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Asset Retirement Obligations
12 Months Ended
Dec. 31, 2016
Asset Retirement Obligations

11: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. 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.

CMS Energy and Consumers calculate the fair value of ARO liabilities using an expected present-value technique that reflects assumptions about costs and inflation, and uses a credit-adjusted risk-free rate to discount the expected cash flows. CMS Energy’s ARO liabilities are primarily at Consumers. As a regulated entity, Consumers defers the effects of any changes in assumptions on the fair values of its ARO liabilities, adjusting the associated regulatory assets or liabilities rather than recognizing such effects in earnings.

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:



 

 

 



 

 

 

Company and ARO Description

In-Service 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 

 

Gas distribution cut, purge, and cap

Various 

Gas distribution mains and services 

 

Asbestos abatement

1973 

Electric and gas utility plant 

 

Closure of renewable generation assets

2012,2014,2016 

Wind and solar generation facilities 

 

Consumers

 

 

 

Closure of coal ash disposal areas

Various 

Generating plants coal ash areas 

 

Gas distribution cut, purge, and cap

Various 

Gas distribution mains and services 

 

Asbestos abatement

1973 

Electric and gas utility plant 

 

Closure of renewable generation assets

2012,2014,2016 

Wind and solar 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

12/31/2015 

Incurred 

Settled 

Accretion 

Revisions 

12/31/2016 

 

CMS Energy, including Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumers

 

$

438 

 

$

 

$

(18)

 

$

23 

 

$

 -

 

$

446 

 

Gas treating plant and gas wells

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

Total CMS Energy

 

$

439 

 

$

 

$

(18)

 

$

23 

 

$

 -

 

$

447 

 

Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal ash disposal areas

 

$

200 

 

$

 -

 

$

(8)

 

$

 

$

 -

 

$

201 

 

Gas distribution cut, purge, and cap

 

 

178 

 

 

 

 

(9)

 

 

11 

 

 

 -

 

 

182 

 

Asbestos abatement

 

 

54 

 

 

 -

 

 

(1)

 

 

 

 

 -

 

 

56 

 

Renewable generation assets

 

 

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 

Total Consumers

 

$

438 

 

$

 

$

(18)

 

$

23 

 

$

 -

 

$

446 

 



                    



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In Millions  



ARO 

 

 

 

 

 

 

 

 

 

 

 

 

ARO 

 



Liability 

 

 

 

 

 

 

 

 

 

Cash flow 

Liability 

 

Company and ARO Description

12/31/2014 

Incurred 

Settled 

Accretion 

Revisions 

12/31/2015 

 

CMS Energy, including Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumers

 

$

339 

 

$

11 

 

$

(6)

 

$

20 

 

$

74 

 

$

438 

 

Gas treating plant and gas wells

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

Total CMS Energy

 

$

340 

 

$

11 

 

$

(6)

 

$

20 

 

$

74 

 

$

439 

 

Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal ash disposal areas

 

$

120 

 

$

 -

 

$

 -

 

$

 

$

74 

 

$

200 

 

Gas distribution cut, purge, and cap

 

 

162 

 

 

11 

 

 

(6)

 

 

11 

 

 

 -

 

 

178 

 

Asbestos abatement

 

 

51 

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

54 

 

Renewable generation assets

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

Total Consumers

 

$

339 

 

$

11 

 

$

(6)

 

$

20 

 

$

74 

 

$

438 

 



In 2015, Consumers increased its ARO liability for coal ash disposal areas. The increase was attributable to proposed changes in state regulations based on the EPA’s final rule regarding CCRs, which provided Consumers with sufficient information to reasonably estimate an additional ARO liability associated with closure work at certain waste management facilities.

Consumers Energy Company [Member]  
Asset Retirement Obligations

11: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. 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.

CMS Energy and Consumers calculate the fair value of ARO liabilities using an expected present-value technique that reflects assumptions about costs and inflation, and uses a credit-adjusted risk-free rate to discount the expected cash flows. CMS Energy’s ARO liabilities are primarily at Consumers. As a regulated entity, Consumers defers the effects of any changes in assumptions on the fair values of its ARO liabilities, adjusting the associated regulatory assets or liabilities rather than recognizing such effects in earnings.

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:



 

 

 



 

 

 

Company and ARO Description

In-Service 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 

 

Gas distribution cut, purge, and cap

Various 

Gas distribution mains and services 

 

Asbestos abatement

1973 

Electric and gas utility plant 

 

Closure of renewable generation assets

2012,2014,2016 

Wind and solar generation facilities 

 

Consumers

 

 

 

Closure of coal ash disposal areas

Various 

Generating plants coal ash areas 

 

Gas distribution cut, purge, and cap

Various 

Gas distribution mains and services 

 

Asbestos abatement

1973 

Electric and gas utility plant 

 

Closure of renewable generation assets

2012,2014,2016 

Wind and solar 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

12/31/2015 

Incurred 

Settled 

Accretion 

Revisions 

12/31/2016 

 

CMS Energy, including Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumers

 

$

438 

 

$

 

$

(18)

 

$

23 

 

$

 -

 

$

446 

 

Gas treating plant and gas wells

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

Total CMS Energy

 

$

439 

 

$

 

$

(18)

 

$

23 

 

$

 -

 

$

447 

 

Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal ash disposal areas

 

$

200 

 

$

 -

 

$

(8)

 

$

 

$

 -

 

$

201 

 

Gas distribution cut, purge, and cap

 

 

178 

 

 

 

 

(9)

 

 

11 

 

 

 -

 

 

182 

 

Asbestos abatement

 

 

54 

 

 

 -

 

 

(1)

 

 

 

 

 -

 

 

56 

 

Renewable generation assets

 

 

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 

Total Consumers

 

$

438 

 

$

 

$

(18)

 

$

23 

 

$

 -

 

$

446 

 



                    



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In Millions  



ARO 

 

 

 

 

 

 

 

 

 

 

 

 

ARO 

 



Liability 

 

 

 

 

 

 

 

 

 

Cash flow 

Liability 

 

Company and ARO Description

12/31/2014 

Incurred 

Settled 

Accretion 

Revisions 

12/31/2015 

 

CMS Energy, including Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumers

 

$

339 

 

$

11 

 

$

(6)

 

$

20 

 

$

74 

 

$

438 

 

Gas treating plant and gas wells

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

Total CMS Energy

 

$

340 

 

$

11 

 

$

(6)

 

$

20 

 

$

74 

 

$

439 

 

Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal ash disposal areas

 

$

120 

 

$

 -

 

$

 -

 

$

 

$

74 

 

$

200 

 

Gas distribution cut, purge, and cap

 

 

162 

 

 

11 

 

 

(6)

 

 

11 

 

 

 -

 

 

178 

 

Asbestos abatement

 

 

51 

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

54 

 

Renewable generation assets

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

Total Consumers

 

$

339 

 

$

11 

 

$

(6)

 

$

20 

 

$

74 

 

$

438 

 



In 2015, Consumers increased its ARO liability for coal ash disposal areas. The increase was attributable to proposed changes in state regulations based on the EPA’s final rule regarding CCRs, which provided Consumers with sufficient information to reasonably estimate an additional ARO liability associated with closure work at certain waste management facilities.