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Financial Instruments
 12 Months Ended
Dec. 31, 2019
Financial Instruments [Line Items]  
Financial Instruments
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 6, Fair Value Measurements.
In Millions
 
 
December 31, 2019
 
December 31, 2018
 
 
 
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
 
$
20

 
$
20

 
$
—

 
$
—

 
$
20

 
 
$
22

 
$
22

 
$
—

 
$
—

 
$
22

Notes receivable2
 
2,500

 
2,652

 
—

 
—

 
2,652

 
 
1,857

 
1,967

 
—

 
—

 
1,967

Securities held to maturity
 
26

 
26

 
—

 
26

 
—

 
 
22

 
21

 
—

 
21

 
—

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt3
 
13,062

 
14,185

 
1,197

 
11,048

 
1,940

 
 
11,589

 
11,630

 
459

 
9,404

 
1,767

Long-term payables4
 
30

 
32

 
—

 
—

 
32

 
 
27

 
27

 
—

 
—

 
27

Consumers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term receivables1
 
$
20

 
$
20

 
$
—

 
$
—

 
$
20

 
 
$
22

 
$
22

 
$
—

 
$
—

 
$
22

Notes receivable – related party5
 
103

 
103

 
—

 
—

 
103

 
 
106

 
106

 
—

 
—

 
106

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt6
 
7,250

 
8,010

 
—

 
6,070

 
1,940

 
 
6,805

 
6,833

 
—

 
5,066

 
1,767

1 
Includes current portion of long-term accounts receivable of $13 million at December 31, 2019 and $14 million at December 31, 2018.
2 
Includes current portion of notes receivable of $242 million at December 31, 2019 and $233 million at December 31, 2018. For further details, see Note 8, Notes Receivable.
3 
Includes current portion of long-term debt of $1.1 billion at December 31, 2019 and $1.0 billion at December 31, 2018.
4 
Includes current portion of long-term payables of $1 million at December 31, 2019 and December 31, 2018.
5 
Includes current portion of notes receivable – related party of $7 million at December 31, 2019 and December 31, 2018. For further details on this note receivable, see the DB SERP discussion below.
6 
Includes current portion of long-term debt of $202 million at December 31, 2019 and $26 million at December 31, 2018.
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 December 31, 2019 and December 31, 2018. The entirety of these amounts was at Consumers.
DB SERP Securities: Presented in the following table is a summary of the sales activity for investment securities held within the DB SERP and classified as available for sale:
In Millions
 
Years Ended December 31
2019
 
2018
 
2017
 
CMS Energy, including Consumers
 
 
 
 
 
 
Proceeds from sales of investment securities
 
$
—

 
$
142

 
$
145

Consumers
 
 
 
 
 
 
Proceeds from sales of investment securities
 
$
—

 
$
103

 
$
105


In 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 bears interest at an annual rate of 4.10 percent and has a maturity date of 2028. The demand note payable and associated DB SERP investment were eliminated on CMS Energy’s consolidated balance sheets. The portion of the demand note attributable to Consumers was recorded as a note receivable – related party on Consumers’ consolidated balance sheets.
During 2017, CMS Energy and Consumers sold mutual fund securities held within the DB SERP and used the proceeds to purchase the debt securities, which were later sold in 2018. CMS Energy reclassified gains of $2 million ($1 million, net of tax) from AOCI and included this amount in other income on the consolidated statements of income. This amount included Consumers’ gains of $2 million ($1 million, net of tax).
Debt securities classified as held to maturity consisted primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank. Presented in the following table are these investment securities:
In Millions
 
 
December 31, 2019
 
December 31, 2018
 
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
 
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
CMS Energy
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
 
$
26

 
$
—

 
$
—

 
$
26

 
 
$
22

 
$
—

 
$
1

 
$
21
Consumers Energy Company  
Financial Instruments [Line Items]  
Financial Instruments
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 6, Fair Value Measurements.
In Millions
 
 
December 31, 2019
 
December 31, 2018
 
 
 
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
 
$
20

 
$
20

 
$
—

 
$
—

 
$
20

 
 
$
22

 
$
22

 
$
—

 
$
—

 
$
22

Notes receivable2
 
2,500

 
2,652

 
—

 
—

 
2,652

 
 
1,857

 
1,967

 
—

 
—

 
1,967

Securities held to maturity
 
26

 
26

 
—

 
26

 
—

 
 
22

 
21

 
—

 
21

 
—

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt3
 
13,062

 
14,185

 
1,197

 
11,048

 
1,940

 
 
11,589

 
11,630

 
459

 
9,404

 
1,767

Long-term payables4
 
30

 
32

 
—

 
—

 
32

 
 
27

 
27

 
—

 
—

 
27

Consumers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term receivables1
 
$
20

 
$
20

 
$
—

 
$
—

 
$
20

 
 
$
22

 
$
22

 
$
—

 
$
—

 
$
22

Notes receivable – related party5
 
103

 
103

 
—

 
—

 
103

 
 
106

 
106

 
—

 
—

 
106

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt6
 
7,250

 
8,010

 
—

 
6,070

 
1,940

 
 
6,805

 
6,833

 
—

 
5,066

 
1,767

1 
Includes current portion of long-term accounts receivable of $13 million at December 31, 2019 and $14 million at December 31, 2018.
2 
Includes current portion of notes receivable of $242 million at December 31, 2019 and $233 million at December 31, 2018. For further details, see Note 8, Notes Receivable.
3 
Includes current portion of long-term debt of $1.1 billion at December 31, 2019 and $1.0 billion at December 31, 2018.
4 
Includes current portion of long-term payables of $1 million at December 31, 2019 and December 31, 2018.
5 
Includes current portion of notes receivable – related party of $7 million at December 31, 2019 and December 31, 2018. For further details on this note receivable, see the DB SERP discussion below.
6 
Includes current portion of long-term debt of $202 million at December 31, 2019 and $26 million at December 31, 2018.
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 December 31, 2019 and December 31, 2018. The entirety of these amounts was at Consumers.
DB SERP Securities: Presented in the following table is a summary of the sales activity for investment securities held within the DB SERP and classified as available for sale:
In Millions
 
Years Ended December 31
2019
 
2018
 
2017
 
CMS Energy, including Consumers
 
 
 
 
 
 
Proceeds from sales of investment securities
 
$
—

 
$
142

 
$
145

Consumers
 
 
 
 
 
 
Proceeds from sales of investment securities
 
$
—

 
$
103

 
$
105


In 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 bears interest at an annual rate of 4.10 percent and has a maturity date of 2028. The demand note payable and associated DB SERP investment were eliminated on CMS Energy’s consolidated balance sheets. The portion of the demand note attributable to Consumers was recorded as a note receivable – related party on Consumers’ consolidated balance sheets.
During 2017, CMS Energy and Consumers sold mutual fund securities held within the DB SERP and used the proceeds to purchase the debt securities, which were later sold in 2018. CMS Energy reclassified gains of $2 million ($1 million, net of tax) from AOCI and included this amount in other income on the consolidated statements of income. This amount included Consumers’ gains of $2 million ($1 million, net of tax).
Debt securities classified as held to maturity consisted primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank. Presented in the following table are these investment securities:
In Millions
 
 
December 31, 2019
 
December 31, 2018
 
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
 
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
CMS Energy
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
 
$
26

 
$
—

 
$
—

 
$
26

 
 
$
22

 
$
—

 
$
1

 
$
21