Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Schedule Of Effective Income Tax Rate Reconciliation



In Millions, Except Tax Rate
Years Ended December 31	2017				2016				2015
CMS Energy, including Consumers
Income from continuing operations before income taxes		$	886			$	826			$	796

Income tax expense at statutory rate			310				289				279
Increase (decrease) in income taxes from:
Impact of the TCJA			148				-				-
State and local income taxes, net of federal effect1			26				37				39
Accelerated flow-through of regulatory tax benefits2			(39)				(39)				(39)
Employee share-based awards			(6)				(7)				-
Other, net			(15)				(7)				(8)
Income tax expense		$	424			$	273			$	271
Effective tax rate			47.9	%			33.1	%			34.0	%
Consumers
Income from continuing operations before income taxes		$	971			$	936			$	896

Income tax expense at statutory rate			340				328				314
Increase (decrease) in income taxes from:
Impact of the TCJA			33				-				-
State and local income taxes, net of federal effect1			30				44				42
Accelerated flow-through of regulatory tax benefits2			(39)				(39)				(39)
Employee share-based awards			(6)				(6)				-
Other, net			(19)				(7)				(15)
Income tax expense		$	339			$	320			$	302
Effective tax rate			34.9	%			34.2	%			33.7	%

1In September 2017, CMS Energy completed the evaluation of its methodology for the state apportionment of Consumers’ electricity sales to MISO, taking into account recent state tax law developments in the electric utility sector. As a result, CMS Energy intends to amend state income tax filings for 2013 through 2016 to seek a refund of taxes previously paid. To recognize the anticipated refund and the impact of the expected lower effective tax rate on their deferred state tax liabilities, CMS Energy, including Consumers, recorded a $14 million income tax benefit in 2017. The $14 million income tax benefit was net of reserves for uncertain tax positions and primarily attributable to Consumers.

2In 2013, the MPSC issued an order authorizing Consumers to accelerate the flow-through to electric and gas customers of certain income tax benefits associated primarily with the cost of removal of plant placed in service before 1993. Consumers implemented this regulatory treatment beginning in 2014. 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, 2017, 2016, and 2015.

Significant Components Of Income Tax Expense



In Millions
Years Ended December 31	2017			2016			2015
CMS Energy, including Consumers
Current income taxes
Federal		$	-		$	-		$	-
State and local			6			9			24
		$	6		$	9		$	24
Deferred income taxes
Federal		$	368		$	200		$	192
State and local			36			47			36
		$	404		$	247		$	228
Deferred income tax credit			14			17			19
Tax expense		$	424		$	273		$	271
Consumers
Current income taxes
Federal		$	159		$	9		$	66
State and local			17			22			32
		$	176		$	31		$	98
Deferred income taxes
Federal		$	120		$	227		$	153
State and local			29			45			32
		$	149		$	272		$	185
Deferred income tax credit			14			17			19
Tax expense		$	339		$	320		$	302

Principal Components Of Deferred Income Tax Assets And Liailities



In Millions
December 31	2017			2016
CMS Energy, including Consumers
Deferred income tax assets
Tax loss and credit carryforwards		$	453		$	871
Net regulatory tax liability			411			27
Reserves and accruals			40			69
Total deferred income tax assets		$	904		$	967
Valuation allowance			(15)			(5)
Total deferred income tax assets, net of valuation reserves		$	889		$	962
Deferred income tax liabilities
Plant, property, and equipment		$	(1,891)		$	(2,902)
Employee benefits			(96)			(158)
Securitized costs			(71)			(118)
Gas inventory			(37)			(65)
Other			(63)			(6)
Total deferred income tax liabilities		$	(2,158)		$	(3,249)
Total net deferred income tax liabilities		$	(1,269)		$	(2,287)
Consumers
Deferred income tax assets
Net regulatory tax liability		$	411		$	27
Tax loss and credit carryforwards			101			190
Reserves and accruals			21			37
Total deferred income tax assets		$	533		$	254
Deferred income tax liabilities
Plant, property, and equipment		$	(1,901)		$	(2,924)
Employee benefits			(105)			(181)
Securitized costs			(71)			(118)
Gas inventory			(37)			(65)
Other			(59)			(8)
Total deferred income tax liabilities		$	(2,173)		$	(3,296)
Total net deferred income tax liabilities		$	(1,640)		$	(3,042)

Loss And Credit Carryforwards



In Millions
	Gross Amount			Tax Attribute			Expiration
CMS Energy, including Consumers
Federal net operating loss carryforward		$	855		$	179	2028 – 2036
Local net operating loss carryforwards			487			5	2023 – 2036
Alternative minimum tax credits			137			137	Not applicable
General business credits			130			130	2018 – 2037
Charitable contribution carryover			8			2	2021
Total tax attributes					$	453
Consumers
Federal net operating loss carryforward		$	309		$	65	2028 – 2036
General business credits			34			34	2032 – 2037
Charitable contribution carryover			8			2	2021
Total tax attributes					$	101

Reconciliation Of Beginning And Ending Uncertain Tax Benefits



In Millions
Years Ended December 31	2017			2016			2015
CMS Energy, including Consumers
Balance at beginning of period		$	5		$	6		$	5
Additions for current-year tax positions			10			-			1
Additions for prior-year tax positions			-			-			1
Reductions for prior-year tax positions			(1)			-			(1)
Settlements			-			(1)			-
Balance at end of period		$	14		$	5		$	6
Consumers
Balance at beginning of period		$	5		$	6		$	5
Additions for current-year tax positions			17			-			1
Additions for prior-year tax positions			-			-			1
Reductions for prior-year tax positions			(1)			-			(1)
Settlements			-			(1)			-
Balance at end of period		$	21		$	5		$	6

