Financings and Capitalization

3 Months Ended

Mar. 31, 2023

Debt Instrument [Line Items]

Financings and Capitalization

Financings and Capitalization

Financings: Presented in the following table is a summary of major long-term debt issuances during the three months ended March 31, 2023:

	Principal (In Millions)			Interest Rate (%)		Issuance Date	Maturity Date
NorthStar Clean Energy, including subsidiaries
Term loan facility1		$	85	variable		February 2023	September 2023
Total NorthStar Clean Energy, including subsidiaries		$	85
Consumers
First mortgage bonds		$	425	4.650	%	January 2023	March 2028
First mortgage bonds		700		4.625		February 2023	May 2033
Total Consumers		$	1,125
Total CMS Energy		$	1,210

1    In December 2022, a subsidiary of NorthStar Clean Energy entered into a $185 million unsecured term loan credit agreement. Under this credit agreement, a subsidiary of NorthStar Clean Energy borrowed $85 million in 2023. As of March 31, 2023, there was $185 million of loans outstanding bearing an interest rate of 5.806 percent under the unsecured term loan credit agreement.

In January 2023, Consumers entered into a bond purchase agreement to issue an aggregate principal amount of $400 million of first mortgage bonds through a private placement offering. The bonds, which were priced in November 2022, carry a weighted average interest rate of 5.251 percent and mature at varying dates between 2026 and 2037. The bonds are expected to be issued in May 2023. The proceeds of the bonds will be used to finance a portion of the purchase price of the New Covert Generating Facility and for general corporate purposes.

Presented in the following table is a summary of major long-term debt retirements during the three months ended March 31, 2023:

	Principal (In Millions)			Interest Rate (%)	Retirement Date	Maturity Date
Consumers
Term loan facility		$	1,000	variable	February 2023	January 2024

Credit Facilities: The following credit facilities with banks were available at March 31, 2023:

In Millions
Expiration Date	Amount of Facility			Amount Borrowed			Letters of Credit Outstanding			Amount Available
CMS Energy, parent only
December 14, 20271		$	550		$	—		$	21		$	529
September 22, 2024		50			—			50			—
NorthStar Clean Energy, including subsidiaries
September 25, 20252		$	37		$	—		$	37		$	—
Consumers3
December 14, 2027		$	1,100		$	—		$	27		$	1,073
November 18, 2024		250			—			27			223

1There were no borrowings under this facility during the three months ended March 31, 2023.

2This letter of credit facility is available to Aviator Wind Equity Holdings. For more information regarding Aviator Wind Equity Holdings, see Note 11, Variable Interest Entities.

3Obligations under these facilities are secured by first mortgage bonds of Consumers. There were no borrowings under these facilities during the three months ended March 31, 2023.

Regulatory Authorization for Financings: Consumers is required to maintain FERC authorization for financings. Any long-term issuances during the authorization period are exempt from FERC’s competitive bidding and negotiated placement requirements. In March 2023, FERC granted Consumers the authority to issue securities between April 1, 2023 and March 31, 2025.

Short-term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, investment-grade commercial paper notes with maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities and may have an aggregate principal amount outstanding of up to $500 million. While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At March 31, 2023, there were no commercial paper notes outstanding under this program.

In December 2022, Consumers renewed a short-term credit agreement with CMS Energy, permitting Consumers to borrow up to $500 million. At March 31, 2023, there were no outstanding borrowings under the agreement.

Dividend Restrictions: At March 31, 2023, payment of dividends by CMS Energy on its common stock was limited to $6.8 billion under provisions of the Michigan Business Corporation Act of 1972.

Under the provisions of its articles of incorporation, at March 31, 2023, Consumers had $1.9 billion of unrestricted retained earnings available to pay dividends on its common stock to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that, under a variety of circumstances, dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.

During the three months ended March 31, 2023, Consumers paid $287 million in dividends on its common stock to CMS Energy.

Issuance of Common Stock: Presented in the following table are details of CMS Energy’s forward sales contracts under its equity offering program at March 31, 2023:

			Forward Price Per Share
Contract Date	Maturity Date	Number of Shares	Initial		March 31, 2023
August 3, 2022	February 1, 2024	2,944,207		67.59		67.98
August 24, 2022	February 26, 2024	1,677,938		69.46		69.89
August 29, 2022	February 26, 2024	1,783,388		68.18		68.56

Under these contracts, CMS Energy may either settle physically by issuing shares of its common stock at the then-applicable forward sale price specified by the agreement or settle net by delivering or receiving cash or shares. CMS Energy may settle the contracts at any time through their maturity dates, and presently intends to physically settle the contracts by delivering shares of its common stock.

The initial forward price in the forward equity sale contracts includes a deduction for commissions and will be adjusted on a daily basis over the term based on an interest rate factor and decreased on certain dates by certain predetermined amounts to reflect expected dividend payments. No amounts are recorded on CMS Energy’s consolidated balance sheets until settlements of the forward equity sale contracts occur. If CMS Energy had elected to net share settle or net cash settle the contracts as of March 31, 2023, CMS Energy would not have been required to deliver shares or pay cash.

