progress
Other non-current assets
Total assets1
Current
Current portion of long-term debt
Accounts payable
Non-current
Non-current portion of finance leases
Asset retirement obligations
Total liabilities
In Millions
2023
2022
$
28
$
43
3
4
1,064
—
3
7
7
850
156
—
$ 1,102
$ 1,063
$ —
$
100
12
23
32
67
33
23
24
$
180
$
1
Assets 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 3,
Contingencies and Commitments—Guarantees.
Consumers’ wholly-owned subsidiaries, Consumers 2014 Securitization Funding and Consumers
2023 Securitization Funding, are VIEs designed to collateralize Consumers’ securitization bonds. These
entities are considered VIEs primarily because their equity capitalization is insufficient to support their
operations. Consumers is the primary beneficiary of and consolidates these VIEs, 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. The VIEs’ primary
assets and liabilities comprise regulatory assets and long-term debt. For more information on these assets
and liabilities, see Note 2, Regulatory Matters— Securitized Costs and Note 4, Financings and
Capitalization—Securitization Bonds.
Non-consolidated 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:
Name
Nature of the Entity
Nature of CMS Energy’s Involvement
T.E.S. Filer City
Coal-fueled power generator
Long-term PPA between partnership and Consumers
Employee assignment agreement
Grayling
Wood waste-fueled power generator
Long-term PPA between partnership and Consumers
Reduced dispatch agreement with Consumers1
Operating and management contract
Genesee
Wood waste-fueled power generator
Long-term PPA between partnership and Consumers
Reduced dispatch agreement with Consumers1
Operating and management contract
Craven
Wood waste-fueled power generator
Operating and management contract
1
Reduced dispatch agreements allow the facilities to be dispatched based on the market price of power
compared with the cost of production of the plants. This results in fuel cost savings that each partnership
shares with Consumers’ customers.
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 $74 million at December 31, 2023 and $71 million at December 31, 2022.
19: Exit Activities and Discontinued Operations
Exit Activities: In accordance with its Clean Energy Plan, Consumers retired the D.E. Karn coal-fueled
electric generating units in June 2023 and 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 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 December 31, 2023, the cumulative cost incurred and charged to maintenance and other operating
expenses related to the D.E. Karn retention incentive program was $16 million. Additionally, an amount
of $4 million was capitalized as a cost of plant, property, and equipment and an amount of $12 million
was 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 $35 million. The regulatory assets for both
programs will be collected from customers over three years.
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Presented in the following table is a reconciliation of the retention benefit liability recorded in other
liabilities on Consumers’ consolidated balance sheets:
Years Ended December 31
Retention benefit liability at beginning of period
Costs deferred as a regulatory asset
Costs paid or settled
Retention benefit liability at the end of the period1
In Millions
2023
2022
$
$
21
16
(21)
$
16
$
14
24
(17)
21
1
Includes current portion of other liabilities of $7 million at December 31, 2023 and $13 million at
December 31, 2022.
Discontinued Operations: In 2021, EnerBank was acquired by a non-affiliated company. 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 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 year ended December 31, 2021.
The table below presents the financial results of EnerBank included in income from discontinued
operations:
Years Ended December 31
Operating revenue
Expenses
Operating expenses
Interest expense
Income before income taxes
Gain on sale
Income from discontinued operations before income taxes
Income tax expense
Income from discontinued operations, net of tax
In Millions
2022
2021
$ —
$
209
—
—
$ —
$
5
5
1
4
$
$
$
$
60
34
115
657
772
170
602
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Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of CMS Energy Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of CMS Energy Corporation and its
subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements
of income, of comprehensive income, of changes in equity and of cash flows for each of the three years in
the period ended December 31, 2023, including the related notes and financial statement schedules listed
in the index appearing under Item 15 (collectively referred to as the “consolidated financial statements”).
We also have audited the Company’s internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2023 in
conformity with accounting principles generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Management’s Annual Report on Internal
Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on
the Company’s consolidated financial statements and on the Company’s internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (iii) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that (i) relates to accounts or disclosures that are material to the consolidated financial
statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.
Accounting for the Effects of New Regulatory Matters
As described in Note 2 to the consolidated financial statements, the Company is a utility and must apply
regulatory accounting when its rates are designed to recover specific costs of providing regulated
services. Under regulatory accounting, the Company records regulatory assets or liabilities for certain
transactions that would have been treated as expense or revenue by a non-regulated business. As of
December 31, 2023, the Company has recognized a total of $3,886 million of regulatory assets,
$3,950 million of regulatory liabilities, and $54 million of accrued rate refunds. As described by
management, there are multiple participants to rate case proceedings who often challenge various aspects
of those proceedings, including the prudence of the Company’s policies and practices. These participants
often seek cost disallowances and other relief and have appealed significant decisions reached by the
regulators. The recovery of regulatory assets and the settlement of regulatory liabilities are contingent
upon the outcomes of rate cases and regulatory proceedings. The principal considerations for our
determination that performing procedures relating to accounting for the effects of new regulatory matters
is a critical audit matter are (i) the high degree of auditor judgment and subjectivity applied to evaluate
management’s assessment of the potential outcomes and related accounting impacts associated with
pending rate case proceedings; (ii) in some cases, the significant audit effort necessary to assess contrary
evidence from various parties involved in rate case proceedings; and (iii) the significant audit effort
necessary to evaluate audit evidence related to the recovery of regulatory assets and the settlement of
regulatory liabilities. Addressing the matter involved performing procedures and evaluating audit
evidence in connection with forming our overall opinion on the consolidated financial statements. These
procedures included testing the effectiveness of controls relating to management’s assessment of
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regulatory proceedings, including the probability of recovering incurred costs and the related accounting
and disclosure impacts. These procedures also included, among others, (i) evaluating the Company’s
correspondence with regulators; (ii) evaluating the reasonableness of management’s assessment regarding
whether recovery of regulatory assets and settlement of regulatory liabilities is probable; (iii) evaluating
the sufficiency of the disclosures in the consolidated financial statements; and (iv) testing, on a sample
basis, the regulatory assets and liabilities, including those subject to pending rate cases and regulatory
proceedings, based on (a) provisions and formulas outlined in rate orders; (b) other regulatory
correspondence; and (c) application of relevant regulatory precedents.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
February 8, 2024
We have served as the Company’s auditor since 2007.
