Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Schedule Of Effective Income Tax Rate Reconciliation



In Millions, Except Tax Rate
Years Ended December 31	2012				2011				2010
CMS Energy, including Consumers
Income from continuing operations before income taxes		$	620			$	604			$	587

Income tax expense at statutory rate			217				211				205
Increase (decrease) in income taxes from:
MCIT law change, net of federal effect¹			-				(32)				-
State and local income taxes, net of federal effect			27				21				26
Medicare Part D exempt income law change²			-				-				3
Other, net			1				(9)				(10)
Income tax expense		$	245			$	191			$	224
Effective tax rate			39.5	%			31.6	%			38.2	%
Consumers
Income from continuing operations before income taxes		$	736			$	734			$	688

Income tax expense at statutory rate			258				257				241
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect			36				24				26
Other, net			3				(14)				(13)
Income tax expense		$	297			$	267			$	254
Effective tax rate			40.4	%			36.4	%			36.9	%

For the year ended December 31, 2011, CMS Energy and Consumers remeasured their Michigan deferred income tax assets and liabilities due to the enactment in May 2011 of the MCIT, which became effective January 1, 2012. The MCIT, a simplified six percent corporate income tax, replaced the MBT, a complex multi-part tax. CMS Energy recognized a one-time non-cash deferred tax benefit of $32 million as a result of this remeasurement. Consumers recognized a $128 million regulatory asset (not including the effects of income tax gross-ups) related to this change in tax law.

For the year ended December 31, 2010, CMS Energy recognized deferred tax expense of $3 million to reflect the enactment of the Health Care Acts. The law change prospectively repealed the tax deduction for the portion of the health care costs reimbursed by the Medicare Part D subsidy for taxable years beginning after December 31, 2012.

Significant Components Of Income Tax Expense Table



In Millions
Years Ended December 31	2012			2011			2010
CMS Energy, including Consumers
Current income taxes
Federal		$	1		$	2		$	(21)
State and local			21			24			26
		$	22		$	26		$	5
Deferred income taxes
Federal		$	205		$	207		$	210
State and local			21			11			13
MCIT law change			-			(49)			-
		$	226		$	169		$	223
Deferred income tax credit			(3)			(4)			(4)
Tax expense		$	245		$	191		$	224
Consumers
Current income taxes
Federal		$	110		$	74		$	(17)
State and local			37			32			25
		$	147		$	106		$	8
Deferred income taxes
Federal		$	134		$	159		$	236
State and local			19			6			14
		$	153		$	165		$	250
Deferred income tax credit			(3)			(4)			(4)
Tax expense		$	297		$	267		$	254

Principal Components Of Deferred Income Tax Assets Table



In Millions
December 31	2012			2011
CMS Energy, including Consumers
Employee benefits		$	3		$	(126)
Gas inventory			(147)			(155)
Plant, property, and equipment			(1,783)			(1,668)
Net regulatory tax liability			131			70
Reserves and accruals			71			86
Securitized costs			(73)			(96)
Tax loss and credit carryforwards			733			806
Other			(15)			92
		$	(1,080)		$	(991)
Less valuation allowance			(3)			(20)
Total net deferred income tax liabilities		$	(1,083)		$	(1,011)
Deferred tax assets, net of valuation reserves		$	935		$	1,034
Deferred tax liabilities			(2,018)			(2,045)
Total net deferred income tax liabilities		$	(1,083)		$	(1,011)
Consumers
Employee benefits		$	(36)		$	(158)
Gas inventory			(147)			(155)
Plant, property, and equipment			(1,848)			(1,742)
Net regulatory tax liability			131			70
Reserves and accruals			41			44
Securitized costs			(73)			(96)
Tax loss and credit carryforwards			61			67
Other			(13)			81
		$	(1,884)		$	(1,889)
Less valuation allowance			(1)			(1)
Total net deferred income tax liabilities		$	(1,885)		$	(1,890)
Deferred tax assets, net of valuation reserves		$	232		$	261
Deferred tax liabilities			(2,117)			(2,151)
Total net deferred income tax liabilities		$	(1,885)		$	(1,890)

Loss And Credit Carryforwards Table



In Millions
	Gross Amount			Tax Attribute			Expiration
CMS Energy, including Consumers
Federal net operating loss carryforward		$	1,194		$	418	2024 – 2031
Local net operating loss carryforwards			433			4	2024 – 2031
State capital loss carryforward			18			1	2014 – 2015
Alternative minimum tax credits			270			270	No expiration
Charitable contribution carryover			6			2	2016
General business credits			38			38	2018 – 2031
Total tax attributes					$	733
Consumers
Federal net operating loss carryforward		$	163		$	56	2024 – 2031
State capital loss carryforward			10			1	2014 – 2015
Alternative minimum tax credits			2			2	No expiration
Charitable contribution carryover			6			2	2016
Total tax attributes					$	61

