Financings and Capitalization

9 Months Ended

Sep. 30, 2019

Debt Instrument [Line Items]

Financings and Capitalization

Financings and Capitalization

Financings: Presented in the following table is a summary of major long‑term debt transactions during the nine months ended September 30, 2019:

	Principal  (In Millions)			Interest Rate		Issue/Retirement Date	Maturity Date
Debt issuances
CMS Energy, parent only
Term loan facility		$	300	variable		January 2019	December 2019
Junior subordinated notes1		630		5.875	%	February 2019	March 2079
Term loan facility2		165		variable		June 2019	June 2020
Total CMS Energy, parent only		$	1,095
Consumers
First mortgage bonds		$	300	3.750	%	May 2019	February 2050
First mortgage bonds		550		3.100	%	September 2019	August 2050
First mortgage bonds3		76		variable		September 2019	September 2069
Total Consumers		$	926
Total CMS Energy		$	2,021
Debt retirements
CMS Energy, parent only
Term loan facility		$	300	variable		February 2019	December 2019
Term loan facility		180		variable		February 2019	April 2019
Term loan facility2		65		variable		August 2019	June 2020
Total CMS Energy, parent only		$	545
Consumers
First mortgage bonds		$	300	5.650	%	May 2019	April 2020
Total Consumers		$	300
Total CMS Energy		$	845

¹  These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness.

²  At September 30, 2019, the weighted-average interest rate on the remaining balance of this term loan facility was 2.552 percent, based on a $95 million tranche bearing interest at a rate of one-month LIBOR plus 0.500 percent and a $5 million tranche bearing interest at a rate of one-week LIBOR plus 0.500 percent. In October 2019, CMS Energy repaid the $5 million tranche.

³  These floating rate first mortgage bonds bear interest quarterly at a rate of three-month LIBOR minus 0.300 percent (1.864 percent at September 30, 2019).

Tax-exempt Variable Rate Limited Obligation Revenue Bonds: In October 2019, Consumers entered into a $75 million loan agreement with the MSF that matures in October 2049. Concurrently, the MSF issued $75 million in tax-exempt variable rate limited obligation revenue bonds and loaned Consumers the proceeds. The proceeds from the bonds, which are collateralized by Consumers’ first mortgage bonds, will reimburse or pay for the cost of construction, improvement, and installation of solid waste disposal facilities at certain generating units.

Revolving Credit Facilities: The following revolving credit facilities with banks were available at September 30, 2019:

In Millions
Expiration Date	Amount of Facility			Amount Borrowed			Letters of Credit Outstanding			Amount Available
CMS Energy, parent only
June 5, 2023		$	550		$	—		$	3		$	547
CMS Enterprises, including subsidiaries
September 30, 20251		$	18		$	—		$	8		$	10
Consumers2
June 5, 2023		$	850		$	—		$	7		$	843
November 23, 2020		250			—			25			225
April 18, 2022		30			—			30			—

¹  Under this facility, $8 million is available solely for the purpose of issuing letters of credit. Obligations under this facility are secured by the collateral accounts with the lending bank.

²  Obligations under these facilities are secured by first mortgage bonds of Consumers.

Short‑term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, commercial paper notes with maturities of up to 365 days and that bear interest at fixed or floating 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 September 30, 2019, there were no commercial paper notes outstanding under this program.

Dividend Restrictions: At September 30, 2019, payment of dividends by CMS Energy on its common stock was limited to $5.0 billion under provisions of the Michigan Business Corporation Act of 1972.

Under the provisions of its articles of incorporation, at September 30, 2019, Consumers had $1.4 billion of unrestricted retained earnings available to pay dividends on its common stock to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that, under a variety of circumstances, dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.

For the nine months ended September 30, 2019, Consumers paid $396 million in dividends on its common stock to CMS Energy.

Issuance of Common Stock: In 2018, CMS Energy entered into an equity offering program under which it may sell, from time to time, shares of CMS Energy common stock having an aggregate sales price of up to $250 million. Under this program, CMS Energy may sell its common stock in privately negotiated transactions, in “at the market” offerings, through forward sales transactions or otherwise. CMS Energy has entered into forward sales contracts having an aggregate sales price of $250 million. Presented in the following table are details of these contracts:

Contract Date	Maturity Date	Number of Shares	Initial Forward Price Per Share
November 16, 2018	May 16, 2020	2,017,783		$	49.06
November 20, 2018	May 20, 2020	777,899		50.91
February 21, 2019	August 21, 2020	2,083,340		52.27

These contracts allow CMS Energy to either physically settle the contracts by issuing shares of its common stock at the then‑applicable forward sale price specified by the agreement or net settle the contracts through the delivery or receipt of cash or shares. CMS Energy may settle the contracts at any time through their maturity dates, and presently intends to physically settle the contracts by delivering shares of its common stock.

The initial forward price in the forward equity sale contracts includes a deduction for commissions and will be adjusted on a daily basis over the term based on an interest rate factor and decreased on certain dates by certain predetermined amounts to reflect expected dividend payments.

No amounts have or will be recorded on CMS Energy’s consolidated balance sheets until settlements of the forward equity sale contracts occur. If CMS Energy had elected to net share settle the contracts as of September 30, 2019, CMS Energy would have been required to deliver 1,039,414 shares.

