Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Schedule Of Effective Income Tax Rate Reconciliation

In Millions, Except Tax Rate
Years Ended December 31	2016				2015				2014
CMS Energy, including Consumers
Income from continuing operations before income taxes		$	826			$	796			$	729
Income tax expense at statutory rate			289				279				255
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect			37				39				36
Accelerated flow-through of regulatory tax benefits1			(39)				(39)				(39)
Employee share-based awards2			(7)				-				-
Other, net			(7)				(8)				(2)
Income tax expense		$	273			$	271			$	250
Effective tax rate			33.1	%			34.0	%			34.3	%
Consumers
Income from continuing operations before income taxes		$	936			$	896			$	873
Income tax expense at statutory rate			328				314				306
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect			44				42				42
Accelerated flow-through of regulatory tax benefits1			(39)				(39)				(39)
Employee share-based awards2			(6)				-				-
Other, net			(7)				(15)				(3)
Income tax expense		$	320			$	302			$	306
Effective tax rate			34.2	%			33.7	%			35.1	%

¹ Since 2014, Consumers has followed a regulatory treatment ordered by the MPSC that accelerates the return of certain income tax benefits to customers. This change, which also accelerates Consumers’ recognition of the income tax benefits, reduced Consumers’ income tax expense by $39 million for each of the years ended December 31, 2016, 2015, and 2014.

² CMS Energy and Consumers elected to adopt ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, as of January 1, 2016. For further details on the implementation of this standard, see Note 2, New Accounting Standards.

Significant Components Of Income Tax Expense

In Millions
Years Ended December 31	2016			2015			2014
CMS Energy, including Consumers
Current income taxes
Federal		$	-		$	-		$	-
State and local			9			24			24
		$	9		$	24		$	24
Deferred income taxes
Federal		$	200		$	192		$	198
State and local			47			36			31
		$	247		$	228		$	229
Deferred income tax credit			17			19			(3)
Tax expense		$	273		$	271		$	250
Consumers
Current income taxes
Federal		$	9		$	66		$	8
State and local			22			32			36
		$	31		$	98		$	44
Deferred income taxes
Federal		$	227		$	153		$	236
State and local			45			32			29
		$	272		$	185		$	265
Deferred income tax credit			17			19			(3)
Tax expense		$	320		$	302		$	306

Principal Components Of Deferred Income Tax Assets And Liailities

In Millions
December 31	2016			2015
CMS Energy, including Consumers
Employee benefits		$	(158)		$	(127)
Gas inventory			(65)			(96)
Plant, property, and equipment			(2,902)			(2,429)
Net regulatory tax liability			27			50
Reserves and accruals			69			59
Securitized costs			(118)			(122)
Tax loss and credit carryforwards			871			657
Other			(6)			(5)
		$	(2,282)		$	(2,013)
Less valuation allowance			(5)			(4)
Total net deferred income tax liabilities		$	(2,287)		$	(2,017)
Deferred tax assets, net of valuation reserves		$	962		$	762
Deferred tax liabilities			(3,249)			(2,779)
Total net deferred income tax liabilities		$	(2,287)		$	(2,017)
Consumers
Employee benefits		$	(181)		$	(156)
Gas inventory			(65)			(96)
Plant, property, and equipment			(2,924)			(2,457)
Net regulatory tax liability			27			50
Reserves and accruals			37			30
Securitized costs			(118)			(122)
Tax loss and credit carryforwards			190			46
Other			(8)			(5)
Total net deferred income tax liabilities		$	(3,042)		$	(2,710)
Deferred tax assets, net of valuation reserves		$	254		$	126
Deferred tax liabilities			(3,296)			(2,836)
Total net deferred income tax liabilities		$	(3,042)		$	(2,710)

Loss And Credit Carryforwards

In Millions
	Gross Amount			Tax Attribute			Expiration
CMS Energy, including Consumers
Federal net operating loss carryforward		$	1,415		$	495	2025 – 2036
Local net operating loss carryforwards			408			4	2023 – 2036
Alternative minimum tax credits			270			270	No expiration
General business credits			102			102	2018 – 2036
Total tax attributes					$	871
Consumers
Federal net operating loss carryforward		$	447		$	157	2025 – 2036
General business credits			33			33	2032 – 2036
Total tax attributes					$	190

Reconciliation Of Beginning And Ending Uncertain Tax Benefits

In Millions
Years Ended December 31	2016			2015			2014
CMS Energy, including Consumers
Balance at beginning of period		$	6		$	5		$	4
Additions for current-year tax positions			-			1			2
Additions for prior-year tax positions			-			1			1
Reductions for prior-year tax positions			-			(1)			(2)
Settlements			(1)			-			-
Balance at end of period		$	5		$	6		$	5
Consumers
Balance at beginning of period		$	6		$	5		$	4
Additions for current-year tax positions			-			1			2
Additions for prior-year tax positions			-			1			1
Reductions for prior-year tax positions			-			(1)			(2)
Settlements			(1)			-			-
Balance at end of period		$	5		$	6		$	5