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183
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholder of Consumers Energy Company
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Consumers Energy Company and its
subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements
of income, of comprehensive income, of changes in equity and of cash flows for each of the three years in
the period ended December 31, 2023, including the related notes and financial statement schedule listed
in the index appearing under Item 15 (collectively referred to as the “consolidated financial statements”).
We also have audited the Company’s internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2023 in
conformity with accounting principles generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Management’s Annual Report on Internal
Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on
the Company’s consolidated financial statements and on the Company’s internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (iii) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that (i) relates to accounts or disclosures that are material to the consolidated financial
statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.
Accounting for the Effects of New Regulatory Matters
As described in Note 2 to the consolidated financial statements, the Company is a utility and must apply
regulatory accounting when its rates are designed to recover specific costs of providing regulated
services. Under regulatory accounting, the Company records regulatory assets or liabilities for certain
transactions that would have been treated as expense or revenue by a non-regulated business. As of
December 31, 2023, the Company has recognized a total of $3,886 million of regulatory assets,
$3,950 million of regulatory liabilities, and $54 million of accrued rate refunds. As described by
management, there are multiple participants to rate case proceedings who often challenge various aspects
of those proceedings, including the prudence of the Company’s policies and practices. These participants
often seek cost disallowances and other relief and have appealed significant decisions reached by the
regulators. The recovery of regulatory assets and the settlement of regulatory liabilities are contingent
upon the outcomes of rate cases and regulatory proceedings. The principal considerations for our
determination that performing procedures relating to accounting for the effects of new regulatory matters
is a critical audit matter are (i) the high degree of auditor judgment and subjectivity applied to evaluate
management’s assessment of the potential outcomes and related accounting impacts associated with
pending rate case proceedings; (ii) in some cases, the significant audit effort necessary to assess contrary
evidence from various parties involved in rate case proceedings; and (iii) the significant audit effort
necessary to evaluate audit evidence related to the recovery of regulatory assets and the settlement of
regulatory liabilities. Addressing the matter involved performing procedures and evaluating audit
evidence in connection with forming our overall opinion on the consolidated financial statements. These
procedures included testing the effectiveness of controls relating to management’s assessment of
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Table of Contents
regulatory proceedings, including the probability of recovering incurred costs and the related accounting
and disclosure impacts. These procedures also included, among others, (i) evaluating the Company’s
correspondence with regulators; (ii) evaluating the reasonableness of management’s assessment regarding
whether recovery of regulatory assets and settlement of regulatory liabilities is probable; (iii) evaluating
the sufficiency of the disclosures in the consolidated financial statements; and (iv) testing, on a sample
basis, the regulatory assets and liabilities, including those subject to pending rate cases and regulatory
proceedings, based on (a) provisions and formulas outlined in rate orders; (b) other regulatory
correspondence; and (c) application of relevant regulatory precedents.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
February 8, 2024
We have served as the Company’s auditor since 2007.
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Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
CMS Energy
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures: Under the
supervision and with the participation of management, including its CEO and CFO, CMS Energy
conducted an evaluation of its disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on such evaluation, CMS Energy’s CEO
and CFO have concluded that its disclosure controls and procedures were effective as of
December 31, 2023.
Management’s Annual Report on Internal Control Over Financial Reporting: CMS Energy’s
management is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). CMS Energy’s internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
GAAP and includes policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of CMS Energy
provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, and that receipts and expenditures of
CMS Energy are being made only in accordance with authorizations of management and directors
of CMS Energy
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of CMS Energy’s assets that could have a material effect on its
financial statements
Management, including its CEO and CFO, does not expect that its internal controls will prevent or detect
all errors and all fraud. A control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of
a control system must reflect the fact that there are resource constraints, and the benefits of controls must
be considered relative to their costs. In addition, any evaluation of the effectiveness of controls is subject
to risks that those internal controls may become inadequate in future periods because of changes in
business conditions, or that the degree of compliance with the policies or procedures deteriorates.
Under the supervision and with the participation of management, including its CEO and CFO,
CMS Energy conducted an evaluation of the effectiveness of its internal control over financial reporting
as of December 31, 2023. In making this evaluation, management used the criteria set forth in the
framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on such evaluation, CMS Energy’s management
concluded that its internal control over financial reporting was effective as of December 31, 2023. The
effectiveness of CMS Energy’s internal control over financial reporting as of December 31, 2023 has
187
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been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as
stated in their report which appears under Item 8. Financial Statements and Supplementary Data.
Changes in Internal Control Over Financial Reporting: There have not been any changes in
CMS Energy’s internal control over financial reporting during the last fiscal quarter that have materially
affected, or are reasonably likely to affect materially, its internal control over financial reporting.
Consumers
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures: Under the
supervision and with the participation of management, including its CEO and CFO, Consumers conducted
an evaluation of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act). Based on such evaluation, Consumers’ CEO and CFO have
concluded that its disclosure controls and procedures were effective as of December 31, 2023.
