Notes Receivable

6 Months Ended

Jun. 30, 2017

7:Notes Receivable

Presented in the following table are details of CMS Energy’s and Consumers’ current and non‑current notes receivable:



In Millions
	June 30, 2017			December 31, 2016
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	163		$	151
EnerBank notes receivable held for sale			18			39
State of Michigan tax settlement			30			29
Non-current
EnerBank notes receivable			1,094			1,088
State of Michigan tax settlement			20			19
Total notes receivable		$	1,325		$	1,326
Consumers
Current
State of Michigan tax settlement		$	30		$	29
Non-current
State of Michigan tax settlement			16			16
Total notes receivable		$	46		$	45

EnerBank notes receivable are unsecured consumer installment loans for financing home improvements. EnerBank records its notes receivable at cost, less an allowance for loan losses. In March 2017, EnerBank completed a sale of notes receivable, receiving proceeds of $19 million and recording an insignificant gain. At June 30, 2017, $18 million of notes receivable remained classified as held for sale; the fair value of notes receivable held for sale exceeded their carrying value. These notes are expected to be sold in 2017.

Authorized contractors pay fees to EnerBank to provide borrowers with same-as-cash, zero interest, or reduced interest loans. Unearned income associated with the loan fees, which is recorded as a reduction to notes receivable on CMS Energy’s consolidated balance sheets, was $84 million at June 30, 2017 and December 31, 2016. Unearned income associated with the loan fees for notes receivable held for sale was $4 million at June 30, 2017 and $8 million at December 31, 2016.

The allowance for loan losses is a valuation allowance to reflect estimated credit losses. The allowance is increased by the provision for loan losses and decreased by loan charge-offs net of recoveries. Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors. Loan losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.

Loans that are 30 days or more past due are considered delinquent. The balance of EnerBank’s delinquent consumer loans was $9 million at June 30, 2017 and $11 million at December 31, 2016.

At June 30, 2017 and December 31, 2016, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.

Consumers Energy Company [Member]

Notes Receivable

7:Notes Receivable

Presented in the following table are details of CMS Energy’s and Consumers’ current and non‑current notes receivable:



In Millions
	June 30, 2017			December 31, 2016
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	163		$	151
EnerBank notes receivable held for sale			18			39
State of Michigan tax settlement			30			29
Non-current
EnerBank notes receivable			1,094			1,088
State of Michigan tax settlement			20			19
Total notes receivable		$	1,325		$	1,326
Consumers
Current
State of Michigan tax settlement		$	30		$	29
Non-current
State of Michigan tax settlement			16			16
Total notes receivable		$	46		$	45

Loans that are 30 days or more past due are considered delinquent. The balance of EnerBank’s delinquent consumer loans was $9 million at June 30, 2017 and $11 million at December 31, 2016.

At June 30, 2017 and December 31, 2016, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.