Notes Receivable

9 Months Ended

Sep. 30, 2012

Notes Receivable

9:NOTES RECEIVABLE

Presented in the following table are details of CMS Energy’s and Consumers’ current and non‑current notes receivable:

In Millions
	September 30, 2012			December 31, 2011
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	27		$	19
Other			1			30
Non-current
EnerBank notes receivable, net of allowance for loan losses			486			461
Other			26			1
Total notes receivable		$	540		$	511
Consumers
Current
Other		$	-		$	23
Non-current
Other			26			1
Total notes receivable		$	26		$	24

EnerBank notes receivable are unsecured consumer installment loans for financing home improvements.

The allowance for loan losses is a valuation allowance to reflect estimated credit losses.  The allowance is increased by the provision for loan losses and decreased by loan charge-offs net of recoveries.  Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors.  Loan losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.

Presented in the following table are the changes in the allowance for loan losses:

In Millions
	Three Months Ended						Nine Months Ended
September 30	2012			2011			2012			2011
Balance at beginning of period		$	5		$	5		$	5		$	5
Charge-offs			(2)			(1)			(4)			(4)
Recoveries			1			-			1			1
Provision for loan losses			1			1			3			3
Balance at end of period		$	5		$	5		$	5		$	5

Loans that are 30 days or more past due are considered delinquent.  Presented in the following table is the delinquency status of EnerBank’s consumer loans:

In Millions
							Past Due
	Past Due			Past Due			Over			Total						Total
	30-59 Days			60-89 Days			90 Days			Delinquent			Current			Outstanding
September 30, 2012		$	1		$	1		$	1		$	3		$	510		$	513
December 31, 2011			1			-			1			2			478			480

At September 30, 2012 and December 31, 2011, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.

Consumers Energy Company [Member]

Notes Receivable

9:NOTES RECEIVABLE

Presented in the following table are details of CMS Energy’s and Consumers’ current and non‑current notes receivable:

In Millions
	September 30, 2012			December 31, 2011
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	27		$	19
Other			1			30
Non-current
EnerBank notes receivable, net of allowance for loan losses			486			461
Other			26			1
Total notes receivable		$	540		$	511
Consumers
Current
Other		$	-		$	23
Non-current
Other			26			1
Total notes receivable		$	26		$	24

EnerBank notes receivable are unsecured consumer installment loans for financing home improvements.

The allowance for loan losses is a valuation allowance to reflect estimated credit losses.  The allowance is increased by the provision for loan losses and decreased by loan charge-offs net of recoveries.  Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors.  Loan losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.

Presented in the following table are the changes in the allowance for loan losses:

In Millions
	Three Months Ended						Nine Months Ended
September 30	2012			2011			2012			2011
Balance at beginning of period		$	5		$	5		$	5		$	5
Charge-offs			(2)			(1)			(4)			(4)
Recoveries			1			-			1			1
Provision for loan losses			1			1			3			3
Balance at end of period		$	5		$	5		$	5		$	5

Loans that are 30 days or more past due are considered delinquent.  Presented in the following table is the delinquency status of EnerBank’s consumer loans:

In Millions
							Past Due
	Past Due			Past Due			Over			Total						Total
	30-59 Days			60-89 Days			90 Days			Delinquent			Current			Outstanding
September 30, 2012		$	1		$	1		$	1		$	3		$	510		$	513
December 31, 2011			1			-			1			2			478			480

At September 30, 2012 and December 31, 2011, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.