Consumers Energy Company

Debt Instrument [Line Items]

Financings and Capitalization

Financings and Capitalization

Financings: Presented in the following table is a summary of major long‑term debt transactions during the nine months ended September 30, 2019:

	Principal  (In Millions)			Interest Rate		Issue/Retirement Date	Maturity Date
Debt issuances
CMS Energy, parent only
Term loan facility		$	300	variable		January 2019	December 2019
Junior subordinated notes1		630		5.875	%	February 2019	March 2079
Term loan facility2		165		variable		June 2019	June 2020
Total CMS Energy, parent only		$	1,095
Consumers
First mortgage bonds		$	300	3.750	%	May 2019	February 2050
First mortgage bonds		550		3.100	%	September 2019	August 2050
First mortgage bonds3		76		variable		September 2019	September 2069
Total Consumers		$	926
Total CMS Energy		$	2,021
Debt retirements
CMS Energy, parent only
Term loan facility		$	300	variable		February 2019	December 2019
Term loan facility		180		variable		February 2019	April 2019
Term loan facility2		65		variable		August 2019	June 2020
Total CMS Energy, parent only		$	545
Consumers
First mortgage bonds		$	300	5.650	%	May 2019	April 2020
Total Consumers		$	300
Total CMS Energy		$	845

¹  These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness.

²  At September 30, 2019, the weighted-average interest rate on the remaining balance of this term loan facility was 2.552 percent, based on a $95 million tranche bearing interest at a rate of one-month LIBOR plus 0.500 percent and a $5 million tranche bearing interest at a rate of one-week LIBOR plus 0.500 percent. In October 2019, CMS Energy repaid the $5 million tranche.

³  These floating rate first mortgage bonds bear interest quarterly at a rate of three-month LIBOR minus 0.300 percent (1.864 percent at September 30, 2019).

Tax-exempt Variable Rate Limited Obligation Revenue Bonds: In October 2019, Consumers entered into a $75 million loan agreement with the MSF that matures in October 2049. Concurrently, the MSF issued $75 million in tax-exempt variable rate limited obligation revenue bonds and loaned Consumers the proceeds. The proceeds from the bonds, which are collateralized by Consumers’ first mortgage bonds, will reimburse or pay for the cost of construction, improvement, and installation of solid waste disposal facilities at certain generating units.

Revolving Credit Facilities: The following revolving credit facilities with banks were available at September 30, 2019:

In Millions
Expiration Date	Amount of Facility			Amount Borrowed			Letters of Credit Outstanding			Amount Available
CMS Energy, parent only
June 5, 2023		$	550		$	—		$	3		$	547
CMS Enterprises, including subsidiaries
September 30, 20251		$	18		$	—		$	8		$	10
Consumers2
June 5, 2023		$	850		$	—		$	7		$	843
November 23, 2020		250			—			25			225
April 18, 2022		30			—			30			—

¹  Under this facility, $8 million is available solely for the purpose of issuing letters of credit. Obligations under this facility are secured by the collateral accounts with the lending bank.

²  Obligations under these facilities are secured by first mortgage bonds of Consumers.

Short‑term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, commercial paper notes with maturities of up to 365 days and that bear interest at fixed or floating 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 September 30, 2019, there were no commercial paper notes outstanding under this program.

Dividend Restrictions: At September 30, 2019, payment of dividends by CMS Energy on its common stock was limited to $5.0 billion under provisions of the Michigan Business Corporation Act of 1972.

Under the provisions of its articles of incorporation, at September 30, 2019, Consumers had $1.4 billion of unrestricted retained earnings available to pay dividends on its common stock to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that, under a variety of circumstances, dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.

For the nine months ended September 30, 2019, Consumers paid $396 million in dividends on its common stock to CMS Energy.

Issuance of Common Stock: In 2018, CMS Energy entered into an equity offering program under which it may sell, from time to time, shares of CMS Energy common stock having an aggregate sales price of up to $250 million. Under this program, CMS Energy may sell its common stock in privately negotiated transactions, in “at the market” offerings, through forward sales transactions or otherwise. CMS Energy has entered into forward sales contracts having an aggregate sales price of $250 million. Presented in the following table are details of these contracts:

Contract Date	Maturity Date	Number of Shares	Initial Forward Price Per Share
November 16, 2018	May 16, 2020	2,017,783		$	49.06
November 20, 2018	May 20, 2020	777,899		50.91
February 21, 2019	August 21, 2020	2,083,340		52.27

These contracts allow CMS Energy to either physically settle the contracts by issuing shares of its common stock at the then‑applicable forward sale price specified by the agreement or net settle the contracts through the delivery or receipt of cash or shares. CMS Energy may settle the contracts at any time through their maturity dates, and presently intends to physically settle the contracts by delivering shares of its common stock.

The initial forward price in the forward equity sale contracts includes a deduction for commissions and will be adjusted on a daily basis over the term based on an interest rate factor and decreased on certain dates by certain predetermined amounts to reflect expected dividend payments.

No amounts have or will be recorded on CMS Energy’s consolidated balance sheets until settlements of the forward equity sale contracts occur. If CMS Energy had elected to net share settle the contracts as of September 30, 2019, CMS Energy would have been required to deliver 1,039,414 shares.