Income Taxes (Tables)

9 Months Ended

Sep. 30, 2020

Income Taxes [Line Items]

Schedule Of Effective Income Tax Rate Reconciliation

Presented in the following table is a reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate from continuing operations:

Nine Months Ended September 30	2020		2019
CMS Energy, including Consumers
U.S. federal income tax rate	21.0	%	21.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect	4.7		5.4
TCJA excess deferred taxes¹	(4.0	)	(3.4	)
Production tax credits	(3.0	)	(2.5	)
Research and development tax credits, net²	(1.5	)	(0.2	)
Accelerated flow-through of regulatory tax benefits³	(1.5	)	(1.5	)
Refund of alternative minimum tax sequestration4	(1.3	)	—
Other, net	(0.2	)	(1.2	)
Effective tax rate	14.2	%	17.6	%
Consumers
U.S. federal income tax rate	21.0	%	21.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect	5.0		5.7
TCJA excess deferred taxes¹	(3.6	)	(3.2	)
Production tax credits	(1.9	)	(1.6	)
Research and development tax credits, net²	(1.3	)	(0.2	)
Accelerated flow-through of regulatory tax benefits³	(1.1	)	(1.0	)
Other, net	(0.3	)	(0.4	)
Effective tax rate	17.8	%	20.3	%

¹  In December 2017, Consumers remeasured its deferred tax assets and liabilities at the new federal tax rate enacted by the TCJA and recorded a net $1.6 billion regulatory liability. As a result of an order received in September 2019, Consumers began refunding these excess deferred taxes to customers. In September 2020, the MPSC approved a settlement agreement in Consumers’ 2019 gas rate case including Consumers request to accelerate the amortization of its regulatory liability associated with the unprotected, non-property-related excess deferred income taxes resulting from the TCJA. Consumers will increase its TCJA amortization to fully refund this regulatory liability during the period October 2021 through September 2022 instead of the previous amortization schedule through 2029.

²  In March 2020, CMS Energy finalized a study of research and development tax credits for tax years 2012 through 2018. As a result, for the nine months ended September 30, 2020, CMS Energy, including Consumers, recognized a $9 million increase in the credit, net of reserves for uncertain tax positions. Of this amount, $8 million was recognized at Consumers.

³  In 2013, the MPSC issued an order authorizing Consumers to accelerate the flow‑through to electric and gas customers of certain income tax benefits associated primarily with the cost of removal of plant placed in service before 1993. Consumers implemented this regulatory treatment beginning in 2014, with the electric portion ending in 2018 and the gas portion expected to continue through 2025. This change, which also accelerates Consumers’ recognition of the income tax benefits, reduced Consumers’ income tax expense by $8 million for the nine months ended September 30, 2020 and by $7 million for the nine months ended September 30, 2019. In September 2020, the MPSC approved a settlement agreement in Consumers’ 2019 gas rate case including Consumers request to accelerate the amortization of this income

tax benefit to fully amortize the balance during the period October 2021 through September 2022 instead of the previous amortization schedule through 2025.

⁴ 

In January 2020, the IRS issued a decision restoring alternative minimum tax credit refunds sequestered in years prior to 2018. As a result, for the nine months ended September 30, 2020, CMS Energy recognized a $9 million income tax benefit for sequestered amounts related to its 2017 tax return. CMS Energy received the refund in April 2020.

Consumers Energy Company

Income Taxes [Line Items]

Schedule Of Effective Income Tax Rate Reconciliation

Presented in the following table is a reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate from continuing operations:

Nine Months Ended September 30	2020		2019
CMS Energy, including Consumers
U.S. federal income tax rate	21.0	%	21.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect	4.7		5.4
TCJA excess deferred taxes¹	(4.0	)	(3.4	)
Production tax credits	(3.0	)	(2.5	)
Research and development tax credits, net²	(1.5	)	(0.2	)
Accelerated flow-through of regulatory tax benefits³	(1.5	)	(1.5	)
Refund of alternative minimum tax sequestration4	(1.3	)	—
Other, net	(0.2	)	(1.2	)
Effective tax rate	14.2	%	17.6	%
Consumers
U.S. federal income tax rate	21.0	%	21.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect	5.0		5.7
TCJA excess deferred taxes¹	(3.6	)	(3.2	)
Production tax credits	(1.9	)	(1.6	)
Research and development tax credits, net²	(1.3	)	(0.2	)
Accelerated flow-through of regulatory tax benefits³	(1.1	)	(1.0	)
Other, net	(0.3	)	(0.4	)
Effective tax rate	17.8	%	20.3	%

¹  In December 2017, Consumers remeasured its deferred tax assets and liabilities at the new federal tax rate enacted by the TCJA and recorded a net $1.6 billion regulatory liability. As a result of an order received in September 2019, Consumers began refunding these excess deferred taxes to customers. In September 2020, the MPSC approved a settlement agreement in Consumers’ 2019 gas rate case including Consumers request to accelerate the amortization of its regulatory liability associated with the unprotected, non-property-related excess deferred income taxes resulting from the TCJA. Consumers will increase its TCJA amortization to fully refund this regulatory liability during the period October 2021 through September 2022 instead of the previous amortization schedule through 2029.

²  In March 2020, CMS Energy finalized a study of research and development tax credits for tax years 2012 through 2018. As a result, for the nine months ended September 30, 2020, CMS Energy, including Consumers, recognized a $9 million increase in the credit, net of reserves for uncertain tax positions. Of this amount, $8 million was recognized at Consumers.

³  In 2013, the MPSC issued an order authorizing Consumers to accelerate the flow‑through to electric and gas customers of certain income tax benefits associated primarily with the cost of removal of plant placed in service before 1993. Consumers implemented this regulatory treatment beginning in 2014, with the electric portion ending in 2018 and the gas portion expected to continue through 2025. This change, which also accelerates Consumers’ recognition of the income tax benefits, reduced Consumers’ income tax expense by $8 million for the nine months ended September 30, 2020 and by $7 million for the nine months ended September 30, 2019. In September 2020, the MPSC approved a settlement agreement in Consumers’ 2019 gas rate case including Consumers request to accelerate the amortization of this income

tax benefit to fully amortize the balance during the period October 2021 through September 2022 instead of the previous amortization schedule through 2025.

⁴ 

In January 2020, the IRS issued a decision restoring alternative minimum tax credit refunds sequestered in years prior to 2018. As a result, for the nine months ended September 30, 2020, CMS Energy recognized a $9 million income tax benefit for sequestered amounts related to its 2017 tax return. CMS Energy received the refund in April 2020.