Revenue

6 Months Ended

Jun. 30, 2020

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

Revenue

Revenue

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

In Millions
Three Months Ended June 30, 2020	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	1,020		$	306		$	—		$	—		$	1,326
Other		—			—			17			—			17
Revenue recognized from contracts with customers		$	1,020		$	306		$	17		$	—		$	1,343
Leasing income		—			—			35			—			35
Financing income		2			2			—			61			65
Total operating revenue – CMS Energy		$	1,022		$	308		$	52		$	61		$	1,443
Consumers
Consumers utility revenue
Residential		$	507		$	206								$	713
Commercial		341			51									392
Industrial		126			7									133
Other		46			42									88
Revenue recognized from contracts with customers		$	1,020		$	306								$	1,326
Financing income		2			2									4
Total operating revenue – Consumers		$	1,022		$	308								$	1,330

¹  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 $21 million for the three months ended June 30, 2020.

In Millions
Three Months Ended June 30, 2019	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	1,026		$	305		$	—		$	—		$	1,331
Other		—			—			16			—			16
Revenue recognized from contracts with customers		$	1,026		$	305		$	16		$	—		$	1,347
Leasing income		—			—			42			—			42
Financing income		1			2			—			53			56
Total operating revenue – CMS Energy		$	1,027		$	307		$	58		$	53		$	1,445
Consumers
Consumers utility revenue
Residential		$	423		$	198								$	621
Commercial		362			58									420
Industrial		174			8									182
Other		67			41									108
Revenue recognized from contracts with customers		$	1,026		$	305								$	1,331
Financing income		1			2									3
Total operating revenue – Consumers		$	1,027		$	307								$	1,334

¹  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 $29 million for the three months ended June 30, 2019.

In Millions
Six Months Ended June 30, 2020	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	2,045		$	1,020		$	—		$	—		$	3,065
Other		—			—			36			—			36
Revenue recognized from contracts with customers		$	2,045		$	1,020		$	36		$	—		$	3,101
Leasing income		—			—			74			—			74
Financing income		5			4			—			123			132
Total operating revenue – CMS Energy		$	2,050		$	1,024		$	110		$	123		$	3,307
Consumers
Consumers utility revenue
Residential		$	988		$	699								$	1,687
Commercial		680			200									880
Industrial		266			27									293
Other		111			94									205
Revenue recognized from contracts with customers		$	2,045		$	1,020								$	3,065
Financing income		5			4									9
Total operating revenue – Consumers		$	2,050		$	1,024								$	3,074

¹  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 $46 million for the six months ended June 30, 2020.

In Millions
Six Months Ended June 30, 2019	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	2,126		$	1,143		$	—		$	—		$	3,269
Other		—			—			35			—			35
Revenue recognized from contracts with customers		$	2,126		$	1,143		$	35		$	—		$	3,304
Leasing income		—			—			90			—			90
Financing income		4			4			—			102			110
Total operating revenue – CMS Energy		$	2,130		$	1,147		$	125		$	102		$	3,504
Consumers
Consumers utility revenue
Residential		$	946		$	787								$	1,733
Commercial		713			232									945
Industrial		336			33									369
Other		131			91									222
Revenue recognized from contracts with customers		$	2,126		$	1,143								$	3,269
Financing income		4			4									8
Total operating revenue – Consumers		$	2,130		$	1,147								$	3,277

¹  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 $63 million for the six months ended June 30, 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.

• 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.

• 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.

CMS Energy and Consumers recorded uncollectible accounts expense of $8 million for the three months ended June 30, 2020 and $6 million for the three months ended June 30, 2019. CMS Energy and Consumers recorded uncollectible accounts expense of $13 million for the six months ended June 30, 2020 and $12 million for the six months ended June 30, 2019. At June 30, 2020, Consumers deferred $9 million of incremental uncollectible accounts expense as a non‑current regulatory asset. For additional information see Note 2, Regulatory Matters.