Management’s Annual Report on Internal Control Over Financial Reporting: Consumers’
management is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Consumers’ internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
GAAP and includes policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of Consumers
provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, and that receipts and expenditures of Consumers
are being made only in accordance with authorizations of management and directors of
Consumers
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of Consumers’ assets that could have a material effect on its
financial statements
Management, including its CEO and CFO, does not expect that its internal controls will prevent or detect
all errors and all fraud. A control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of
a control system must reflect the fact that there are resource constraints, and the benefits of controls must
be considered relative to their costs. In addition, any evaluation of the effectiveness of controls is subject
to risks that those internal controls may become inadequate in future periods because of changes in
business conditions, or that the degree of compliance with the policies or procedures deteriorates.
Under the supervision and with the participation of management, including its CEO and CFO, Consumers
conducted an evaluation of the effectiveness of its internal control over financial reporting as of
December 31, 2023. In making this evaluation, management used the criteria set forth in the framework in
Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on such evaluation, Consumers’ management concluded that its
internal control over financial reporting was effective as of December 31, 2023. The effectiveness of
Consumers’ internal control over financial reporting as of December 31, 2023 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report
which appears under Item 8. Financial Statements and Supplementary Data.
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Changes in Internal Control Over Financial Reporting: There have not been any changes in
Consumers’ internal control over financial reporting during the last fiscal quarter that have materially
affected, or are reasonably likely to affect materially, its internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections
Not applicable.
Part III
Item 10. Directors, Executive Officers and Corporate Governance
CMS Energy
Information that is required in Item 10 of this Form 10-K regarding executive officers is included in the
Item 1. Business—Information About CMS Energy’s and Consumers’ Executive Officers section, which
is incorporated by reference herein.
Information that is required in Item 10 of this Form 10-K regarding directors, executive officers, and
corporate governance is incorporated by reference from CMS Energy’s and Consumers’ definitive proxy
statement for their 2024 Annual Meetings of Shareholders to be held May 3, 2024. The proxy statement
will be filed with the SEC, pursuant to Regulation 14A under the Exchange Act, within 120 days after the
end of the fiscal year covered by this Form 10-K, all of which information is hereby incorporated by
reference in, and made part of, this Form 10-K.
Code of Ethics
CMS Energy has adopted an employee code of ethics, entitled “CMS Energy 2024 Code of Conduct and
Guide to Ethical Business Behavior” (Employee Code) that applies to its CEO, CFO, and CAO, as well as
all other officers and employees of CMS Energy and its affiliates. The Employee Code is administered by
the Chief Compliance Officer of CMS Energy, who reports directly to the Audit Committee. CMS Energy
has also adopted a director code of ethics entitled “2024 Board of Directors Code of Conduct and Guide
to Ethical Business Behavior” (Director Code) that applies to its directors. The Director Code is
administered by the Audit Committee. Any alleged violation of the Director Code by a director will be
investigated by disinterested members of the Audit Committee, or if none, by disinterested members of
the entire Board. The Employee Code and Director Code and any waivers of, or amendments or
exceptions to, a provision of the Employee Code that applies to CMS Energy’s CEO, CFO, CAO or
persons performing similar functions and any waivers of, or amendments or exceptions to, a provision of
CMS Energy’s Director Code will be disclosed on CMS Energy’s website at www.cmsenergy.com/
corporate-governance/compliance-and-ethics.
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Consumers
Information that is required in Item 10 of this Form 10-K regarding executive officers is included in the
Item 1. Business—Information About CMS Energy’s and Consumers’ Executive Officers section, which
is incorporated by reference herein.
Information that is required in Item 10 of this Form 10-K regarding directors, executive officers, and
corporate governance is incorporated by reference from CMS Energy’s and Consumers’ definitive proxy
statement for their 2024 Annual Meetings of Shareholders to be held May 3, 2024. The proxy statement
will be filed with the SEC, pursuant to Regulation 14A under the Exchange Act, within 120 days after the
end of the fiscal year covered by this Form 10-K, all of which information is hereby incorporated by
reference in, and made part of, this Form 10-K.
Code of Ethics
Consumers has adopted an employee code of ethics, entitled “CMS Energy 2024 Code of Conduct and
Guide to Ethical Business Behavior” (Employee Code) that applies to its CEO, CFO, and CAO, as well as
all other officers and employees of Consumers and its affiliates. The Employee Code is administered by
the Chief Compliance Officer of Consumers, who reports directly to the Audit Committee. Consumers
has also adopted a director code of ethics entitled “2024 Board of Directors Code of Conduct and Guide
to Ethical Business Behavior” (Director Code) that applies to its directors. The Director Code is
administered by the Audit Committee. Any alleged violation of the Director Code by a director will be
investigated by disinterested members of the Audit Committee, or if none, by disinterested members of
the entire Board. The Employee Code and Director Code and any waivers of, or amendments or
exceptions to, a provision of the Employee Code that applies to Consumers’ CEO, CFO, CAO or persons
performing similar functions and any waivers of, or amendments or exceptions to, a provision of
Consumers’ Director Code will be disclosed on Consumers’ website at www.cmsenergy.com/corporate-
governance/compliance-and-ethics.
Item 11. Executive Compensation
See the note below.
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Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Securities Authorized for Issuance Under Equity
Compensation Plans
Presented in the following table is information regarding CMS Energy’s equity compensation plans as of
December 31, 2023:
(a)
(b)
(c)
Number of securities to
be issued upon exercise
of outstanding options,
warrants, and rights
Weighted-average
exercise price of
outstanding options,
warrants, and rights
Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column (a))
—
$ —
4,960,465
Plan Category
Equity compensation plan
approved by
shareholders
Also see the note below.
Item 13. Certain Relationships and Related Transactions, and
Director Independence
See the note below.
