Asset Retirement Obligations

12 Months Ended

Dec. 31, 2013

Asset Retirement Obligations

10:ASSET RETIREMENT OBLIGATIONS

CMS Energy and Consumers record the fair value of the cost to remove assets at the end of their useful lives, if there is a legal obligation to remove them.  No market risk premiums were included in CMS Energy’s and Consumers’ ARO fair value estimates since reasonable estimates could not be made.  If a five percent market risk premium were assumed, CMS Energy’s and Consumers’ ARO liabilities would be $16 million higher at December 31, 2013 and December 31, 2012.  In 2012, Consumers updated the ARO for coal ash disposal areas to reflect a revised estimate of future obligations and recorded the initial estimate for the Lake Winds® Energy Park ARO.

If a reasonable estimate of fair value cannot be made in the period in which the ARO is incurred, such as for assets with indeterminate lives, the liability is recognized when a reasonable estimate of fair value can be made.  CMS Energy and Consumers have not recorded liabilities for assets that have insignificant cumulative disposal costs, such as substation batteries.

Presented below are the categories of assets that CMS Energy and Consumers have legal obligations to remove at the end of their useful lives and for which they have an ARO liability recorded:

	In-Service
Company and ARO Description	Date	Long-Lived Assets
CMS Energy, including Consumers
Closure of gas treating plant and gas wells	Various	Gas transmission and storage
Closure of coal ash disposal areas	Various	Generating plants coal ash areas
Closure of wells at gas storage fields	Various	Gas storage fields
Asbestos abatement	1973	Electric and gas utility plant
Gas distribution cut, purge, and cap	Various	Gas distribution mains and services
Closure of wind park	2012	Wind generation facilities
Consumers
Closure of coal ash disposal areas	Various	Generating plants coal ash areas
Closure of wells at gas storage fields	Various	Gas storage fields
Asbestos abatement	1973	Electric and gas utility plant
Gas distribution cut, purge, and cap	Various	Gas distribution mains and services
Closure of wind park	2012	Wind generation facilities

No assets have been restricted for purposes of settling AROs.

Presented in the following tables are the changes in CMS Energy’s and Consumers’ ARO liabilities:

In Millions
	ARO															ARO
	Liability												Cash flow			Liability
Company and ARO Description	12/31/2012			Incurred			Settled1			Accretion			Revisions			12/31/2013
CMS Energy, including Consumers
Gas treating plant and gas wells		$	1		$	-		$	-		$	-		$	-		$	1
Consumers			311			(3)			(6)			18			4			324
Total CMS Energy		$	312		$	(3)		$	(6)		$	18		$	4		$	325
Consumers
Coal ash disposal areas		$	114		$	-		$	(1)		$	5		$	-		$	118
Asbestos abatement			43			-			(1)			3			4			49
Gas distribution cut, purge,    and cap			151			(3)			(4)			10			-			154
Wind park			3			-			-			-			-			3
Total Consumers		$	311		$	(3)		$	(6)		$	18		$	4		$	324

In Millions
	ARO															ARO
	Liability												Cash flow			Liability
Company and ARO Description	12/31/2011			Incurred			Settled1			Accretion			Revisions			12/31/2012
CMS Energy, including Consumers
Gas treating plant and gas wells		$	1		$	-		$	-		$	-		$	-		$	1
Consumers			253			7			(8)			19			40			311
Total CMS Energy		$	254		$	7		$	(8)		$	19		$	40		$	312
Consumers
Coal ash disposal areas		$	70		$	-		$	(3)		$	7		$	40		$	114
Wells at gas storage fields			1			-			(1)			-			-			-
Asbestos abatement			42			-			(1)			2			-			43
Gas distribution cut, purge,    and cap			140			4			(3)			10			-			151
Wind park			-			3			-			-			-			3
Total Consumers		$	253		$	7		$	(8)		$	19		$	40		$	311

1Cash payments of $6 million in 2013 and $8 million in 2012 were included in other current and non-current assets and liabilities as a component of net cash provided by operating activities in CMS Energy’s and Consumers’ consolidated statements of cash flow.

