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Financial Instruments
 12 Months Ended
Dec. 31, 2015
Financial Instruments

7:Financial Instruments

Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value. The table does not include information on cash, cash equivalents, short-term accounts and notes receivable, short-term investments, and current liabilities since the carrying amounts of these items approximate their fair values because of their short-term nature. For information about assets and liabilities recorded at fair value and for additional details regarding the fair value hierarchy, see Note 6, Fair Value Measurements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In Millions  

 

December 31, 2015

 

December 31, 2014

 

 

 

Fair Value

 

 

Fair Value

 

 

Carrying 

 

 

 

Level

 

Carrying 

 

 

 

Level

 

 

Amount 

Total 

 1  2  3 

 

Amount 

Total 

 1  2  3 

 

CMS Energy, including Consumers

 

Securities held
   to maturity

 

$

 11 

 

$

 11 

 

$

 -

 

$

 11 

 

$

 -

 

 

$

 11 

 

$

 11 

 

$

 -

 

$

 11 

 

$

 -

 

Notes
   payable1

 

 

 14 

 

 

 14 

 

 

 -

 

 

 -

 

 

 14 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

Notes
   receivable2

 

 

 1,161 

 

 

 1,228 

 

 

 -

 

 

 -

 

 

 1,228 

 

 

 

 938 

 

 

 995 

 

 

 -

 

 

 -

 

 

 995 

 

Long-term
   debt3

 

 

 9,125 

 

 

 9,599 

 

 

 -

 

 

 8,648 

 

 

 951 

 

 

 

 8,535 

 

 

 9,285 

 

 

 -

 

 

 8,252 

 

 

 1,033 

 

Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term
   debt4

 

$

 5,404 

 

$

 5,684 

 

$

 -

 

$

 4,733 

 

$

 951 

 

 

$

 5,278 

 

$

 5,749 

 

$

 -

 

$

 4,716 

 

$

 1,033 

 

 

1

Includes current portion of notes payable of $1 million at December 31, 2015.

2

Includes current portion of notes receivable of $144 million at December 31, 2015 and $138 million at December 31, 2014.

3

Includes current portion of long-term debt of $684 million at December 31, 2015 and $519 million at December 31, 2014.

4

Includes current portion of long-term debt of $198 million at December 31, 2015 and $124 million at December 31, 2014.

Notes receivable consist of EnerBank’s fixed-rate installment loans. EnerBank estimates the fair value of these loans using a discounted cash flows technique that incorporates market interest rates as well as assumptions about the remaining life of the loans and credit risk.

CMS Energy and Consumers estimate the fair value of their long-term debt using quoted prices from market trades of the debt, if available. In the absence of quoted prices, CMS Energy and Consumers calculate market yields and prices for the debt using a matrix method that incorporates market data for similarly rated debt. Depending on the information available, other valuation techniques and models may be used that rely on assumptions that cannot be observed or confirmed through market transactions.

The effects of third-party credit enhancements are excluded from the fair value measurements of long-term debt. At December 31, 2015 and 2014, CMS Energy’s long-term debt included $103 million principal amount that was supported by third-party credit enhancements. This entire principal amount was at Consumers.

Presented in the following table are CMS Energy’s and Consumers’ investment securities classified as available for sale or held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In Millions  

 

December 31, 2015

 

December 31, 2014

 

 

 

Unrealized 

Unrealized 

Fair 

 

 

Unrealized 

Unrealized 

Fair 

 

 

Cost 

Gains 

Losses 

Value 

 

Cost 

Gains 

Losses 

Value 

 

CMS Energy, including Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DB SERP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

$

 152 

 

$

 -

 

$

 6 

 

$

 146 

 

 

$

 129 

 

$

 -

 

$

 2 

 

$

 127 

 

Held to maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities

 

 

 11 

 

 

 -

 

 

 -

 

 

 11 

 

 

 

 11 

 

 

 -

 

 

 -

 

 

 11 

 

Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DB SERP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

$

 108 

 

$

 -

 

$

 4 

 

$

 104 

 

 

$

 92 

 

$

 -

 

$

 2 

 

$

 90 

 

CMS Energy
   common stock

 

 

 4 

 

 

 25 

 

 

 -

 

 

 29 

 

 

 

 5 

 

 

 33 

 

 

 -

 

 

 38 

 

 

The mutual funds classified as available for sale hold primarily fixed-income instruments of varying maturities. Debt securities classified as held to maturity consist primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank.

Presented in the following table is a summary of the sales activity for CMS Energy’s and Consumers’ investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In Millions  

Years Ended December 31

 2015  2014  2013 

 

CMS Energy, including Consumers

 

 

 

 

 

 

 

 

 

 

Proceeds from sales of investment securities

 

$

 3 

 

$

 8 

 

$

 3 

 

Consumers

 

 

 

 

 

 

 

 

 

 

Proceeds from sales of investment securities

 

$

 2 

 

$

 6 

 

$

 2 

 

 

The sales proceeds for all periods represent sales of investments that were held within the DB SERP and classified as available for sale. Realized gains and losses on the sales were insignificant for CMS Energy and Consumers during each period.

Consumers recognized gains of $9 million in 2015 and $4 million in 2013 from transferring shares of CMS Energy common stock to a related charitable foundation. The gains reflected the excess of fair value over cost of the stock donated and were recorded in other income on Consumers’ consolidated statements of income. The gains were eliminated on CMS Energy’s consolidated statements of income.

