Financial Instruments

6 Months Ended

Jun. 30, 2018

Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]

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.



In Millions
	June 30, 2018															December 31, 2017
				Fair Value															Fair Value
	Carrying						Level									Carrying						Level
	Amount			Total			1			2			3			Amount			Total			1			2			3
CMS Energy, including Consumers
Assets
Long-term receivables¹		$	21		$	21		$	—		$	—		$	21		$	21		$	21		$	—		$	—		$	21
Notes receivable²		1,437			1,522			—			—			1,522			1,371			1,464			—			—			1,464
Securities held to maturity		19			19			—			19			—			16			16			—			16			—
Liabilities
Long-term debt³		10,466			10,539			199			9,053			1,287			10,204			10,715			—			9,363			1,352
Long-term payables⁴		26			26			—			—			26			27			26			—			—			26
Consumers
Assets
Long-term receivables¹		$	21		$	21		$	—		$	—		$	21		$	21		$	21		$	—		$	—		$	21
Notes receivable⁵		17			17			—			—			17			17			17			—			—			17
Liabilities
Long-term debt⁶		6,114			6,163			—			4,876			1,287			5,904			6,236			—			4,883			1,353


¹	Includes current accounts receivable of $14 million at June 30, 2018 and December 31, 2017.


²	Includes current portion of notes receivable of $206 million at June 30, 2018 and $200 million at December 31, 2017.


³	Includes current portion of long-term debt of $1.2 billion at June 30, 2018 and $1.1 billion at December 31, 2017.


⁴	Includes current portion of long-term payables of $3 million at June 30, 2018 and December 31, 2017.


⁵	Includes current portion of notes receivable of $17 million at June 30, 2018 and December 31, 2017.


⁶	Includes current portion of long-term debt of $376 million at June 30, 2018 and $343 million at December 31, 2017.

At CMS Energy, notes receivable consisted primarily of EnerBank’s fixed-rate installment loans. EnerBank estimated the fair value of these loans using a discounted cash flows technique that incorporates market interest rates as well as assumptions about the remaining life of the loans and credit risk.

CMS Energy and Consumers estimated the fair value of their long-term debt using quoted prices from market trades of the debt, if available. In the absence of quoted prices, CMS Energy and Consumers calculated market yields and prices for the debt using a matrix method incorporating market data for similarly rated debt. Depending on the information available, other valuation techniques and models may be used that rely on assumptions that cannot be observed or confirmed through market transactions.

The effects of third-party credit enhancements were excluded from the fair value measurements of long-term debt. The principal amount of CMS Energy’s long-term debt supported by third-party credit enhancements was $35 million at June 30, 2018 and $103 million at December 31, 2017. The entirety of these amounts was at Consumers.

Presented in the following table are CMS Energy’s and Consumers’ investment securities classified as available for sale or held to maturity:



In Millions
	June 30, 2018													December 31, 2017
	Cost			Unrealized Gains			Unrealized Losses				Fair Value			Cost			Unrealized Gains			Unrealized Losses			Fair Value
CMS Energy, including Consumers
Available for sale
DB SERP
Debt securities		$	135		$	—		$	(2	)		$	133		$	141		$	—		$	—		$	141
Held to maturity
Debt securities		19			—			—				19			16			—			—			16
Consumers
Available for sale
DB SERP
Debt securities		$	98		$	—		$	(1	)		$	97		$	102		$	—		$	—		$	102
CMS Energy common stock¹		—			—			—				—			2			19			—			21

In January 2018, Consumers implemented ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. In accordance with the standard, as of January 1, 2018, Consumers removed a $19 million unrealized gain on its investment in CMS Energy common stock from AOCI and recorded the gain in retained earnings. For further details on CMS Energy’s and Consumers’ accounting for this new standard, see Note 1, New Accounting Standards.

In January 2018, Consumers transferred substantially all of its shares in CMS Energy common stock to a related charitable foundation. Consumers’ remaining equity investment in CMS Energy common stock was $1 million at June 30, 2018. There were no material changes in the fair value of Consumers’ investment in CMS Energy common stock during the six months ended June 30, 2018.

The DB SERP debt securities classified as available for sale were U.S. Treasury debt securities with maturities ranging from one to ten years. Debt securities classified as held to maturity consisted primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank.

In July 2018, CMS Energy and Consumers sold the DB SERP debt securities and CMS Energy issued a $146 million demand note payable to the DB SERP rabbi trust. The demand note payable and associated DB SERP investment will be eliminated on CMS Energy’s consolidated balance sheets. The CMS Energy demand note payable bears interest at an annual rate of 4.10 percent and has a maturity date of 2028.

Consumers Energy Company

Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]

Financial Instruments



In Millions
	June 30, 2018															December 31, 2017
				Fair Value															Fair Value
	Carrying						Level									Carrying						Level
	Amount			Total			1			2			3			Amount			Total			1			2			3
CMS Energy, including Consumers
Assets
Long-term receivables¹		$	21		$	21		$	—		$	—		$	21		$	21		$	21		$	—		$	—		$	21
Notes receivable²		1,437			1,522			—			—			1,522			1,371			1,464			—			—			1,464
Securities held to maturity		19			19			—			19			—			16			16			—			16			—
Liabilities
Long-term debt³		10,466			10,539			199			9,053			1,287			10,204			10,715			—			9,363			1,352
Long-term payables⁴		26			26			—			—			26			27			26			—			—			26
Consumers
Assets
Long-term receivables¹		$	21		$	21		$	—		$	—		$	21		$	21		$	21		$	—		$	—		$	21
Notes receivable⁵		17			17			—			—			17			17			17			—			—			17
Liabilities
Long-term debt⁶		6,114			6,163			—			4,876			1,287			5,904			6,236			—			4,883			1,353


¹	Includes current accounts receivable of $14 million at June 30, 2018 and December 31, 2017.


²	Includes current portion of notes receivable of $206 million at June 30, 2018 and $200 million at December 31, 2017.


³	Includes current portion of long-term debt of $1.2 billion at June 30, 2018 and $1.1 billion at December 31, 2017.


⁴	Includes current portion of long-term payables of $3 million at June 30, 2018 and December 31, 2017.


⁵	Includes current portion of notes receivable of $17 million at June 30, 2018 and December 31, 2017.


⁶	Includes current portion of long-term debt of $376 million at June 30, 2018 and $343 million at December 31, 2017.

Presented in the following table are CMS Energy’s and Consumers’ investment securities classified as available for sale or held to maturity:



In Millions
	June 30, 2018													December 31, 2017
	Cost			Unrealized Gains			Unrealized Losses				Fair Value			Cost			Unrealized Gains			Unrealized Losses			Fair Value
CMS Energy, including Consumers
Available for sale
DB SERP
Debt securities		$	135		$	—		$	(2	)		$	133		$	141		$	—		$	—		$	141
Held to maturity
Debt securities		19			—			—				19			16			—			—			16
Consumers
Available for sale
DB SERP
Debt securities		$	98		$	—		$	(1	)		$	97		$	102		$	—		$	—		$	102
CMS Energy common stock¹		—			—			—				—			2			19			—			21