Item 14. Principal Accountant Fees and Services
See the note below.
NOTE: Information that is required by Part III—Items 11, 12, 13, and 14 of this Form 10-K is
incorporated by reference from CMS Energy’s and Consumers’ definitive proxy statement for their
2024 Annual Meetings of Shareholders to be held May 3, 2024. The proxy statement will be filed with the
SEC, pursuant to Regulation 14A under the Exchange Act, within 120 days after the end of the fiscal year
covered by this Form 10-K, all of which information is hereby incorporated by reference in, and made
part of, this Form 10-K.
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192
Table of Contents
Part IV
Item 15. Exhibits and Financial Statement Schedules
The following financial statements are filed as part of this report under Item 8. Financial Statements and
Supplementary Data:
• Consolidated Statements of Income of CMS Energy for the years ended December 31, 2023,
2022, and 2021
• Consolidated Statements of Comprehensive Income of CMS Energy for the years ended
December 31, 2023, 2022, and 2021
• Consolidated Statements of Cash Flows of CMS Energy for the years ended December 31, 2023,
2022, and 2021
• Consolidated Balance Sheets of CMS Energy at December 31, 2023 and 2022
• Consolidated Statements of Changes in Equity of CMS Energy for the years ended
December 31, 2023, 2022, and 2021
• Consolidated Statements of Income of Consumers for the years ended December 31, 2023, 2022,
and 2021
• Consolidated Statements of Comprehensive Income of Consumers for the years ended
December 31, 2023, 2022, and 2021
• Consolidated Statements of Cash Flows of Consumers for the years ended December 31, 2023,
2022, and 2021
• Consolidated Balance Sheets of Consumers at December 31, 2023 and 2022
• Consolidated Statements of Changes in Equity of Consumers for the years ended
December 31, 2023, 2022, and 2021
• Notes to the Consolidated Financial Statements
• Report of Independent Registered Public Accounting Firm for CMS Energy
• Report of Independent Registered Public Accounting Firm for Consumers
The following financial statement schedules are included below:
•
•
•
Schedule I — Condensed Financial Information of Registrant, CMS Energy—Parent Company at
December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022, and 2021
Schedule II — Valuation and Qualifying Accounts and Reserves of CMS Energy for the years
ended December 31, 2023, 2022, and 2021
Schedule II — Valuation and Qualifying Accounts and Reserves of Consumers for the years
ended December 31, 2023, 2022, and 2021
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Schedule I — Condensed Financial Information of
Registrant
CMS Energy—Parent Company
Condensed Statements of Income
Years Ended December 31
Operating Expenses
Other operating expenses
Total operating expenses
Operating Loss
Other Income (Expense)
Equity earnings of subsidiaries
Nonoperating retirement benefits, net
Other income
Other expense
Total other income
Interest Charges
Interest on long-term debt
Intercompany interest expense and other
Total interest charges
Income Before Income Taxes
Income Tax Benefit
Income From Continuing Operations
Income From Discontinued Operations, Net of Tax of $—, $—, and $(5)
Net Income Attributable to CMS Energy
Preferred Stock Dividends
In Millions
2023
2022
2021
$
10
10
(10)
929
(1)
31
—
959
201
10
211
738
(20)
758
—
758
10
$
$
7
7
(7)
7
7
(7)
980
1,482
(1)
5
(1)
(1)
2
—
983
1,483
181
8
189
787
(50)
837
—
837
10
183
7
190
1,286
(60)
1,346
7
1,353
5
Net Income Available to Common Stockholders
$
748
$
827
$ 1,348
The accompanying notes are an integral part of these statements.
194
Table of Contents
Schedule I — Condensed Financial Information of
Registrant (Continued)
CMS Energy—Parent Company
Condensed Statements of Cash Flows
Years Ended December 31
Cash Flows from Operating Activities
Net cash provided by operating activities
Cash Flows from Investing Activities
Investment in subsidiaries
Investment in debt securities - intercompany
Decrease (increase) in notes receivable – intercompany
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from issuance of debt
Issuance of common stock
Issuance of preferred stock
Retirement of long-term debt
Payment of dividends on common and preferred stock
Debt issuance costs and financing fees
Change in notes payable – intercompany
Net cash provided by (used in) financing activities
Net Increase (Decrease) in Cash and Cash Equivalents, Including
Restricted Amounts
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of
Period
In Millions
2023
2022
2021
$
595
$
565
$ 1,549
(630)
(293)
55
(868)
800
192
—
—
(579)
(20)
(7)
386
(796)
—
286
(510)
—
69
—
—
(544)
(11)
77
(409)
(581)
—
(83)
(664)
—
26
224
(200)
(507)
(10)
(28)
(495)
113
(354)
390
36
390
—
Cash and Cash Equivalents, Including Restricted Amounts, End of
Period
$
149
$
36
$
390
The accompanying notes are an integral part of these statements.
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Schedule I — Condensed Financial Information of
Registrant (Continued)
CMS Energy—Parent Company
Condensed Balance Sheets
ASSETS
December 31
Current Assets
Cash and cash equivalents
Notes and accrued interest receivable – intercompany
Accounts receivable – intercompany and related parties
Taxes receivable
Prepayments and other current assets
Total current assets
Other Non-current Assets
Deferred income taxes
Investments in subsidiaries
Investment in debt securities – intercompany
Other investments
Other
Total other non-current assets
Total Assets
In Millions
2023
2022
$
149
$
60
9
11
—
229
36
107
8
45
1
197
137
105
11,701
10,881
296
8
24
—
6
11
12,166
11,003
$ 12,395
$ 11,200
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LIABILITIES AND EQUITY
December 31
Current Liabilities
Current portion of long-term debt
Accounts and notes payable – intercompany
Accrued interest, including intercompany
Other current liabilities
Total current liabilities
Non-current Liabilities
Long-term debt
Notes payable – intercompany
Postretirement benefits
Other non-current liabilities
Total non-current liabilities
Equity
Common stock
Other stockholders' equity
Total common stockholders’ equity
Preferred stock
Total equity
Total Liabilities and Equity
The accompanying notes are an integral part of these statements.