Consumers Energy Company [Member]

Schedule Of Effective Income Tax Rate Reconciliation

In Millions, Except Tax Rate
Years Ended December 31	2016				2015				2014
CMS Energy, including Consumers
Income from continuing operations before income taxes		$	826			$	796			$	729
Income tax expense at statutory rate			289				279				255
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect			37				39				36
Accelerated flow-through of regulatory tax benefits1			(39)				(39)				(39)
Employee share-based awards2			(7)				-				-
Other, net			(7)				(8)				(2)
Income tax expense		$	273			$	271			$	250
Effective tax rate			33.1	%			34.0	%			34.3	%
Consumers
Income from continuing operations before income taxes		$	936			$	896			$	873
Income tax expense at statutory rate			328				314				306
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect			44				42				42
Accelerated flow-through of regulatory tax benefits1			(39)				(39)				(39)
Employee share-based awards2			(6)				-				-
Other, net			(7)				(15)				(3)
Income tax expense		$	320			$	302			$	306
Effective tax rate			34.2	%			33.7	%			35.1	%

¹ Since 2014, Consumers has followed a regulatory treatment ordered by the MPSC that accelerates the return of certain income tax benefits to customers. This change, which also accelerates Consumers’ recognition of the income tax benefits, reduced Consumers’ income tax expense by $39 million for each of the years ended December 31, 2016, 2015, and 2014.

² CMS Energy and Consumers elected to adopt ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, as of January 1, 2016. For further details on the implementation of this standard, see Note 2, New Accounting Standards.

Significant Components Of Income Tax Expense

In Millions
Years Ended December 31	2016			2015			2014
CMS Energy, including Consumers
Current income taxes
Federal		$	-		$	-		$	-
State and local			9			24			24
		$	9		$	24		$	24
Deferred income taxes
Federal		$	200		$	192		$	198
State and local			47			36			31
		$	247		$	228		$	229
Deferred income tax credit			17			19			(3)
Tax expense		$	273		$	271		$	250
Consumers
Current income taxes
Federal		$	9		$	66		$	8
State and local			22			32			36
		$	31		$	98		$	44
Deferred income taxes
Federal		$	227		$	153		$	236
State and local			45			32			29
		$	272		$	185		$	265
Deferred income tax credit			17			19			(3)
Tax expense		$	320		$	302		$	306

Principal Components Of Deferred Income Tax Assets And Liailities

In Millions
December 31	2016			2015
CMS Energy, including Consumers
Employee benefits		$	(158)		$	(127)
Gas inventory			(65)			(96)
Plant, property, and equipment			(2,902)			(2,429)
Net regulatory tax liability			27			50
Reserves and accruals			69			59
Securitized costs			(118)			(122)
Tax loss and credit carryforwards			871			657
Other			(6)			(5)
		$	(2,282)		$	(2,013)
Less valuation allowance			(5)			(4)
Total net deferred income tax liabilities		$	(2,287)		$	(2,017)
Deferred tax assets, net of valuation reserves		$	962		$	762
Deferred tax liabilities			(3,249)			(2,779)
Total net deferred income tax liabilities		$	(2,287)		$	(2,017)
Consumers
Employee benefits		$	(181)		$	(156)
Gas inventory			(65)			(96)
Plant, property, and equipment			(2,924)			(2,457)
Net regulatory tax liability			27			50
Reserves and accruals			37			30
Securitized costs			(118)			(122)
Tax loss and credit carryforwards			190			46
Other			(8)			(5)
Total net deferred income tax liabilities		$	(3,042)		$	(2,710)
Deferred tax assets, net of valuation reserves		$	254		$	126
Deferred tax liabilities			(3,296)			(2,836)
Total net deferred income tax liabilities		$	(3,042)		$	(2,710)

Loss And Credit Carryforwards

In Millions
	Gross Amount			Tax Attribute			Expiration
CMS Energy, including Consumers
Federal net operating loss carryforward		$	1,415		$	495	2025 – 2036
Local net operating loss carryforwards			408			4	2023 – 2036
Alternative minimum tax credits			270			270	No expiration
General business credits			102			102	2018 – 2036
Total tax attributes					$	871
Consumers
Federal net operating loss carryforward		$	447		$	157	2025 – 2036
General business credits			33			33	2032 – 2036
Total tax attributes					$	190

Reconciliation Of Beginning And Ending Uncertain Tax Benefits

In Millions
Years Ended December 31	2016			2015			2014
CMS Energy, including Consumers
Balance at beginning of period		$	6		$	5		$	4
Additions for current-year tax positions			-			1			2
Additions for prior-year tax positions			-			1			1
Reductions for prior-year tax positions			-			(1)			(2)
Settlements			(1)			-			-
Balance at end of period		$	5		$	6		$	5
Consumers
Balance at beginning of period		$	6		$	5		$	4
Additions for current-year tax positions			-			1			2
Additions for prior-year tax positions			-			1			1
Reductions for prior-year tax positions			-			(1)			(2)
Settlements			(1)			-			-
Balance at end of period		$	5		$	6		$	5