Financings And Capitalization

12 Months Ended

Dec. 31, 2016

5:Financings and Capitalization

Presented in the following table is CMS Energy’s long-term debt at December 31:



In Millions
	Interest Rate (%)		Maturity	2016			2015
CMS Energy, including Consumers
CMS Energy, parent only
Senior notes	6.550		2017		$	-		$	250
	5.050		2018			-			250
	8.750		2019			300			300
	6.250		2020			300			300
	5.050		2022			300			300
	3.875		2024			250			250
	3.600		2025			250			250
	3.000		2026			300			-
	2.950		2027			275			-
	4.700		2043			250			250
	4.875		2044			300			300
Total senior notes					$	2,525		$	2,450
Term loan facility	variable	1	2018			180			180
EnerBank
Certificates of deposit	1.505	2	2017-2026			1,198			1,098
Consumers						5,661			5,409
Total principal amount outstanding					$	9,564		$	9,137
Current amounts						(864)			(684)
Net unamortized discounts						(15)			(12)
Unamortized issuance costs						(45)			(41)
Total long-term debt					$	8,640		$	8,400

Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 0.85 percent (1.61 percent at December 31, 2016).

The weighted-average interest rate for EnerBank’s certificates of deposit was 1.51 percent at December 31, 2016 and 1.36 percent at December 31, 2015. EnerBank’s primary deposit product consists of brokered certificates of deposit with varying maturities and having a face value of $1,000.

Presented in the following table is Consumers’ long-term debt at December 31:



In Millions
	Interest Rate (%)		Maturity	2016			2015
Consumers
First mortgage bonds1	5.500		2016		$	-		$	173
	5.150		2017			250			250
	3.210		2017			100			100
	5.650		2018			250			250
	6.125		2019			350			350
	6.700		2019			500			500
	5.650		2020			300			300
	3.770		2020			100			100
	5.300		2022			250			250
	2.850		2022			375			375
	3.375		2023			325			325
	3.190		2024			52			52
	3.125		2024			250			250
	3.390		2027			35			35
	5.800		2035			175			175
	6.170		2040			50			50
	4.970		2040			50			50
	4.310		2042			263			263
	3.950		2043			425			425
	4.100		2045			250			250
	3.250		2046			450			-
	4.350		2064			250			250
Total first mortgage bonds					$	5,050		$	4,773
Securitization bonds	2.790	2	2020-2029	3		328			353
Senior notes	6.875		2018			180			180
Tax-exempt pollution control revenue bonds	various		2018-2035			103			103
Total principal amount outstanding					$	5,661		$	5,409
Current amounts						(375)			(198)
Net unamortized discounts						(8)			(5)
Unamortized issuance costs						(25)			(23)
Total long-term debt					$	5,253		$	5,183

The weighted-average interest rate for Consumers’ first mortgage bonds was 4.57 percent at December 31, 2016 and 4.73 percent at December 31, 2015.

The weighted-average interest rate for Consumers’ securitization bonds issued through its subsidiary Consumers 2014 Securitization Funding was 2.79 percent at December 31, 2016 and 2.69 percent at December 31, 2015.

Principal and interest payments are made semiannually.

Financings: Presented in the following table is a summary of major long-term debt transactions during the year ended December 31, 2016:



	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy, parent only
Senior notes		$	300	3.000	%	May 2016	May 2026
Senior notes			275	2.950		November 2016	February 2027
Total CMS Energy, parent only		$	575
Consumers
First mortgage bonds		$	450	3.250	%	August 2016	August 2046
Total Consumers		$	450
Total CMS Energy		$	1,025
Debt retirements
CMS Energy, parent only
Senior notes		$	250	6.550	%	December 2016	July 2017
Senior notes			250	5.050		December 2016	February 2018
Total CMS Energy, parent only		$	500
Consumers
First mortgage bonds		$	173	5.500	%	August 2016	August 2016
Total Consumers		$	173
Total CMS Energy		$	673

First Mortgage Bonds: Consumers secures its first mortgage bonds by a mortgage and lien on substantially all of its property. Consumers’ ability to issue first mortgage bonds is restricted by certain provisions in the First Mortgage Bond Indenture and the need for regulatory approvals under federal law. Restrictive issuance provisions in the First Mortgage Bond Indenture include achieving a two-times interest coverage ratio and having sufficient unfunded net property additions.

Term Loan: In April 2016, the maturity date of CMS Energy’s $180 million term loan was extended by one year, through April 2018.

