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Exit Activities and Discontinued Operations
 9 Months Ended
Sep. 30, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]  
Exit Activities and Discontinued Operations Exit Activities and Discontinued Operations
Exit Activities: Under its Clean Energy Plan, Consumers plans to retire the D.E. Karn coal-fueled electric generating units in 2023. In 2019, Consumers announced a retention incentive program to ensure necessary staffing at the D.E. Karn generating complex through the anticipated retirement of the coal-fueled generating units. Based on the number of employees that have chosen to participate, the aggregate cost of the program through 2023 is estimated to be $35 million. In its order in Consumers’ 2020 electric rate case, the MPSC approved deferred accounting treatment for these costs; Consumers began deferring these costs as a regulatory asset in 2021.
Under the 2021 IRP, Consumers will retire the J.H. Campbell coal-fueled generating units in 2025. Similar to the D.E. Karn program, Consumers is providing a retention incentive program to ensure necessary staffing at the J.H. Campbell generating complex through retirement. Based on the number of employees that have chosen to participate, the aggregate cost of the program through 2025 is estimated to be $50 million. Additionally, Consumers recognized $4 million related to severance benefits during the nine months ended September 30, 2022. This amount was recorded in other non-current liabilities on its consolidated balance sheets at September 30, 2022. The 2021 IRP provides deferred accounting treatment for the retention and severance costs recognized during 2022; deferral of costs beyond 2022 will be addressed in future rate cases.
As of September 30, 2022, the cumulative cost incurred and charged to expense related to the D.E. Karn retention incentive program was $16 million. Additionally, an amount of $4 million has been capitalized as a cost of plant, property, and equipment and an amount of $11 million has been deferred as a regulatory asset. The cumulative cost incurred and deferred as a regulatory asset related to the J.H. Campbell retention incentive program was $10 million.
Presented in the following table is a reconciliation of the retention benefit liability recorded in other liabilities on Consumers’ consolidated balance sheets:
In Millions
Nine Months Ended
September 3020222021
Retention benefit liability at beginning of period$14 $11 
Costs deferred as a regulatory asset1
14 5 
Costs incurred and capitalized— 1 
Retention benefit liability at the end of the period2
$28 $17 
1Includes $11 million for the three months ended September 30, 2022 and $2 million for the three months ended September 30, 2021.
2Includes current portion of other liabilities of $25 million at September 30, 2022 and $5 million at September 30, 2021.
Discontinued Operations: In October 2021, EnerBank was acquired by Regions Bank. CMS Energy received proceeds of over $1.0 billion from the transaction and recognized a pre-tax gain of $657 million in 2021. In March 2022, CMS Energy received $6 million of additional proceeds as the result of a post-closing adjustment. Net of related transaction costs, CMS Energy recognized a pre-tax gain of $5 million during the nine months ended September 30, 2022.
In December 2021, CMS Energy submitted a notice of disagreement to Regions Bank relating to a $36 million negative post-closing purchase price adjustment that it believed was inconsistent with the merger agreement. In accordance with the merger agreement, the disputed adjustment was submitted to a mutually agreed upon independent accounting firm for final determination. In June 2022, the accounting firm rendered a determination on the disputed items entirely in favor of CMS Energy. As a result, no further adjustment was required in 2022.
EnerBank’s results of operations through the date of the sale are presented as income from discontinued operations on CMS Energy’s consolidated statements of income for the three and nine months ended
September 30, 2021. The table below presents the financial results of EnerBank included in income from discontinued operations:
In Millions
Three Months EndedNine Months Ended
September 302022202120222021
Operating revenue$— $70 $— $209 
Expenses
Operating expenses— 17 — 60 
Interest expense— 11 — 34 
Income before income taxes$— $42 $— $115 
Gain on sale1
— (3)5 (8)
Income from discontinued operations before income taxes$— $39 $5 $107 
Income tax expense— 9 1 25 
Income from discontinued operations, net of tax$— $30 $4 $82 
1Amounts in 2021 represent transaction costs.
