Schedule I - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]

Schedule I - Condensed Financial Information of Registrant

CMS Energy—Parent Company

Condensed Statements of Income

In Millions
Years Ended December 31	2019				2018				2017
Operating Expenses
Other operating expenses		$	(38	)		$	(7	)		$	(9	)
Total operating expenses		(38		)		(7		)		(9		)
Operating Loss		(38		)		(7		)		(9		)
Other Income (Expense)
Equity earnings of subsidiaries		826				780				633
Nonoperating retirement benefits, net		(1		)		(1		)		(1		)
Interest income		1				2				1
Other income		1				—				2
Other expense		—				(17		)		(31		)
Total other income		827				764				604
Interest Charges
Interest on long-term debt		156				135				143
Intercompany interest expense and other		10				7				3
Total interest charges		166				142				146
Income Before Income Taxes		623				615				449
Income Tax Benefit		(57		)		(42		)		(11		)
Net Income Available to Common Stockholders		$	680			$	657			$	460

The accompanying notes are an integral part of these statements.

Schedule I — Condensed Financial Information of Registrant (Continued)

CMS Energy—Parent Company

Condensed Statements of Cash Flows

In Millions
Years Ended December 31	2019				2018				2017
Cash Flows from Operating Activities
Net cash provided by operating activities		$	697			$	702			$	433
Cash Flows from Investing Activities
Investment in subsidiaries		(683		)		(363		)		(447		)
Proceeds from DB SERP investments		—				22				—
Net cash used in investing activities		(683		)		(341		)		(447		)
Cash Flows from Financing Activities
Proceeds from issuance of debt		1,158				560				799
Issuance of common stock		12				41				83
Retirement of long-term debt		(738		)		(675		)		(425		)
Debt prepayment costs		—				(16		)		(18		)
Payment of dividends on common stock		(434		)		(405		)		(375		)
Debt issuance costs and financing fees		(18		)		(8		)		(3		)
Change in notes payable – intercompany		6				142				(47		)
Net cash provided by (used in) financing activities		(14		)		(361		)		14
Net Increase in Cash and Cash Equivalents, Including Restricted Amounts		—				—				—
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period		—				—				—
Cash and Cash Equivalents, Including Restricted Amounts, End of Period		$	—			$	—			$	—

The accompanying notes are an integral part of these statements.

Schedule I — Condensed Financial Information of Registrant (Continued)

CMS Energy—Parent Company

Condensed Balance Sheets

ASSETS
In Millions
December 31	2019			2018
Current Assets
Notes and accrued interest receivable		$	2		$	2
Accounts receivable – intercompany and related parties		9			7
Federal income tax receivable		18			44
Accrued taxes		—			26
Prepayments and other current assets		1			1
Total current assets		30			80
Other Non‑current Assets
Deferred income taxes		126			180
Investments in subsidiaries		8,526			7,706
Other investments		4			3
Other		16			10
Total other non‑current assets		8,672			7,899
Total Assets		$	8,702		$	7,979

LIABILITIES AND EQUITY
In Millions
December 31	2019			2018
Current Liabilities
Current portion of long-term debt		$	—		$	180
Accounts and notes payable – intercompany		123			113
Accrued interest, including intercompany		34			32
Accrued taxes		5			—
Other current liabilities		38			7
Total current liabilities		200			332
Non‑current Liabilities
Long-term debt		3,334			2,750
Notes payable – intercompany		112			116
Postretirement benefits		21			17
Other non‑current liabilities		17			9
Total non‑current liabilities		3,484			2,892
Equity
Common stockholders’ equity		5,018			4,755
Total Liabilities and Equity		$	8,702		$	7,979

The accompanying notes are an integral part of these statements.

Basis of Presentation

CMS Energy’s condensed financial statements have been prepared on a parent-only basis. In accordance with Rule 12-04 of Regulation S-X, these parent-only financial statements do not include all of the information and notes required by GAAP for annual financial statements, and therefore these parent-only financial statements and other information included should be read in conjunction with CMS Energy’s audited consolidated financial statements contained within Item 8. Financial Statements and Supplementary Data.

Contingencies

Gas Index Price Reporting Litigation: CMS Energy, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company, were named as defendants in four class action lawsuits and one individual lawsuit arising as a result of alleged inaccurate natural gas price reporting to publications that report trade information. Allegations include price-fixing conspiracies, restraint of trade, and artificial inflation of natural gas retail prices in Kansas, Missouri, and Wisconsin. In 2016, CMS Energy entities reached a settlement with the plaintiffs in the Kansas and Missouri class action cases for an amount that was not material to CMS Energy. In 2017, the federal district court approved the settlement.

CMS Energy and the plaintiffs in each of the Kansas and the Wisconsin actions engaged in settlement discussions and CMS Energy has recorded a $30 million liability at December 31, 2019 as a probable estimate to settle these two cases. CMS Energy can give no assurances that it can reach a final settlement with the plaintiffs in these two cases, of the actual amount CMS Energy would have to pay in any settlement, or, in the Wisconsin case, that the Wisconsin court would approve any such settlement. If settlement does not occur and the outcome after appeals is unfavorable to CMS Energy, these cases could negatively affect CMS Energy’s liquidity, financial condition, and results of operations.

Guarantees

CMS Energy has issued guarantees with a maximum potential obligation of $430 million on behalf of some of its wholly owned subsidiaries and related parties. CMS Energy’s maximum potential obligation consists primarily of potential payments:

• to third parties under certain commodity purchase and swap agreements entered into with CMS ERM

• to third parties under certain agreements entered into with Grand River Wind, LLC, a wholly owned subsidiary of CMS Enterprises

• to third parties in support of non‑recourse revenue bonds issued by Genesee

• to EGLE on behalf of CMS Land and CMS Capital, for environmental remediation obligations at Bay Harbor

• to the U.S. Department of Energy on behalf of Consumers, in connection with Consumers’ 2011 settlement agreement with the U.S. Department of Energy regarding damages resulting from the department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by Consumers

The expiry dates of these guarantees vary, depending upon contractual provisions or upon the statute of limitations under the relevant governing law.

Note Payable—Intercompany

In July 2018, CMS Energy issued a demand note payable to the DB SERP rabbi trust, of which $124 million was attributable to CMS Energy’s subsidiaries. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028. This note payable is not recorded at fair value; however, its carrying value approximates fair value at December 31, 2019. This fair value measurement is classified in Level 3 within the fair value hierarchy.