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Plant, Property, and Equipment
12 Months Ended
Dec. 31, 2019
Public Utility, Property, Plant and Equipment [Line Items]  
Plant, Property, and Equipment
Plant, Property, and Equipment
Presented in the following table are details of CMS Energy’s and Consumers’ plant, property, and equipment:
In Millions
 
December 31
Estimated Depreciable Life in Years
2019
 
2018
 
CMS Energy, including Consumers
 
 
 
 
 
 
 
Plant, property, and equipment, gross
 
 
 
 
 
 
 
Consumers
3
125
 
$
24,963

 
$
23,963

Enterprises
 
 
 
 
 
 
 
Independent power production1
3
40
 
403

 
410

Other
3
5
 
2

 
2

EnerBank
1
7
 
22

 
25

Plant, property, and equipment, gross
 
 
 
 
$
25,390

 
$
24,400

Construction work in progress
 
 
 
 
896

 
763

Accumulated depreciation and amortization
 
 
 
 
(7,360
)
 
(7,037
)
Total plant, property, and equipment
 
 
 
 
$
18,926

 
$
18,126

Consumers
 
 
 
 
 
 
 
Plant, property, and equipment, gross
 
 
 
 
 
 
 
Electric
 
 
 
 
 
 
 
Generation
22
125
 
$
5,942

 
$
6,305

Distribution
20
75
 
8,519

 
7,957

Transmission
46
75
 
113

 
154

Other
5
50
 
1,258

 
1,316

Assets under finance leases and other financing2
 
 
 
 
326

 
295

Gas
 
 
 
 
 
 
 
Distribution
20
85
 
5,235

 
4,651

Transmission
17
75
 
1,752

 
1,521

Underground storage facilities3
27
75
 
987

 
910

Other
5
50
 
797

 
823

Assets under finance leases2
 
 
 
 
14

 
14

Other non‑utility property
3
51
 
20

 
17

Plant, property, and equipment, gross
 
 
 
 
$
24,963

 
$
23,963

Construction work in progress
 
 
 
 
879

 
756

Accumulated depreciation and amortization
 
 
 
 
(7,272
)
 
(6,958
)
Total plant, property, and equipment4
 
 
 
 
$
18,570

 
$
17,761

1 
The majority 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 10, Leases and Palisades Financing.
2 
For information regarding the amortization terms of Consumers’ assets under finance leases and other financing, see Note 10, Leases and Palisades Financing.
3 
Underground storage includes base natural gas of $26 million at December 31, 2019 and 2018. Base natural gas is not subject to depreciation.
4 
For the year ended December 31, 2019, Consumers’ plant additions were $2.0 billion and plant retirements were $380 million. For the year ended December 31, 2018, Consumers’ plant additions were $1.8 billion and plant retirements were $190 million. Consumers plans to retire the D.E. Karn 1 & 2 coal-fueled electric generating units in 2023. Accordingly, in 2019, Consumers removed from total plant, property, and equipment $667 million, representing the remaining book value of the two units upon their retirement, and recorded it as a regulatory asset. For additional details, see Note 3, Regulatory Matters.
Intangible Assets: Included in net plant, property, and equipment are intangible assets. Presented in the following table are details about CMS Energy’s and Consumers’ intangible assets:
In Millions
 
 
 
December 31, 2019
 
December 31, 2018
Description
Amortization Life in Years
Gross Cost¹
 
Accumulated Amortization
 
 
Gross Cost¹
 
Accumulated Amortization
 
CMS Energy, including Consumers
 
 
 
 
 
 
 
 
 
Software development
1
15
 
$
882

 
$
529

 
 
$
1,024

 
$
603

Rights of way
50
85
 
180

 
55

 
 
167

 
52

Franchises and consents
5
50
 
16

 
9

 
 
15

 
9

Leasehold improvements
various²
 
9

 
7

 
 
9

 
7

Other intangibles
various
 
27

 
15

 
 
27

 
15

Total
 
 
 
 
$
1,114

 
$
615

 
 
$
1,242

 
$
686

Consumers
 
 
 
 
 
 
 
 
 
 
 
 
Software development
3
15
 
$
869

 
$
521

 
 