In Millions
2023
2022
$
250
$ —
75
37
9
371
4,471
105
15
18
74
33
9
116
3,930
109
15
15
4,609
4,069
3
7,188
7,191
224
7,415
3
6,788
6,791
224
7,015
$ 12,395
$ 11,200
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Schedule I — Condensed Financial Information of
Registrant (Continued)
CMS Energy—Parent Company
Notes to the Condensed Financial Statements
1: Basis of Presentation
CMS Energy’s condensed financial statements have been prepared on a parent-only basis. In accordance
with Rule 12-04 of Regulation S-X, these parent-only financial statements do not include all of the
information and notes required by GAAP for annual financial statements, and therefore these parent-only
financial statements and other information included should be read in conjunction with CMS Energy’s
audited consolidated financial statements contained within Item 8. Financial Statements and
Supplementary Data.
2: Guarantees
CMS Energy has issued guarantees with a maximum potential obligation of $886 million on behalf of
some of its wholly owned subsidiaries and related parties. CMS Energy’s maximum potential obligation
consists primarily of potential payments:
•
•
•
•
to third parties under certain commodity purchase and sales agreements entered into by
CMS ERM and other subsidiaries of NorthStar Clean Energy
to tax equity investors that hold membership interests in certain VIEs held by NorthStar Clean
Energy
to EGLE on behalf of CMS Land and CMS Capital, for environmental remediation obligations at
Bay Harbor
to the U.S. Department of Energy on behalf of Consumers, in connection with Consumers’ 2011
settlement agreement with the U.S. Department of Energy regarding damages resulting from the
department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by
Consumers
The expiration dates of these guarantees vary, depending upon contractual provisions or upon the statute
of limitations under the relevant governing law.
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Schedule II — Valuation and Qualifying Accounts and
Reserves
CMS Energy Corporation
Years Ended December 31, 2023, 2022, and 2021
Description
Allowance for uncollectible accounts1
2023
2022
2021
Deferred tax valuation allowance
Balance at
Beginning of
Period
Charged to
Expense
Charged to
Other
Accounts Deductions
In Millions
Balance at
End of
Period
$ 27
$ 34
$ —
$ 40
$ 21
20
29
2
2
1
$
50
22
—
—
43
31
$ —
$ —
$ —
$
—
1
—
—
—
—
27
20
2
2
2
Deductions represent write-offs of uncollectible accounts, net of recoveries.
Consumers Energy Company
Years Ended December 31, 2023, 2022, and 2021
Description
Allowance for uncollectible accounts1
Balance at
Beginning of
Period
Charged to
Expense
Charged to
Other
Accounts Deductions
In Millions
Balance at
End of
Period
$ 27
$ 34
$ —
$ 40
$ 21
20
29
50
22
—
—
43
31
27
20
2023
2022
2021
1
2023
2022
2021
1
Deductions represent write-offs of uncollectible accounts, net of recoveries.
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Exhibit Index
The agreements included as exhibits to this Form 10-K filing are included solely to provide information
regarding the terms of the agreements and are not intended to provide any other factual or disclosure
information about CMS Energy, Consumers, or other parties to the agreements. The agreements may
contain representations and warranties made by each of the parties to each of the agreements that were
made exclusively for the benefit of the parties involved in each of the agreements and should not be
treated as statements of fact. The representations and warranties were made as a way to allocate risk if one
or more of those statements prove to be incorrect. The statements were qualified by disclosures of the
parties to each of the agreements that may not be reflected in each of the agreements. The agreements
may apply standards of materiality that are different than standards applied to other investors.
Additionally, the statements were made as of the date of the agreements or as specified in the agreements
and have not been updated. The representations and warranties may not describe the actual state of affairs
of the parties to each agreement.
Additional information about CMS Energy and Consumers may be found in this filing, at
www.cmsenergy.com, at www.consumersenergy.com, and through the SEC’s website at www.sec.gov.
