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Revenue

3 Months Ended

Mar. 31, 2020

Revenue, Initial Application Period Cumulative Effect Transition [Line Items]

Presented in the following tables are the components of operating revenue:



In Millions
Three Months Ended March 31, 2020	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	1,025		$	714		$	—		$	—		$	1,739
Other		—			—			19			—			19
Revenue recognized from contracts with customers		$	1,025		$	714		$	19		$	—		$	1,758
Leasing income		—			—			39			—			39
Financing income		3			2			—			62			67
Total operating revenue – CMS Energy		$	1,028		$	716		$	58		$	62		$	1,864
Consumers
Consumers utility revenue
Residential		$	481		$	493		$	—		$	—		$	974
Commercial		339			149			—			—			488
Industrial		140			20			—			—			160
Other		65			52			—			—			117
Revenue recognized from contracts with customers		$	1,025		$	714		$	—		$	—		$	1,739
Financing income		3			2			—			—			5
Total operating revenue – Consumers		$	1,028		$	716		$	—		$	—		$	1,744

Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. The enterprises segment’s sales of energy commodities are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. The enterprises segment’s leasing income included variable lease payments of $25 million for the three months ended March 31, 2020.



In Millions
Three Months Ended March 31, 2019	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	1,100		$	838		$	—		$	—		$	1,938
Other		—			—			19			—			19
Revenue recognized from contracts with customers		$	1,100		$	838		$	19		$	—		$	1,957
Leasing income		—			—			48			—			48
Financing income		3			2			—			49			54
Total operating revenue – CMS Energy		$	1,103		$	840		$	67		$	49		$	2,059
Consumers
Consumers utility revenue
Residential		$	523		$	589		$	—		$	—		$	1,112
Commercial		351			174			—			—			525
Industrial		162			25			—			—			187
Other		64			50			—			—			114
Revenue recognized from contracts with customers		$	1,100		$	838		$	—		$	—		$	1,938
Financing income		3			2			—			—			5
Total operating revenue – Consumers		$	1,103		$	840		$	—		$	—		$	1,943

Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. The enterprises segment’s sales of energy commodities are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. The enterprises segment’s leasing income included variable lease payments of $34 million for the three months ended March 31, 2019.

Electric and Gas Utilities

Consumers Utility Revenue: Consumers recognizes revenue primarily from the sale of electric and gas utility services at tariff‑based rates regulated by the MPSC. Consumers’ customer base consists of a mix of residential, commercial, and diversified industrial customers. Consumers’ tariff‑based sales performance obligations are described below.

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Consumers has performance obligations for the service of standing ready to deliver electricity or natural gas to customers, and it satisfies these performance obligations over time. Consumers recognizes revenue at a fixed rate as it provides these services. These arrangements generally do not have fixed terms and remain in effect as long as the customer consumes the utility service. The rates are set by the MPSC through the rate‑making process and represent the stand‑alone selling price of Consumers’ service to stand ready to deliver.

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Consumers has performance obligations for the service of delivering the commodity of electricity or natural gas to customers, and it satisfies these performance obligations upon delivery. Consumers recognizes revenue at a price per unit of electricity or natural gas delivered, based on the tariffs established by the MPSC. These arrangements generally do not have fixed terms and remain in effect as long as the customer consumes the utility service. The rates are set by the MPSC through the rate‑making process and represent the stand‑alone selling price of a bundled

product comprising the commodity, electricity or natural gas, and the service of delivering such commodity.

In some instances, Consumers has specific fixed‑term contracts with large commercial and industrial customers to provide electricity or gas at certain tariff rates or to provide gas transportation services at contracted rates. The amount of electricity and gas to be delivered under these contracts and the associated future revenue to be received are generally dependent on the customers’ needs. Accordingly, Consumers recognizes revenues at the tariff or contracted rate as electricity or gas is delivered to the customer. Consumers also has other miscellaneous contracts with customers related to pole and other property rentals, appliance service plans, and utility contract work. Generally, these contracts are short term or evergreen in nature.

Accounts Receivable and Unbilled Revenues: Accounts receivable comprise trade receivables and unbilled receivables. CMS Energy and Consumers record their accounts receivable at cost, less an allowance for uncollectible accounts. The allowance is increased for uncollectible accounts expense and decreased for account write-offs net of recoveries. CMS Energy and Consumers establish the allowance based on historical losses, management’s assessment of existing economic conditions, customer payment trends, and reasonable and supported forecast information. CMS Energy and Consumers assess late payment fees on trade receivables based on contractual past‑due terms established with customers. Accounts are written off when deemed uncollectible, which is generally when they become six months past due. Uncollectible expense for CMS Energy and Consumers was $5 million for the three months ended March 31, 2020 and $6 million for the three months ended March 31, 2019.

Consumers’ customers are billed monthly in cycles having billing dates that do not generally coincide with the end of a calendar month. This results in customers having received electricity or natural gas that they have not been billed for as of the month‑end. Consumers estimates its unbilled revenues by applying an average billed rate to total unbilled deliveries for each customer class. Unbilled revenues, which are recorded as accounts receivable on CMS Energy’s and Consumers’ consolidated balance sheets, were $354 million at March 31, 2020 and $426 million at December 31, 2019.

Alternative‑Revenue Programs: The energy waste reduction incentive mechanism provides a financial incentive if the energy savings of Consumers’ customers exceed annual targets established by the MPSC. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizing revenue related to the incentive as soon as energy savings exceed the annual targets established by the MPSC.

Under a gas revenue decoupling mechanism authorized by the MPSC, Consumers is allowed to adjust future gas rates for differences between Consumers’ actual weather-normalized, non‑fuel revenues and the revenues approved by the MPSC. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizing the effects of decoupling adjustments on revenue as gas is delivered.

Consumers does not reclassify revenue from its alternative-revenue program to revenue from contracts with customers at the time the amounts are collected from customers.

Consumers Energy Company