$
1,009

 
$
595

Rights of way
50
85
 
180

 
55

 
 
167

 
52

Franchises and consents
5
50
 
16

 
9

 
 
15

 
9

Leasehold improvements
various²
 
9

 
7

 
 
9

 
7

Other intangibles
various
 
26

 
15

 
 
26

 
15

Total
 
 
 
 
$
1,100

 
$
607

 
 
$
1,226

 
$
678

1 
For the year ended December 31, 2019, Consumers’ intangible asset additions were $67 million and intangible asset retirements were $193 million. For the year ended December 31, 2018, Consumers’ intangible asset additions were $90 million and intangible asset retirements were $7 million.
2 
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.
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, except pollution control facilities on its fossil-fuel-fired power plants. 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
2019

2018

2017

Electric
6.4
%
6.9
%
6.8
%
Gas
5.8

5.9

6.0


Assets Under Finance Leases and Other Financing: Presented in the following table are further details about changes in Consumers’ assets under finance leases and other financing:
In Millions
 
Years Ended December 31
2019
 
2018
 
Consumers
 
 
 
 
Balance at beginning of period
 
$
309

 
$
312

Additions
 
26

 

Net retirements and other adjustments
 
5

 
(3
)
Balance at end of period
 
$
340

 
$
309


Assets under finance leases and other financing are presented as gross amounts. Accumulated amortization of assets under finance leases and other financing was $239 million at December 31, 2019 and $212 million at December 31, 2018 for Consumers.
Depreciation and Amortization: Presented in the following table are further details about CMS Energy’s and Consumers’ accumulated depreciation and amortization:
In Millions
 
December 31
2019
 
2018
 
CMS Energy, including Consumers
 
 
 
 
Utility plant assets
 
$
7,269

 
$
6,956

Nonutility plant assets
 
91

 
81

Consumers
 
 
 
 
Utility plant assets
 
$
7,269

 
$
6,956

Nonutility plant assets
 
3

 
2


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
2019
 
2018
 
2017
 
Electric utility property
 
3.9
%
 
3.9
%
 
3.9
%
Gas utility property
 
2.9

 
2.9

 
2.9

Other property
 
10.0

 
10.1

 
10.0


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:
In Millions
 
Years Ended December 31
2019
 
2018
 
2017
 
CMS Energy, including Consumers
 
 
 
 
 
 
Depreciation expense – plant, property, and equipment
 
$
842

 
$
778

 
$
739

Amortization expense
 
 
 
 
 
 
Software
 
121

 
127

 
114

Other intangible assets
 
3

 
3

 
3

Securitized regulatory assets
 
26

 
25

 
25

Total depreciation and amortization expense
 
$
992

 
$
933

 
$
881

Consumers
 
 
 
 
 
 
Depreciation expense – plant, property, and equipment
 
$
827

 
$
768

 
$
732

Amortization expense
 
 
 
 
 
 
Software
 
119

 
125

 
112

Other intangible assets
 
3

 
3

 
3

Securitized regulatory assets
 
26

 
25

 
25

Total depreciation and amortization expense
 
$
975

 
$
921

 
$
872


Presented in the following table is CMS Energy’s and Consumers’ estimated amortization expense on intangible assets for each of the next five years:
In Millions
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
CMS Energy, including Consumers
 
 
 
 
 
 
 
 
 
 
Intangible asset amortization expense
 
$
118

 
$
112

 
$
107

 
$
87

 
$
70

Consumers
 
 
 
 
 
 
 
 
 
 
Intangible asset amortization expense
 
$
116

 
$
110

 
$
106

 
$
87

 
$
70



Jointly Owned Regulated Utility Facilities 
Presented in the following table are Consumers’ investments in jointly owned regulated utility facilities at December 31, 2019:
In Millions, Except Ownership Share
 
J.H. Campbell Unit 3
 
Ludington
 
 
Other

Ownership share
 
93.3
%
 
51.0
%
 
various

Utility plant in service
 
$
1,731

 
$
486

 
$
233

Accumulated depreciation
 
(753
)
 
(166
)
 