Previously Filed
Exhibits
3.11
With File
Number
1-9513
As
Exhibit
Number
Description
3.1 — Restated Articles of Incorporation of CMS Energy, effective
June 1, 2004, as amended May 22, 2009, together with the
Certificate of Designation of 4.200% Cumulative Redeemable
Perpetual Preferred Stock, Series C, effective June 29, 2021
(Form 10-Q for the quarterly period ended June 30, 2021)
3.21
3.3
3.4
4.1
4.1.a
4.1.b
4.1.c
4.1.d
4.1.e
4.1.f
4.1.g
4.1.h
4.1.i
1-9513
3.2 — CMS Energy Bylaws, amended and restated effective
1-5611
February 8, 2016 (Form 8-K filed February 8, 2016)
3(c) — Restated Articles of Incorporation of Consumers effective
June 7, 2000 (Form 10-K for the fiscal year ended
December 31, 2000)
1-5611
3.2 — Consumers Bylaws, amended and restated as of January 24, 2013
(Form 8-K filed January 29, 2013)
2-65973 (b)(1)–4 — Indenture dated as of September 1, 1945 between Consumers and
Chemical Bank (successor to Manufacturers Hanover Trust
Company), as Trustee, including therein indentures supplemental
thereto through the Forty-third Supplemental Indenture dated as
of May 1, 1979 (Form S-16 filed November 13, 1979)
Indentures Supplemental thereto:
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
4.2 — 104th dated as of 8/11/05 (Form 8-K filed August 11, 2005)
4.1 — 112th dated as of 9/1/10 (Form 8-K filed September 7, 2010)
4.1 — 113th dated as of 10/15/10 (Form 8-K filed October 20, 2010)
4.1 — 114th dated as of 3/31/11 (Form 8-K filed April 6, 2011)
4.1 — 120th dated as of 12/17/12 (Form 8-K filed December 20, 2012)
4.1 — 121st dated as of 5/17/13 (Form 8-K filed May 17, 2013)
4.1 — 123rd dated as of 12/20/13 (Form 8-K filed December 27, 2013)
4.1 — 124th dated as of 8/18/2014 (Form 8-K filed August 18, 2014)
4.1 — 125th dated as of 11/6/2015 (Form 8-K filed November 6, 2015)
201
Table of Contents
Previously Filed
Exhibits
4.1.j
With File
Number
1-5611
4.1.k
4.1.l
4.1.m
4.1.n
4.1.o
4.1.p
4.1.q
4.1.r
4.1.s
4.1.t
4.1.u
4.1.v
4.1.w
4.1.x
4.1.y
4.1.z
4.1.aa
4.1.bb
4.1.cc
4.1.dd
4.1.ee
4.1.ff
4.1.gg
4.1.hh
4.2
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
1-5611
4.3
1-5611
As
Exhibit
Number
Description
4.1 — 126th dated as of 11/23/2015 (Form 8-K filed
November 25, 2015)
4.1 — 127th dated as of 8/10/16 (Form 8-K filed August 10, 2016)
4.1 — 128th dated as of 2/22/17 (Form 8-K filed February 22, 2017)
4.1 — 129th dated as of 9/28/17 (Form 8-K filed September 28, 2017)
4.1 — 130th dated as of 11/15/17 (Form 8-K filed November 15, 2017)
4.1 — 131st dated as of 5/14/18 (Form 8-K filed May 14, 2018)
4.1 — 132nd dated as of 6/5/18 (Form 8-K filed June 5, 2018)
4.1 — 133rd dated as of 10/1/18 (Form 8-K filed October 1, 2018)
4.1 — 134th dated as of 11/13/18 (Form 8-K filed November 13, 2018)
4.1 — 135th dated as of 5/28/19 (Form 8-K filed May 28, 2019)
4.1 — 136th dated as of 9/3/19 (Form 8-K filed September 3, 2019)
4.1 — 137th dated as of 9/19/19 (Form 8-K filed September 19, 2019)
4.3 — 138th dated as of 10/1/19 (Form 10-Q for the quarterly period
ended September 30, 2019)
4.1 — 139th dated as of 3/26/20 (Form 8-K filed March 26, 2020)
4.1 — 140th dated as of 5/13/20 (Form 8-K filed May 13, 2020)
4.1 — 141st dated as of 5/20/20 (Form 8-K filed May 20, 2020)
4.1 — 142nd dated as of 10/7/20 (Form 8-K filed October 7, 2020)
4.1 — 144th dated as of 8/12/21 (Form 8-K filed August 12, 2021)
4.1 — 145th dated as of 8/11/22 (Form 8-K filed August 11, 2022)
4.1 — 146th dated as of 12/14/22 (Form 8-K filed December 15, 2022)
4.1 — 147th dated as of 1/10/23 (Form 8-K filed January 10, 2023)
4.1 — 148th dated as of 2/23/23 (Form 8-K filed February 23, 2023)
4.1 — 149th dated as of 5/30/23 (Form 8-K filed May 30, 2023)
4.1 — 150th dated as of 8/4/23 (Form 8-K filed August 4, 2023)
4.1 — 151st dated as of 1/9/24 (Form 8-K filed January 9, 2024)
(4)(b) — Indenture dated as of January 1, 1996 between Consumers and
The Bank of New York Mellon, as Trustee (Form 10-K for the
fiscal year ended December 31, 1995)
(4)(c) — Indenture dated as of February 1, 1998 between Consumers and
The Bank of New York Mellon (formerly The Chase Manhattan
Bank), as Trustee (Form 10-K for the fiscal year ended
December 31, 1997)
4.41
4.4.a1
4.4.b1
4.4.c1
33-47629
(4)(a) — Indenture dated as of September 15, 1992 between CMS Energy
and NBD Bank, as Trustee (Form S-3 filed May 1, 1992)
Indentures Supplemental thereto:
1-9513
1-9513
1-9513
4.1 — 29th dated as of 3/22/13 (Form 8-K filed March 22, 2013)
4.1 — 30th dated as of 2/27/14 (Form 8-K filed February 27, 2014)
4.2 — 31st dated as of 2/27/14 (Form 8-K filed February 27, 2014)
202
Table of Contents
Previously Filed
Exhibits
4.4.d1
4.4.e1
4.4.f1
4.4.g1
4.51
With File
Number
1-9513
1-9513
1-9513
1-9513
1-9513
As
Exhibit
Number
Description
4.1 — 32nd dated as of 11/9/15 (Form 8-K filed November 9, 2015)
4.1 — 33rd dated as of 5/5/16 (Form 8-K filed May 5, 2016)
4.1 — 34th dated as of 11/3/16 (Form 8-K filed November 3, 2016)
4.1 — 35th dated as of 2/13/17 (Form 8-K filed February 13, 2017)
(4a) — Indenture dated as of June 1, 1997 between CMS Energy and
The Bank of New York Mellon, as Trustee (Form 8-K filed
July 1, 1997)
Indentures Supplemental thereto:
4.5.a1
4.5.b1
4.5.c1
4.5.d1
4.5.e1
4.5.f1
4.61
4.71
4.8
4.91