Regulatory Authorization for Financings: Consumers is required to maintain FERC authorization for financings. In June 2016, Consumers received authorization from FERC to have outstanding, at any one time, up to $800 million of secured and unsecured short-term securities for general corporate purposes. At December 31, 2016, Consumers had entered into short-term borrowing programs allowing it to issue up to $800 million in short-term securities; $398 million of securities were outstanding under these programs. FERC has also authorized Consumers to issue and sell up to $1.8 billion of secured and unsecured long-term securities for general corporate purposes. The remaining availability was $1.3 billion at December 31, 2016. The authorizations were effective July 1, 2016 and terminate June 30, 2018. Any long-term issuances during the authorization period are exempt from FERC’s competitive bidding and negotiated placement requirements.

Securitization Bonds: Certain regulatory assets held by Consumers’ subsidiary, Consumers 2014 Securitization Funding, collateralize Consumers’ securitization bonds. The bondholders have no recourse to Consumers’ assets except for those held by the subsidiary that issued the bonds. Consumers collects securitization surcharges to cover the principal and interest on the bonds as well as certain other qualified costs. The surcharges collected are remitted to a trustee and are not available to creditors of Consumers or creditors of Consumers’ affiliates other than the subsidiary that issued the bonds.

Debt Maturities: At December 31, 2016, the aggregate annual contractual maturities for long-term debt for the next five years were:



In Millions
	2017			2018			2019			2020			2021
CMS Energy, including Consumers
Long-term debt		$	864		$	975		$	1,326		$	850		$	103
Consumers
Long-term debt		$	375		$	523		$	876		$	426		$	27

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at December 31, 2016:



In Millions
	Amount of			Amount			Letters of Credit			Amount
Expiration Date	Facility			Borrowed			Outstanding			Available
CMS Energy, parent only
May 27, 20211,3		$	550		$	-		$	1		$	549
Consumers
May 27, 20211,4		$	650		$	-		$	7		$	643
November 23, 20182,4			250			-			-			250
May 9, 20184			30			-			30			-

In May 2016, the expiration date of this revolving credit agreement was extended from 2020 to 2021.

In November 2016, the expiration date of this revolving credit agreement was extended from 2017 to 2018.

During the year ended December 31, 2016, CMS Energy’s average borrowings totaled $3 million with a weighted-average interest rate of 1.68 percent. Obligations under this facility are secured by Consumers common stock.

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Obligations under this facility are secured by first mortgage bonds of Consumers.

Short-term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, commercial paper notes with maturities of up to 365 days and that bear interest at fixed or floating rates. These issuances are supported by Consumers’ $650 million revolving credit facility and may have an aggregate principal amount outstanding of up to $500 million. While the amount of outstanding commercial paper does not reduce the revolver’s available capacity, Consumers does not intend to issue commercial paper in an amount exceeding the available revolver capacity. At December 31, 2016, $398 million of commercial paper notes with a weighted-average annual interest rate of 1.14 percent were outstanding under this program and are recorded as current notes payable on the consolidated balance sheets of CMS Energy and Consumers.

Dividend Restrictions: At December 31, 2016, payment of dividends by CMS Energy on its common stock was limited to $4.3 billion under provisions of the Michigan Business Corporation Act of 1972.

Under the provisions of its articles of incorporation, at December 31, 2016, Consumers had $1.0 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.

For the year ended December 31, 2016, Consumers paid $499 million in dividends on its common stock to CMS Energy.

Capitalization: The authorized capital stock of CMS Energy consists of:

350 million shares of CMS Energy Common Stock, par value $0.01 per share

10 million shares of CMS Energy Preferred Stock, par value $0.01 per share

Issuance of Common Stock: In April 2015, CMS Energy entered into an updated continuous equity offering program permitting it to sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $100 million. Presented in the following table are the transactions that CMS Energy entered into under the program:



	Number of	Average			Proceeds
	Shares Issued	Price per Share			(In Millions)
2015	888,610		$	33.76		$	30
2016	1,449,171			41.40			60
Total	2,337,781		$	38.50		$	90

Preferred Stock of Subsidiary: Presented in the following table are details about Consumers’ preferred stock outstanding:



				Optional			Number of	Balance
				Redemption			Shares	Outstanding
	Series			Price			Outstanding	(In Millions)
December 31								2016			2015
Cumulative, $100 par value, authorized 7,500,000 shares, with no mandatory redemption		$	4.50		$	110.00	373,148		$	37		$	37

Consumers Energy Company [Member]

Financings And Capitalization