Consumers Energy Company [Member]

Schedule Of Effective Income Tax Rate Reconciliation



In Millions, Except Tax Rate
Years Ended December 31	2017				2016				2015
CMS Energy, including Consumers
Income from continuing operations before income taxes		$	886			$	826			$	796

Income tax expense at statutory rate			310				289				279
Increase (decrease) in income taxes from:
Impact of the TCJA			148				-				-
State and local income taxes, net of federal effect1			26				37				39
Accelerated flow-through of regulatory tax benefits2			(39)				(39)				(39)
Employee share-based awards			(6)				(7)				-
Other, net			(15)				(7)				(8)
Income tax expense		$	424			$	273			$	271
Effective tax rate			47.9	%			33.1	%			34.0	%
Consumers
Income from continuing operations before income taxes		$	971			$	936			$	896

Income tax expense at statutory rate			340				328				314
Increase (decrease) in income taxes from:
Impact of the TCJA			33				-				-
State and local income taxes, net of federal effect1			30				44				42
Accelerated flow-through of regulatory tax benefits2			(39)				(39)				(39)
Employee share-based awards			(6)				(6)				-
Other, net			(19)				(7)				(15)
Income tax expense		$	339			$	320			$	302
Effective tax rate			34.9	%			34.2	%			33.7	%

Significant Components Of Income Tax Expense



In Millions
Years Ended December 31	2017			2016			2015
CMS Energy, including Consumers
Current income taxes
Federal		$	-		$	-		$	-
State and local			6			9			24
		$	6		$	9		$	24
Deferred income taxes
Federal		$	368		$	200		$	192
State and local			36			47			36
		$	404		$	247		$	228
Deferred income tax credit			14			17			19
Tax expense		$	424		$	273		$	271
Consumers
Current income taxes
Federal		$	159		$	9		$	66
State and local			17			22			32
		$	176		$	31		$	98
Deferred income taxes
Federal		$	120		$	227		$	153
State and local			29			45			32
		$	149		$	272		$	185
Deferred income tax credit			14			17			19
Tax expense		$	339		$	320		$	302

Principal Components Of Deferred Income Tax Assets And Liailities



In Millions
December 31	2017			2016
CMS Energy, including Consumers
Deferred income tax assets
Tax loss and credit carryforwards		$	453		$	871
Net regulatory tax liability			411			27
Reserves and accruals			40			69
Total deferred income tax assets		$	904		$	967
Valuation allowance			(15)			(5)
Total deferred income tax assets, net of valuation reserves		$	889		$	962
Deferred income tax liabilities
Plant, property, and equipment		$	(1,891)		$	(2,902)
Employee benefits			(96)			(158)
Securitized costs			(71)			(118)
Gas inventory			(37)			(65)
Other			(63)			(6)
Total deferred income tax liabilities		$	(2,158)		$	(3,249)
Total net deferred income tax liabilities		$	(1,269)		$	(2,287)
Consumers
Deferred income tax assets
Net regulatory tax liability		$	411		$	27
Tax loss and credit carryforwards			101			190
Reserves and accruals			21			37
Total deferred income tax assets		$	533		$	254
Deferred income tax liabilities
Plant, property, and equipment		$	(1,901)		$	(2,924)
Employee benefits			(105)			(181)
Securitized costs			(71)			(118)
Gas inventory			(37)			(65)
Other			(59)			(8)
Total deferred income tax liabilities		$	(2,173)		$	(3,296)
Total net deferred income tax liabilities		$	(1,640)		$	(3,042)

Schedule Of Net Regulatory Tax Liability


In Millions
December 31	2017
Consumers
Plant, property, and equipment (subject to normalization1)		$	1,781
All other, net (not subject to normalization1)			(193)
Net regulatory tax liability		$	1,588

1Relates to deferred taxes arising from accelerated tax depreciation on assets in rate base that are governed by normalization provisions of the U.S. Internal Revenue Code. These normalization provisions generally require that customer rate refunds associated with changes in deferred taxes be returned to customers over the remaining average service life of the associated assets. Consumers will collect from customers the portion not subject to normalization over a period to be determined in a future regulatory proceeding. Consumers cannot predict the impact of orders from the MPSC related to the treatment of regulatory balances not subject to amortization.

Loss And Credit Carryforwards



In Millions
	Gross Amount			Tax Attribute			Expiration
CMS Energy, including Consumers
Federal net operating loss carryforward		$	855		$	179	2028 – 2036
Local net operating loss carryforwards			487			5	2023 – 2036
Alternative minimum tax credits			137			137	Not applicable
General business credits			130			130	2018 – 2037
Charitable contribution carryover			8			2	2021
Total tax attributes					$	453
Consumers
Federal net operating loss carryforward		$	309		$	65	2028 – 2036
General business credits			34			34	2032 – 2037
Charitable contribution carryover			8			2	2021
Total tax attributes					$	101

Reconciliation Of Beginning And Ending Uncertain Tax Benefits



In Millions
Years Ended December 31	2017			2016			2015
CMS Energy, including Consumers
Balance at beginning of period		$	5		$	6		$	5
Additions for current-year tax positions			10			-			1
Additions for prior-year tax positions			-			-			1
Reductions for prior-year tax positions			(1)			-			(1)
Settlements			-			(1)			-
Balance at end of period		$	14		$	5		$	6
Consumers
Balance at beginning of period		$	5		$	6		$	5
Additions for current-year tax positions			17			-			1
Additions for prior-year tax positions			-			-			1
Reductions for prior-year tax positions			(1)			-			(1)
Settlements			-			(1)			-
Balance at end of period		$	21		$	5		$	6