10.12
10.22
10.32
10.42
10.52
10.62
1-9513
4.5.a — 5th dated as of 2/13/18 (Form 10-K for the fiscal year ended
December 31, 2017)
1-9513
1-9513
1-9513
1-9513
1-9513
1-9513
4.1 — 6th dated as of 3/8/18 (Form 8-K filed March 8, 2018)
4.1 — 7th dated as of 9/26/18 (Form 8-K filed September 26, 2018)
4.1 — 8th dated as of 2/20/19 (Form 8-K filed February 20, 2019)
4.1 — 9th dated as of 5/28/20 (Form 8-K filed May 28, 2020)
4.1 — 10th dated as of 11/25/20 (Form 8-K filed November 25, 2020)
4.1 — Indenture dated as of May 5, 2023 between CMS Energy and
The Bank of New York Mellon, as Trustee (Form 8-K filed
May 5, 2023)
1-9513
4.6 — Description of CMS Energy Securities (Form 10-K for the fiscal
year ended December 31, 2021)
1-5611
4.7 — Description of Consumers Securities (Form 10-K for the fiscal
year ended December 31, 2019)
1-9513
4.2 — Deposit Agreement, dated as of July 1, 2021, among
CMS Energy, Equiniti Trust Company, and the holders from time
to time of the depositary receipts described therein, including
Form of Depositary Receipt (Form 8-K filed July 1, 2021)
1-9513
10.1 — CMS Energy 2020 Performance Incentive Stock Plan, effective
June 1, 2020 (Form 8-K filed May 5, 2020)
— CMS Energy’s Deferred Salary Savings Plan, as amended and
restated, effective January 1, 2022
1-9513
10.5 — CMS Energy and Consumers Directors’ Deferred Compensation
Plan, effective as of November 30, 2007 (Form 10-K for the
fiscal year ended December 31, 2014)
1-9513
10.6 — Supplemental Executive Retirement Plan for Employees of
CMS Energy/Consumers effective on January 1, 1982 and as
amended effective April 1, 2011 (Form 10-Q for the quarterly
period ended March 31, 2011)
— Defined Contribution Supplemental Executive Retirement Plan,
amended December 21, 2023, effective January 1, 2024
1-9513
10.2 — Form of Officer Separation Agreement as of July 1, 2023
(Form 10-Q for the quarterly period ended June 30, 2023)
203
Table of Contents
Previously Filed
Exhibits
10.71
With File
Number
1-9513
10.81,2
1-9513
10.92
1-5611
10.102
1-9513
1-9513
10.112
10.122
As
Exhibit
Number
(10)(y) — Environmental Agreement dated as of June 1, 1990 made by
CMS Energy to The Connecticut National Bank and Others
(Form 10-K for the fiscal year ended December 31, 1990)
Description
(10)(a) — Form of Indemnification Agreement between CMS Energy and
its Directors, effective as of November 1, 2007 (Form 10-Q for
the quarterly period ended September 30, 2007)
(10)(b) — Form of Indemnification Agreement between Consumers and its
Directors, effective as of November 1, 2007 (Form 10-Q for the
quarterly period ended September 30, 2007)
10.10 — CMS Incentive Compensation Plan for CMS Energy and
Consumers Officers as amended, effective as of January 27, 2022
(Form 10-K for the fiscal year ended December 31, 2021)
10.3 — Form of Change in Control Agreement as of July 1, 2023
(Form 10-Q for the quarterly period ended June 30, 2023)
— Annual Employee Incentive Compensation Plan for Consumers
10.131,2
1-9513
amended December 11, 2023, effective July 1, 2023
10.2 — Annual NorthStar Clean Energy Employee Incentive
Compensation Plan as amended, effective as of July 1, 2023
(Form 10-Q for the quarterly period ended September 30, 2023)
10.141
1-9513
10.1 — $550 million Fifth Amended and Restated Revolving Credit
Agreement dated as of December 14, 2022 among CMS Energy,
the Banks, as defined therein, and Barclays Bank PLC, as Agent
(Form 8-K filed December 15, 2022)
10.15
1-5611
10.2 — $1.1 billion Sixth Amended and Restated Revolving Credit
10.16
1-5611
Agreement dated as of December 14, 2022 among Consumers,
the Banks, as defined therein, and JPMorgan Chase Bank, N.A.,
as Agent (Form 8-K filed December 15, 2022)
10.1 — $250 million Amended and Restated Revolving Credit
Agreement dated as of November 19, 2018 among Consumers,
the Banks, as defined therein, and The Bank of Nova Scotia, as
Agent (Form 8-K filed November 20, 2018)
10.16.a
1-5611
10.1 — Description of the Extension to the Amended and Restated
$250 million Secured Revolving Credit Agreement (Form 8-K
filed November 19, 2019)
10.16.b
1-5611
10.1 — Description of the Second Extension to the Amended and
Restated $250 million Secured Revolving Credit Agreement
(Form 8-K filed November 19, 2020)
10.16.c
1-5611
10.1 — Description of the Third Extension to the Amended and Restated
$250 million Secured Revolving Credit Agreement (Form 8-K
filed November 22, 2021)
10.16.d
1-5611
10.1 — First Amendment to the Amended and Restated $250 million
Secured Revolving Credit Agreement (Form 8-K filed
November 29, 2022)
204
Table of Contents
Previously Filed
Exhibits
10.16.e
10.172
With File
Number
1-5611
As
Exhibit
Number
Description
10.1 — Amendment No. 2 to the Amended and Restated $250 million
Secured Revolving Credit Agreement (Form 8-K filed
November 29, 2023)
1-9513
10.1 — Consumers and other CMS Energy Companies Retired
Executives Survivor Benefit Plan for Management/Executive
Employees, distributed July 1, 2011 (Form 10-Q for the quarterly
period ended September 30, 2011)
10.18
1-5611
10.1 — Form of Commercial Paper Dealer Agreement between
10.19
1-5611
10.19.a
1-5611
Consumers, as Issuer, and the Dealer party thereto (Form 10-Q