Consumers Energy Company  
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]  
Exit Activities and Discontinued Operations Exit Activities and Discontinued Operations
Exit Activities: Under its Clean Energy Plan, Consumers plans to retire the D.E. Karn coal-fueled electric generating units in 2023. In 2019, Consumers announced a retention incentive program to ensure necessary staffing at the D.E. Karn generating complex through the anticipated retirement of the coal-fueled generating units. Based on the number of employees that have chosen to participate, the aggregate cost of the program through 2023 is estimated to be $35 million. In its order in Consumers’ 2020 electric rate case, the MPSC approved deferred accounting treatment for these costs; Consumers began deferring these costs as a regulatory asset in 2021.
Under the 2021 IRP, Consumers will retire the J.H. Campbell coal-fueled generating units in 2025. Similar to the D.E. Karn program, Consumers is providing a retention incentive program to ensure necessary staffing at the J.H. Campbell generating complex through retirement. Based on the number of employees that have chosen to participate, the aggregate cost of the program through 2025 is estimated to be $50 million. Additionally, Consumers recognized $4 million related to severance benefits during the nine months ended September 30, 2022. This amount was recorded in other non-current liabilities on its consolidated balance sheets at September 30, 2022. The 2021 IRP provides deferred accounting treatment for the retention and severance costs recognized during 2022; deferral of costs beyond 2022 will be addressed in future rate cases.
As of September 30, 2022, the cumulative cost incurred and charged to expense related to the D.E. Karn retention incentive program was $16 million. Additionally, an amount of $4 million has been capitalized as a cost of plant, property, and equipment and an amount of $11 million has been deferred as a regulatory asset. The cumulative cost incurred and deferred as a regulatory asset related to the J.H. Campbell retention incentive program was $10 million.
Presented in the following table is a reconciliation of the retention benefit liability recorded in other liabilities on Consumers’ consolidated balance sheets:
In Millions
Nine Months Ended
September 3020222021
Retention benefit liability at beginning of period$14 $11 
Costs deferred as a regulatory asset1
14 5 
Costs incurred and capitalized— 1 
Retention benefit liability at the end of the period2
$28 $17 
1Includes $11 million for the three months ended September 30, 2022 and $2 million for the three months ended September 30, 2021.
2Includes current portion of other liabilities of $25 million at September 30, 2022 and $5 million at September 30, 2021.
Discontinued Operations: In October 2021, EnerBank was acquired by Regions Bank. CMS Energy received proceeds of over $1.0 billion from the transaction and recognized a pre-tax gain of $657 million in 2021. In March 2022, CMS Energy received $6 million of additional proceeds as the result of a post-closing adjustment. Net of related transaction costs, CMS Energy recognized a pre-tax gain of $5 million during the nine months ended September 30, 2022.
In December 2021, CMS Energy submitted a notice of disagreement to Regions Bank relating to a $36 million negative post-closing purchase price adjustment that it believed was inconsistent with the merger agreement. In accordance with the merger agreement, the disputed adjustment was submitted to a mutually agreed upon independent accounting firm for final determination. In June 2022, the accounting firm rendered a determination on the disputed items entirely in favor of CMS Energy. As a result, no further adjustment was required in 2022.
EnerBank’s results of operations through the date of the sale are presented as income from discontinued operations on CMS Energy’s consolidated statements of income for the three and nine months ended
September 30, 2021. The table below presents the financial results of EnerBank included in income from discontinued operations:
In Millions
Three Months EndedNine Months Ended
September 302022202120222021
Operating revenue$— $70 $— $209 
Expenses
Operating expenses— 17 — 60 
Interest expense— 11 — 34 
Income before income taxes$— $42 $— $115 
Gain on sale1
— (3)5 (8)
Income from discontinued operations before income taxes$— $39 $5 $107 
Income tax expense— 9 1 25 
Income from discontinued operations, net of tax$— $30 $4 $82 
1Amounts in 2021 represent transaction costs.