Consumers Energy Company [Member]  
Financial Instruments

7:Financial Instruments

Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value. The table does not include information on cash, cash equivalents, short-term accounts and notes receivable, short-term investments, and current liabilities since the carrying amounts of these items approximate their fair values because of their short-term nature. For information about assets and liabilities recorded at fair value and for additional details regarding the fair value hierarchy, see Note 6, Fair Value Measurements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In Millions  

 

December 31, 2015

 

December 31, 2014

 

 

 

Fair Value

 

 

Fair Value

 

 

Carrying 

 

 

 

Level

 

Carrying 

 

 

 

Level

 

 

Amount 

Total 

 1  2  3 

 

Amount 

Total 

 1  2  3 

 

CMS Energy, including Consumers

 

Securities held
   to maturity

 

$

 11 

 

$

 11 

 

$

 -

 

$

 11 

 

$

 -

 

 

$

 11 

 

$

 11 

 

$

 -

 

$

 11 

 

$

 -

 

Notes
   payable1

 

 

 14 

 

 

 14 

 

 

 -

 

 

 -

 

 

 14 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

Notes
   receivable2

 

 

 1,161 

 

 

 1,228 

 

 

 -

 

 

 -

 

 

 1,228 

 

 

 

 938 

 

 

 995 

 

 

 -

 

 

 -

 

 

 995 

 

Long-term
   debt3

 

 

 9,125 

 

 

 9,599 

 

 

 -

 

 

 8,648 

 

 

 951 

 

 

 

 8,535 

 

 

 9,285 

 

 

 -

 

 

 8,252 

 

 

 1,033 

 

Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term
   debt4

 

$

 5,404 

 

$

 5,684 

 

$

 -

 

$

 4,733 

 

$

 951 

 

 

$

 5,278 

 

$

 5,749 

 

$

 -

 

$

 4,716 

 

$

 1,033 

 

 

1

Includes current portion of notes payable of $1 million at December 31, 2015.

2

Includes current portion of notes receivable of $144 million at December 31, 2015 and $138 million at December 31, 2014.

3

Includes current portion of long-term debt of $684 million at December 31, 2015 and $519 million at December 31, 2014.

4

Includes current portion of long-term debt of $198 million at December 31, 2015 and $124 million at December 31, 2014.

Notes receivable consist of EnerBank’s fixed-rate installment loans. EnerBank estimates the fair value of these loans using a discounted cash flows technique that incorporates market interest rates as well as assumptions about the remaining life of the loans and credit risk.

CMS Energy and Consumers estimate the fair value of their long-term debt using quoted prices from market trades of the debt, if available. In the absence of quoted prices, CMS Energy and Consumers calculate market yields and prices for the debt using a matrix method that incorporates market data for similarly rated debt. Depending on the information available, other valuation techniques and models may be used that rely on assumptions that cannot be observed or confirmed through market transactions.

The effects of third-party credit enhancements are excluded from the fair value measurements of long-term debt. At December 31, 2015 and 2014, CMS Energy’s long-term debt included $103 million principal amount that was supported by third-party credit enhancements. This entire principal amount was at Consumers.

Presented in the following table are CMS Energy’s and Consumers’ investment securities classified as available for sale or held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In Millions  

 

December 31, 2015

 

December 31, 2014

 

 

 

Unrealized 

Unrealized 

Fair 

 

 

Unrealized 

Unrealized 

Fair 

 

 

Cost 

Gains 

Losses 

Value 

 

Cost 

Gains 

Losses 

Value 

 

CMS Energy, including Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DB SERP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

$

 152 

 

$

 -

 

$

 6 

 

$

 146 

 

 

$

 129 

 

$

 -

 

$

 2 

 

$

 127 

 

Held to maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities

 

 

 11 

 

 

 -

 

 

 -

 

 

 11 

 

 

 

 11 

 

 

 -

 

 

 -

 

 

 11 

 

Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DB SERP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

$

 108 

 

$

 -

 

$

 4 

 

$

 104 

 

 

$

 92 

 

$

 -

 

$

 2 

 

$

 90 

 

CMS Energy
   common stock

 

 

 4 

 

 

 25 

 

 

 -

 

 

 29 

 

 

 

 5 

 

 

 33 

 

 

 -

 

 

 38 

 

 

The mutual funds classified as available for sale hold primarily fixed-income instruments of varying maturities. Debt securities classified as held to maturity consist primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank.

Presented in the following table is a summary of the sales activity for CMS Energy’s and Consumers’ investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In Millions  

Years Ended December 31

 2015  2014  2013 

 

CMS Energy, including Consumers

 

 

 

 

 

 

 

 

 

 

Proceeds from sales of investment securities

 

$

 3 

 

$

 8 

 

$

 3 

 

Consumers

 

 

 

 

 

 

 

 

 

 

Proceeds from sales of investment securities

 

$

 2 

 

$

 6 

 

$

 2 

 

 

The sales proceeds for all periods represent sales of investments that were held within the DB SERP and classified as available for sale. Realized gains and losses on the sales were insignificant for CMS Energy and Consumers during each period.

Consumers recognized gains of $9 million in 2015 and $4 million in 2013 from transferring shares of CMS Energy common stock to a related charitable foundation. The gains reflected the excess of fair value over cost of the stock donated and were recorded in other income on Consumers’ consolidated statements of income. The gains were eliminated on CMS Energy’s consolidated statements of income.