for the quarterly period ended September 30, 2014)
10.1 — Purchase and Sale Agreement dated June 21, 2021 by and among
Consumers and New Covert Generating Company, LLC
(Form 8-K filed June 23, 2021)
10.4 — Amendment No. 1 dated as of May 31, 2023 to the Purchase and
Sale Agreement, dated June 21, 2021 by and among Consumers
and New Covert Generating Company, LLC (Form 10-Q for the
quarterly period ending June 30, 2023)
10.20
1-5611
10.1 — $1 billion unsecured Term Loan Credit Agreement dated as of
10.21
1355417
July 22, 2022 among Consumers, the Banks defined therein, and
U.S. Bank National Association, as Agent (Form 10-Q for the
quarterly period ended June 30, 2022)
10.1 — Bond Purchase Agreement dated as of January 12, 2023 between
Consumers and each of the Purchasers named therein (Form 8-K
filed January 12, 2023)
10.222
21.1
23.1
23.2
31.1
31.2
31.3
31.4
32.1
32.2
97.12
— Annual Employee Incentive Compensation Plan for Consumers
amended and restated effective January 1, 2024
— Subsidiaries of CMS Energy and Consumers
— Consent of PricewaterhouseCoopers LLP for CMS Energy
— Consent of PricewaterhouseCoopers LLP for Consumers
— CMS Energy’s certification of the CEO pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
— CMS Energy’s certification of the CFO pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
— Consumers’ certification of the CEO pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
— Consumers’ certification of the CFO pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
— CMS Energy’s certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
— Consumers’ certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
— CMS Energy/Consumers Clawback Policy
205
Table of Contents
Previously Filed
With File
Number
333-275106
Exhibits
99.11
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
As
Exhibit
Number
Description
99.1 — CMS Energy Stock Purchase Plan, as amended and restated
October 20, 2023 (Form S-3ASR filed October 20, 2023)
— Inline XBRL Instance Document
— Inline XBRL Taxonomy Extension Schema
— Inline XBRL Taxonomy Extension Calculation Linkbase
— Inline XBRL Taxonomy Extension Definition Linkbase
— Inline XBRL Taxonomy Extension Labels Linkbase
— Inline XBRL Taxonomy Extension Presentation Linkbase
— 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.
Exhibits that have been previously filed with the SEC, designated above, are incorporated herein by
reference and made a part hereof.
Item 16. Form 10-K Summary
None.
206
Table of Contents
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, CMS Energy
Corporation has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
/s/ Garrick J. Rochow
Name: Garrick J. Rochow
Title: President and Chief Executive Officer
Date: February 8, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed
below by the following persons on behalf of CMS Energy Corporation and in the capacities indicated and
on February 8, 2024.
/s/ Garrick J. Rochow
Garrick J. Rochow
President, Chief Executive Officer, and Director
(Principal Executive Officer)
/s/ Rejji P. Hayes
Rejji P. Hayes
Executive Vice President and Chief Financial
Officer
(Principal Financial Officer)
/s/ Scott B. McIntosh
Scott B. McIntosh
Vice President, Controller, and Chief
Accounting Officer
(Controller)
/s/ William D. Harvey
William D. Harvey, Director
/s/ Ralph Izzo
Ralph Izzo, Director
/s/ John G. Russell
John G. Russell, Director
/s/ Suzanne F. Shank
Suzanne F. Shank, Director
/s/ Myrna M. Soto
Myrna M. Soto, Director
/s/ Jon E. Barfield
Jon E. Barfield, Director
/s/ John G. Sznewajs
John G. Sznewajs, Director
/s/ Deborah H. Butler
Deborah H. Butler, Director
/s/ Ronald J. Tanski
Ronald J. Tanski, Director
/s/ Kurt L. Darrow
Kurt L. Darrow, Director
/s/ Laura H. Wright
Laura H. Wright, Director
207
Table of Contents
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Consumers
Energy Company has duly caused this Annual Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
/s/ Garrick J. Rochow
Name: Garrick J. Rochow
Title: President and Chief Executive Officer
Date: February 8, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed
below by the following persons on behalf of Consumers Energy Company and in the capacities indicated
and on February 8, 2024.
/s/ Garrick J. Rochow
Garrick J. Rochow
President, Chief Executive Officer, and Director
(Principal Executive Officer)
/s/ Rejji P. Hayes
Rejji P. Hayes
Executive Vice President and Chief Financial
Officer
(Principal Financial Officer)
/s/ Scott B. McIntosh
Scott B. McIntosh
Vice President, Controller, and Chief
Accounting Officer
(Controller)
/s/ William D. Harvey
William D. Harvey, Director
/s/ Ralph Izzo
Ralph Izzo, Director
/s/ John G. Russell
John G. Russell, Director
/s/ Suzanne F. Shank
Suzanne F. Shank, Director
/s/ Myrna M. Soto
Myrna M. Soto, Director
/s/ Jon E. Barfield
Jon E. Barfield, Director
/s/ John G. Sznewajs
John G. Sznewajs, Director
/s/ Deborah H. Butler
Deborah H. Butler, Director
/s/ Ronald J. Tanski
Ronald J. Tanski, Director
/s/ Kurt L. Darrow
Kurt L. Darrow, Director
/s/ Laura H. Wright
Laura H. Wright, Director
208
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CMS Energy Corporation
Consumers Energy Company
One Energy Plaza
Jackson, MI 49201-2357