(68
)
Construction work in progress
 
16

 
64

 
15

Net investment
 
$
994

 
$
384

 
$
180


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 Energy Company  
Public Utility, Property, Plant and Equipment [Line Items]  
Plant, Property, and Equipment
Plant, Property, and Equipment
Presented in the following table are details of CMS Energy’s and Consumers’ plant, property, and equipment:
In Millions
 
December 31
Estimated Depreciable Life in Years
2019
 
2018
 
CMS Energy, including Consumers
 
 
 
 
 
 
 
Plant, property, and equipment, gross
 
 
 
 
 
 
 
Consumers
3
125
 
$
24,963

 
$
23,963

Enterprises
 
 
 
 
 
 
 
Independent power production1
3
40
 
403

 
410

Other
3
5
 
2

 
2

EnerBank
1
7
 
22

 
25

Plant, property, and equipment, gross
 
 
 
 
$
25,390

 
$
24,400

Construction work in progress
 
 
 
 
896

 
763

Accumulated depreciation and amortization
 
 
 
 
(7,360
)
 
(7,037
)
Total plant, property, and equipment
 
 
 
 
$
18,926

 
$
18,126

Consumers
 
 
 
 
 
 
 
Plant, property, and equipment, gross
 
 
 
 
 
 
 
Electric
 
 
 
 
 
 
 
Generation
22
125
 
$
5,942

 
$
6,305

Distribution
20
75
 
8,519

 
7,957

Transmission
46
75
 
113

 
154

Other
5
50
 
1,258

 
1,316

Assets under finance leases and other financing2
 
 
 
 
326

 
295

Gas
 
 
 
 
 
 
 
Distribution
20
85
 
5,235

 
4,651

Transmission
17
75
 
1,752

 
1,521

Underground storage facilities3
27
75
 
987

 
910

Other
5
50
 
797

 
823

Assets under finance leases2
 
 
 
 
14

 
14

Other non‑utility property
3
51
 
20

 
17

Plant, property, and equipment, gross
 
 
 
 
$
24,963

 
$
23,963

Construction work in progress
 
 
 
 
879

 
756

Accumulated depreciation and amortization
 
 
 
 
(7,272
)
 
(6,958
)
Total plant, property, and equipment4
 
 
 
 
$
18,570

 
$
17,761

1 
The majority 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 10, Leases and Palisades Financing.
2 
For information regarding the amortization terms of Consumers’ assets under finance leases and other financing, see Note 10, Leases and Palisades Financing.
3 
Underground storage includes base natural gas of $26 million at December 31, 2019 and 2018. Base natural gas is not subject to depreciation.
4 
For the year ended December 31, 2019, Consumers’ plant additions were $2.0 billion and plant retirements were $380 million. For the year ended December 31, 2018, Consumers’ plant additions were $1.8 billion and plant retirements were $190 million. Consumers plans to retire the D.E. Karn 1 & 2 coal-fueled electric generating units in 2023. Accordingly, in 2019, Consumers removed from total plant, property, and equipment $667 million, representing the remaining book value of the two units upon their retirement, and recorded it as a regulatory asset. For additional details, see Note 3, Regulatory Matters.
Intangible Assets: Included in net plant, property, and equipment are intangible assets. Presented in the following table are details about CMS Energy’s and Consumers’ intangible assets:
In Millions
 
 
 
December 31, 2019
 
December 31, 2018
Description
Amortization Life in Years
Gross Cost¹
 
Accumulated Amortization
 
 
Gross Cost¹
 
Accumulated Amortization
 
CMS Energy, including Consumers
 
 
 
 
 
 
 
 
 
Software development
1
15
 
$
882

 
$
529

 
 
$
1,024

 
$
603

Rights of way
50
85
 
180

 
55

 
 
167

 
52

Franchises and consents
5
50
 
16

 
9

 
 
15

 
9

Leasehold improvements
various²
 
9

 
7

 
 
9

 
7

Other intangibles
various
 
27

 
15

 
 
27

 
15

Total
 
 
 
 
$
1,114

 
$
615

 
 
$
1,242

 
$
686

Consumers
 
 
 
 
 
 
 
 
 
 
 
 
Software development
3
15
 
$
869

 
$
521

 
 
