Income Taxes (Tables)

9 Months Ended

Sep. 30, 2019

Income Taxes [Line Items]

Schedule Of Effective Income Tax Rate Reconciliation

Presented in the following table is a reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate from continuing operations:

Nine Months Ended September 30	2019		2018
CMS Energy, including Consumers
U.S. federal income tax rate	21.0	%	21.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect	5.4		5.9
TCJA excess deferred taxes1	(3.4	)	(3.4	)
Production tax credits	(2.5	)	(2.0	)
Accelerated flow-through of regulatory tax benefits2	(1.5	)	(5.0	)
Research and development tax credits, net3	(0.2	)	(1.6	)
Other, net	(1.2	)	0.2
Effective tax rate	17.6	%	15.1	%
Consumers
U.S. federal income tax rate	21.0	%	21.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect	5.7		6.1
TCJA excess deferred taxes1	(3.2	)	(3.1	)
Production tax credits	(1.6	)	(1.6	)
Accelerated flow-through of regulatory tax benefits2	(1.0	)	(4.4	)
Research and development tax credits, net3	(0.2	)	(1.5	)
Other, net	(0.4	)	(0.3	)
Effective tax rate	20.3	%	16.2	%

¹  In December 2017, Consumers remeasured its deferred tax assets and liabilities at the new federal tax rate enacted by the TCJA and recorded a $1.8 billion regulatory liability. This regulatory liability relates to the excess deferred taxes arising from accelerated tax depreciation on assets in rate base that are governed by normalization provisions of the Internal Revenue Code. The normalization provisions require that the excess deferred taxes be refunded to customers over the remaining average service life of the associated assets. In January 2018, Consumers began to reduce this regulatory liability by crediting income tax expense. Consumers fully reserved for the eventual refund of these excess deferred taxes that it credited to income tax expense in a separate non‑current regulatory liability established by reducing revenue. As a result of an order received in September 2019, Consumers began refunding these excess deferred taxes to customers and will no longer reserve for their refund. At the date of the order, this reserve for refund of these excess deferred taxes totaled $62 million. For additional details on the order received, see Note 2, Regulatory Matters.

²  In 2013, the MPSC issued an order authorizing Consumers to accelerate the flow‑through to electric and gas customers of certain income tax benefits associated primarily with the cost of removal of plant placed in service before 1993. Consumers implemented this regulatory treatment beginning in 2014, with the electric portion ending in 2018. This change, which also accelerates Consumers’ recognition of the income tax benefits, reduced Consumers’ income tax expense by $7 million for the nine months ended September 30, 2019 and by $30 million for the nine months ended September 30, 2018.

³ 

In March 2018, Consumers finalized a study of research and development tax credits for the tax years 2012 through 2016. As a result, Consumers recognized an $8 million increase in the credit, net of reserves for uncertain tax positions, at that time.

Consumers Energy Company

Income Taxes [Line Items]

Schedule Of Effective Income Tax Rate Reconciliation

Presented in the following table is a reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate from continuing operations:

Nine Months Ended September 30	2019		2018
CMS Energy, including Consumers
U.S. federal income tax rate	21.0	%	21.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect	5.4		5.9
TCJA excess deferred taxes1	(3.4	)	(3.4	)
Production tax credits	(2.5	)	(2.0	)
Accelerated flow-through of regulatory tax benefits2	(1.5	)	(5.0	)
Research and development tax credits, net3	(0.2	)	(1.6	)
Other, net	(1.2	)	0.2
Effective tax rate	17.6	%	15.1	%
Consumers
U.S. federal income tax rate	21.0	%	21.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect	5.7		6.1
TCJA excess deferred taxes1	(3.2	)	(3.1	)
Production tax credits	(1.6	)	(1.6	)
Accelerated flow-through of regulatory tax benefits2	(1.0	)	(4.4	)
Research and development tax credits, net3	(0.2	)	(1.5	)
Other, net	(0.4	)	(0.3	)
Effective tax rate	20.3	%	16.2	%

¹  In December 2017, Consumers remeasured its deferred tax assets and liabilities at the new federal tax rate enacted by the TCJA and recorded a $1.8 billion regulatory liability. This regulatory liability relates to the excess deferred taxes arising from accelerated tax depreciation on assets in rate base that are governed by normalization provisions of the Internal Revenue Code. The normalization provisions require that the excess deferred taxes be refunded to customers over the remaining average service life of the associated assets. In January 2018, Consumers began to reduce this regulatory liability by crediting income tax expense. Consumers fully reserved for the eventual refund of these excess deferred taxes that it credited to income tax expense in a separate non‑current regulatory liability established by reducing revenue. As a result of an order received in September 2019, Consumers began refunding these excess deferred taxes to customers and will no longer reserve for their refund. At the date of the order, this reserve for refund of these excess deferred taxes totaled $62 million. For additional details on the order received, see Note 2, Regulatory Matters.

²  In 2013, the MPSC issued an order authorizing Consumers to accelerate the flow‑through to electric and gas customers of certain income tax benefits associated primarily with the cost of removal of plant placed in service before 1993. Consumers implemented this regulatory treatment beginning in 2014, with the electric portion ending in 2018. This change, which also accelerates Consumers’ recognition of the income tax benefits, reduced Consumers’ income tax expense by $7 million for the nine months ended September 30, 2019 and by $30 million for the nine months ended September 30, 2018.

³ 

In March 2018, Consumers finalized a study of research and development tax credits for the tax years 2012 through 2016. As a result, Consumers recognized an $8 million increase in the credit, net of reserves for uncertain tax positions, at that time.