Reconciliation Of Beginning And Ending Uncertain Tax Benefits Table



In Millions
Years Ended December 31	2012			2011			2010
CMS Energy, including Consumers
Balance at beginning of period		$	4		$	4		$	62
Reductions for prior-year tax positions			(4)			(1)			(58)
Additions for prior-year tax positions			1			1			-
Balance at end of period		$	1		$	4		$	4
Consumers
Balance at beginning of period		$	4		$	3		$	57
Reductions for prior-year tax positions			(4)			-			(54)
Additions for prior-year tax positions			1			1			-
Balance at end of period		$	1		$	4		$	3

Consumers Energy Company [Member]

Schedule Of Effective Income Tax Rate Reconciliation



In Millions, Except Tax Rate
Years Ended December 31	2012				2011				2010
CMS Energy, including Consumers
Income from continuing operations before income taxes		$	620			$	604			$	587

Income tax expense at statutory rate			217				211				205
Increase (decrease) in income taxes from:
MCIT law change, net of federal effect¹			-				(32)				-
State and local income taxes, net of federal effect			27				21				26
Medicare Part D exempt income law change²			-				-				3
Other, net			1				(9)				(10)
Income tax expense		$	245			$	191			$	224
Effective tax rate			39.5	%			31.6	%			38.2	%
Consumers
Income from continuing operations before income taxes		$	736			$	734			$	688

Income tax expense at statutory rate			258				257				241
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect			36				24				26
Other, net			3				(14)				(13)
Income tax expense		$	297			$	267			$	254
Effective tax rate			40.4	%			36.4	%			36.9	%

Significant Components Of Income Tax Expense Table



In Millions
Years Ended December 31	2012			2011			2010
CMS Energy, including Consumers
Current income taxes
Federal		$	1		$	2		$	(21)
State and local			21			24			26
		$	22		$	26		$	5
Deferred income taxes
Federal		$	205		$	207		$	210
State and local			21			11			13
MCIT law change			-			(49)			-
		$	226		$	169		$	223
Deferred income tax credit			(3)			(4)			(4)
Tax expense		$	245		$	191		$	224
Consumers
Current income taxes
Federal		$	110		$	74		$	(17)
State and local			37			32			25
		$	147		$	106		$	8
Deferred income taxes
Federal		$	134		$	159		$	236
State and local			19			6			14
		$	153		$	165		$	250
Deferred income tax credit			(3)			(4)			(4)
Tax expense		$	297		$	267		$	254

Principal Components Of Deferred Income Tax Assets Table



In Millions
December 31	2012			2011
CMS Energy, including Consumers
Employee benefits		$	3		$	(126)
Gas inventory			(147)			(155)
Plant, property, and equipment			(1,783)			(1,668)
Net regulatory tax liability			131			70
Reserves and accruals			71			86
Securitized costs			(73)			(96)
Tax loss and credit carryforwards			733			806
Other			(15)			92
		$	(1,080)		$	(991)
Less valuation allowance			(3)			(20)
Total net deferred income tax liabilities		$	(1,083)		$	(1,011)
Deferred tax assets, net of valuation reserves		$	935		$	1,034
Deferred tax liabilities			(2,018)			(2,045)
Total net deferred income tax liabilities		$	(1,083)		$	(1,011)
Consumers
Employee benefits		$	(36)		$	(158)
Gas inventory			(147)			(155)
Plant, property, and equipment			(1,848)			(1,742)
Net regulatory tax liability			131			70
Reserves and accruals			41			44
Securitized costs			(73)			(96)
Tax loss and credit carryforwards			61			67
Other			(13)			81
		$	(1,884)		$	(1,889)
Less valuation allowance			(1)			(1)
Total net deferred income tax liabilities		$	(1,885)		$	(1,890)
Deferred tax assets, net of valuation reserves		$	232		$	261
Deferred tax liabilities			(2,117)			(2,151)
Total net deferred income tax liabilities		$	(1,885)		$	(1,890)

Loss And Credit Carryforwards Table



In Millions
	Gross Amount			Tax Attribute			Expiration
CMS Energy, including Consumers
Federal net operating loss carryforward		$	1,194		$	418	2024 – 2031
Local net operating loss carryforwards			433			4	2024 – 2031
State capital loss carryforward			18			1	2014 – 2015
Alternative minimum tax credits			270			270	No expiration
Charitable contribution carryover			6			2	2016
General business credits			38			38	2018 – 2031
Total tax attributes					$	733
Consumers
Federal net operating loss carryforward		$	163		$	56	2024 – 2031
State capital loss carryforward			10			1	2014 – 2015
Alternative minimum tax credits			2			2	No expiration
Charitable contribution carryover			6			2	2016
Total tax attributes					$	61

Reconciliation Of Beginning And Ending Uncertain Tax Benefits Table



In Millions
Years Ended December 31	2012			2011			2010
CMS Energy, including Consumers
Balance at beginning of period		$	4		$	4		$	62
Reductions for prior-year tax positions			(4)			(1)			(58)
Additions for prior-year tax positions			1			1			-
Balance at end of period		$	1		$	4		$	4
Consumers
Balance at beginning of period		$	4		$	3		$	57
Reductions for prior-year tax positions			(4)			-			(54)
Additions for prior-year tax positions			1			1			-
Balance at end of period		$	1		$	4		$	3

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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