$
1,009

 
$
595

Rights of way
50
85
 
180

 
55

 
 
167

 
52

Franchises and consents
5
50
 
16

 
9

 
 
15

 
9

Leasehold improvements
various²
 
9

 
7

 
 
9

 
7

Other intangibles
various
 
26

 
15

 
 
26

 
15

Total
 
 
 
 
$
1,100

 
$
607

 
 
$
1,226

 
$
678

1 
For the year ended December 31, 2019, Consumers’ intangible asset additions were $67 million and intangible asset retirements were $193 million. For the year ended December 31, 2018, Consumers’ intangible asset additions were $90 million and intangible asset retirements were $7 million.
2 
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.
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, except pollution control facilities on its fossil-fuel-fired power plants. 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
2019

2018

2017

Electric
6.4
%
6.9
%
6.8
%
Gas
5.8

5.9

6.0


Assets Under Finance Leases and Other Financing: Presented in the following table are further details about changes in Consumers’ assets under finance leases and other financing:
In Millions
 
Years Ended December 31
2019
 
2018
 
Consumers
 
 
 
 
Balance at beginning of period
 
$
309

 
$
312

Additions
 
26

 

Net retirements and other adjustments
 
5

 
(3
)
Balance at end of period
 
$
340

 
$
309


Assets under finance leases and other financing are presented as gross amounts. Accumulated amortization of assets under finance leases and other financing was $239 million at December 31, 2019 and $212 million at December 31, 2018 for Consumers.
Depreciation and Amortization: Presented in the following table are further details about CMS Energy’s and Consumers’ accumulated depreciation and amortization:
In Millions
 
December 31
2019
 
2018
 
CMS Energy, including Consumers
 
 
 
 
Utility plant assets
 
$
7,269

 
$
6,956

Nonutility plant assets
 
91

 
81

Consumers
 
 
 
 
Utility plant assets
 
$
7,269

 
$
6,956

Nonutility plant assets
 
3

 
2


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
2019
 
2018
 
2017
 
Electric utility property
 
3.9
%
 
3.9
%
 
3.9
%
Gas utility property
 
2.9

 
2.9

 
2.9

Other property
 
10.0

 
10.1

 
10.0


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:
In Millions
 
Years Ended December 31
2019
 
2018
 
2017
 
CMS Energy, including Consumers
 
 
 
 
 
 
Depreciation expense – plant, property, and equipment
 
$
842

 
$
778

 
$
739

Amortization expense
 
 
 
 
 
 
Software
 
121

 
127

 
114

Other intangible assets
 
3

 
3

 
3

Securitized regulatory assets
 
26

 
25

 
25

Total depreciation and amortization expense
 
$
992

 
$
933

 
$
881

Consumers
 
 
 
 
 
 
Depreciation expense – plant, property, and equipment
 
$
827

 
$
768

 
$
732

Amortization expense
 
 
 
 
 
 
Software
 
119

 
125

 
112

Other intangible assets
 
3

 
3

 
3

Securitized regulatory assets
 
26

 
25

 
25

Total depreciation and amortization expense
 
$
975

 
$
921

 
$
872


Presented in the following table is CMS Energy’s and Consumers’ estimated amortization expense on intangible assets for each of the next five years:
In Millions
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
CMS Energy, including Consumers
 
 
 
 
 
 
 
 
 
 
Intangible asset amortization expense
 
$
118

 
$
112

 
$
107

 
$
87

 
$
70

Consumers
 
 
 
 
 
 
 
 
 
 
Intangible asset amortization expense
 
$
116

 
$
110

 
$
106

 
$
87

 
$
70



Jointly Owned Regulated Utility Facilities 
Presented in the following table are Consumers’ investments in jointly owned regulated utility facilities at December 31, 2019:
In Millions, Except Ownership Share
 
J.H. Campbell Unit 3
 
Ludington
 
 
Other

Ownership share
 
93.3
%
 
51.0
%
 
various

Utility plant in service
 
$
1,731

 
$
486

 
$
233

Accumulated depreciation
 
(753
)
 
(166
)
 
(68
)
Construction work in progress
 
16

 
64

 
15

Net investment
 
$
994

 
$
384

 
$
180


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.