Consumers Energy Company [Member]

Asset Retirement Obligations

10:ASSET RETIREMENT OBLIGATIONS

CMS Energy and Consumers record the fair value of the cost to remove assets at the end of their useful lives, if there is a legal obligation to remove them.  No market risk premiums were included in CMS Energy’s and Consumers’ ARO fair value estimates since reasonable estimates could not be made.  If a five percent market risk premium were assumed, CMS Energy’s and Consumers’ ARO liabilities would be $16 million higher at December 31, 2013 and December 31, 2012.  In 2012, Consumers updated the ARO for coal ash disposal areas to reflect a revised estimate of future obligations and recorded the initial estimate for the Lake Winds® Energy Park ARO.

If a reasonable estimate of fair value cannot be made in the period in which the ARO is incurred, such as for assets with indeterminate lives, the liability is recognized when a reasonable estimate of fair value can be made.  CMS Energy and Consumers have not recorded liabilities for assets that have insignificant cumulative disposal costs, such as substation batteries.

Presented below are the categories of assets that CMS Energy and Consumers have legal obligations to remove at the end of their useful lives and for which they have an ARO liability recorded:

	In-Service
Company and ARO Description	Date	Long-Lived Assets
CMS Energy, including Consumers
Closure of gas treating plant and gas wells	Various	Gas transmission and storage
Closure of coal ash disposal areas	Various	Generating plants coal ash areas
Closure of wells at gas storage fields	Various	Gas storage fields
Asbestos abatement	1973	Electric and gas utility plant
Gas distribution cut, purge, and cap	Various	Gas distribution mains and services
Closure of wind park	2012	Wind generation facilities
Consumers
Closure of coal ash disposal areas	Various	Generating plants coal ash areas
Closure of wells at gas storage fields	Various	Gas storage fields
Asbestos abatement	1973	Electric and gas utility plant
Gas distribution cut, purge, and cap	Various	Gas distribution mains and services
Closure of wind park	2012	Wind generation facilities

No assets have been restricted for purposes of settling AROs.

Presented in the following tables are the changes in CMS Energy’s and Consumers’ ARO liabilities:

In Millions
	ARO															ARO
	Liability												Cash flow			Liability
Company and ARO Description	12/31/2012			Incurred			Settled1			Accretion			Revisions			12/31/2013
CMS Energy, including Consumers
Gas treating plant and gas wells		$	1		$	-		$	-		$	-		$	-		$	1
Consumers			311			(3)			(6)			18			4			324
Total CMS Energy		$	312		$	(3)		$	(6)		$	18		$	4		$	325
Consumers
Coal ash disposal areas		$	114		$	-		$	(1)		$	5		$	-		$	118
Asbestos abatement			43			-			(1)			3			4			49
Gas distribution cut, purge,    and cap			151			(3)			(4)			10			-			154
Wind park			3			-			-			-			-			3
Total Consumers		$	311		$	(3)		$	(6)		$	18		$	4		$	324

In Millions
	ARO															ARO
	Liability												Cash flow			Liability
Company and ARO Description	12/31/2011			Incurred			Settled1			Accretion			Revisions			12/31/2012
CMS Energy, including Consumers
Gas treating plant and gas wells		$	1		$	-		$	-		$	-		$	-		$	1
Consumers			253			7			(8)			19			40			311
Total CMS Energy		$	254		$	7		$	(8)		$	19		$	40		$	312
Consumers
Coal ash disposal areas		$	70		$	-		$	(3)		$	7		$	40		$	114
Wells at gas storage fields			1			-			(1)			-			-			-
Asbestos abatement			42			-			(1)			2			-			43
Gas distribution cut, purge,    and cap			140			4			(3)			10			-			151
Wind park			-			3			-			-			-			3
Total Consumers		$	253		$	7		$	(8)		$	19		$	40		$	311

1Cash payments of $6 million in 2013 and $8 million in 2012 were included in other current and non-current assets and liabilities as a component of net cash provided by operating activities in CMS Energy’s and Consumers’ consolidated statements of cash flow.