Consumers Energy Company

Debt Instrument [Line Items]

Financings and Capitalization

Financings and Capitalization

Financings: Presented in the following table is a summary of major long-term debt issuances during the three months ended March 31, 2023:

	Principal (In Millions)			Interest Rate (%)		Issuance Date	Maturity Date
NorthStar Clean Energy, including subsidiaries
Term loan facility1		$	85	variable		February 2023	September 2023
Total NorthStar Clean Energy, including subsidiaries		$	85
Consumers
First mortgage bonds		$	425	4.650	%	January 2023	March 2028
First mortgage bonds		700		4.625		February 2023	May 2033
Total Consumers		$	1,125
Total CMS Energy		$	1,210

1    In December 2022, a subsidiary of NorthStar Clean Energy entered into a $185 million unsecured term loan credit agreement. Under this credit agreement, a subsidiary of NorthStar Clean Energy borrowed $85 million in 2023. As of March 31, 2023, there was $185 million of loans outstanding bearing an interest rate of 5.806 percent under the unsecured term loan credit agreement.

In January 2023, Consumers entered into a bond purchase agreement to issue an aggregate principal amount of $400 million of first mortgage bonds through a private placement offering. The bonds, which were priced in November 2022, carry a weighted average interest rate of 5.251 percent and mature at varying dates between 2026 and 2037. The bonds are expected to be issued in May 2023. The proceeds of the bonds will be used to finance a portion of the purchase price of the New Covert Generating Facility and for general corporate purposes.

Presented in the following table is a summary of major long-term debt retirements during the three months ended March 31, 2023:

	Principal (In Millions)			Interest Rate (%)	Retirement Date	Maturity Date
Consumers
Term loan facility		$	1,000	variable	February 2023	January 2024

Credit Facilities: The following credit facilities with banks were available at March 31, 2023:

In Millions
Expiration Date	Amount of Facility			Amount Borrowed			Letters of Credit Outstanding			Amount Available
CMS Energy, parent only
December 14, 20271		$	550		$	—		$	21		$	529
September 22, 2024		50			—			50			—
NorthStar Clean Energy, including subsidiaries
September 25, 20252		$	37		$	—		$	37		$	—
Consumers3
December 14, 2027		$	1,100		$	—		$	27		$	1,073
November 18, 2024		250			—			27			223

1There were no borrowings under this facility during the three months ended March 31, 2023.

2This letter of credit facility is available to Aviator Wind Equity Holdings. For more information regarding Aviator Wind Equity Holdings, see Note 11, Variable Interest Entities.

3Obligations under these facilities are secured by first mortgage bonds of Consumers. There were no borrowings under these facilities during the three months ended March 31, 2023.

Regulatory Authorization for Financings: Consumers is required to maintain FERC authorization for financings. Any long-term issuances during the authorization period are exempt from FERC’s competitive bidding and negotiated placement requirements. In March 2023, FERC granted Consumers the authority to issue securities between April 1, 2023 and March 31, 2025.

Short-term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, investment-grade commercial paper notes with maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities and may have an aggregate principal amount outstanding of up to $500 million. While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At March 31, 2023, there were no commercial paper notes outstanding under this program.

In December 2022, Consumers renewed a short-term credit agreement with CMS Energy, permitting Consumers to borrow up to $500 million. At March 31, 2023, there were no outstanding borrowings under the agreement.

Dividend Restrictions: At March 31, 2023, payment of dividends by CMS Energy on its common stock was limited to $6.8 billion under provisions of the Michigan Business Corporation Act of 1972.

Under the provisions of its articles of incorporation, at March 31, 2023, Consumers had $1.9 billion of unrestricted retained earnings available to pay dividends on its common stock to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that, under a variety of circumstances, dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.

During the three months ended March 31, 2023, Consumers paid $287 million in dividends on its common stock to CMS Energy.

Issuance of Common Stock: Presented in the following table are details of CMS Energy’s forward sales contracts under its equity offering program at March 31, 2023:

			Forward Price Per Share
Contract Date	Maturity Date	Number of Shares	Initial		March 31, 2023
August 3, 2022	February 1, 2024	2,944,207		67.59		67.98
August 24, 2022	February 26, 2024	1,677,938		69.46		69.89
August 29, 2022	February 26, 2024	1,783,388		68.18		68.56

Under these contracts, CMS Energy may either settle physically by issuing shares of its common stock at the then-applicable forward sale price specified by the agreement or settle net by delivering or receiving cash or shares. CMS Energy may settle the contracts at any time through their maturity dates, and presently intends to physically settle the contracts by delivering shares of its common stock.

The initial forward price in the forward equity sale contracts includes a deduction for commissions and will be adjusted on a daily basis over the term based on an interest rate factor and decreased on certain dates by certain predetermined amounts to reflect expected dividend payments. No amounts are recorded on CMS Energy’s consolidated balance sheets until settlements of the forward equity sale contracts occur. If CMS Energy had elected to net share settle or net cash settle the contracts as of March 31, 2023, CMS Energy would not have been required to deliver shares or pay cash.