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 $326 million at June 30, 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

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

Revenue

Revenue

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

In Millions
Three Months Ended June 30, 2020	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	1,020		$	306		$	—		$	—		$	1,326
Other		—			—			17			—			17
Revenue recognized from contracts with customers		$	1,020		$	306		$	17		$	—		$	1,343
Leasing income		—			—			35			—			35
Financing income		2			2			—			61			65
Total operating revenue – CMS Energy		$	1,022		$	308		$	52		$	61		$	1,443
Consumers
Consumers utility revenue
Residential		$	507		$	206								$	713
Commercial		341			51									392
Industrial		126			7									133
Other		46			42									88
Revenue recognized from contracts with customers		$	1,020		$	306								$	1,326
Financing income		2			2									4
Total operating revenue – Consumers		$	1,022		$	308								$	1,330

¹  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 $21 million for the three months ended June 30, 2020.

In Millions
Three Months Ended June 30, 2019	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	1,026		$	305		$	—		$	—		$	1,331
Other		—			—			16			—			16
Revenue recognized from contracts with customers		$	1,026		$	305		$	16		$	—		$	1,347
Leasing income		—			—			42			—			42
Financing income		1			2			—			53			56
Total operating revenue – CMS Energy		$	1,027		$	307		$	58		$	53		$	1,445
Consumers
Consumers utility revenue
Residential		$	423		$	198								$	621
Commercial		362			58									420
Industrial		174			8									182
Other		67			41									108
Revenue recognized from contracts with customers		$	1,026		$	305								$	1,331
Financing income		1			2									3
Total operating revenue – Consumers		$	1,027		$	307								$	1,334

¹  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 $29 million for the three months ended June 30, 2019.

In Millions
Six Months Ended June 30, 2020	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	2,045		$	1,020		$	—		$	—		$	3,065
Other		—			—			36			—			36
Revenue recognized from contracts with customers		$	2,045		$	1,020		$	36		$	—		$	3,101
Leasing income		—			—			74			—			74
Financing income		5			4			—			123			132
Total operating revenue – CMS Energy		$	2,050		$	1,024		$	110		$	123		$	3,307
Consumers
Consumers utility revenue
Residential		$	988		$	699								$	1,687
Commercial		680			200									880
Industrial		266			27									293
Other		111			94									205
Revenue recognized from contracts with customers		$	2,045		$	1,020								$	3,065
Financing income		5			4									9
Total operating revenue – Consumers		$	2,050		$	1,024								$	3,074

¹  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 $46 million for the six months ended June 30, 2020.

In Millions
Six Months Ended June 30, 2019	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	2,126		$	1,143		$	—		$	—		$	3,269
Other		—			—			35			—			35
Revenue recognized from contracts with customers		$	2,126		$	1,143		$	35		$	—		$	3,304
Leasing income		—			—			90			—			90
Financing income		4			4			—			102			110
Total operating revenue – CMS Energy		$	2,130		$	1,147		$	125		$	102		$	3,504
Consumers
Consumers utility revenue
Residential		$	946		$	787								$	1,733
Commercial		713			232									945
Industrial		336			33									369
Other		131			91									222
Revenue recognized from contracts with customers		$	2,126		$	1,143								$	3,269
Financing income		4			4									8
Total operating revenue – Consumers		$	2,130		$	1,147								$	3,277

¹  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 $63 million for the six months ended June 30, 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.

• 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.

• 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.

CMS Energy and Consumers recorded uncollectible accounts expense of $8 million for the three months ended June 30, 2020 and $6 million for the three months ended June 30, 2019. CMS Energy and Consumers recorded uncollectible accounts expense of $13 million for the six months ended June 30, 2020 and $12 million for the six months ended June 30, 2019. At June 30, 2020, Consumers deferred $9 million of incremental uncollectible accounts expense as a non‑current regulatory asset. For additional information see Note 2, Regulatory Matters.

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 $326 million at June 30, 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.