Plant, Property, and Equipment

12 Months Ended

Dec. 31, 2011

16: PLANT, PROPERTY, AND EQUIPMENT

Presented in the following table are details of CMS Energy's and Consumers' plant, property, and equipment:


In Millions
Years Ended December 31	Estimated Depreciable Life in Years		2011		2010
CMS ENERGY, INCLUDING CONSUMERS
Electric
Generation		18 – 85		$ 3,936		$ 3,812
Distribution		12 – 75		5,538		5,250
Other		7– 40		651		609
Capital and finance leases				275		273
Gas
Underground storage facilities¹		30– 65		322		311
Transmission		13– 75		722		713
Distribution		30– 80		2,754		2,654
Other		5– 50		403		380
Capital leases				5		5
Enterprises
Independent power production		3– 30		89		85
Other		3– 40		20		17
Other		1– 51		36		36
Construction work in progress				783		570
Less accumulated depreciation and amortization				4,901		4,646
Net plant, property, and equipment²				$ 10,633		$ 10,069
CONSUMERS
Electric
Generation		18 – 85		$ 3,936		$3,812
Distribution		12 – 75		5,538		5,250
Other		7 – 40		651		609
Capital and finance leases				275		273
Gas
Underground storage facilities¹		30 – 65		322		311
Transmission		13 – 75		722		713
Distribution		30 – 80		2,754		2,654
Other		5 – 50		403		380
Capital leases				5		5
Other non-utility property		8 – 51		15		15
Construction work in progress				782		566
Less accumulated depreciation and amortization				4,846		4,593
Net plant, property, and equipment²				$ 10,557		$ 9,995

¹	Underground storage includes base natural gas of $26 million at December 31, 2011 and 2010. Base natural gas is not subject to depreciation.

²	For the year ended December 31, 2011, utility plant additions were $700 million and utility plant retirements were $104 million. For the year ended December 31, 2010, utility plant additions were $783 million and utility plant retirements were $85 million.

Presented in the following table is further detail on changes in Consumers' capital and finance leases:


In Millions
Years Ended December 31	2011			2010
CONSUMERS
Balance at beginning of period		$ 278			$ 306
Additions		4			15
Net retirements and other adjustments		(2	)		(43	)
Balance at end of period		$ 280			$ 278

Capital and finance leases presented are gross amounts. Accumulated amortization of capital and finance leases was $87 million at December 31, 2011 and $65 million at December 31, 2010 for Consumers.

Presented in the following table is further detail on CMS Energy's and Consumers' accumulated depreciation and amortization:


In Millions
Years Ended December 31	2011		2010
CMS ENERGY, INCLUDING CONSUMERS
Utility plant assets		$ 4,844		$ 4,592
Non-utility plant assets		57		54
CONSUMERS
Utility plant assets		$ 4,844		$ 4,592
Non-utility plant assets		2		1

Maintenance and Depreciation: CMS Energy and Consumers record property repairs and minor property replacement as maintenance expense. CMS Energy and Consumers record planned major maintenance activities as operating expense unless the cost represents the acquisition of additional long-lived assets or the replacement of an existing long-lived asset.

Consumers depreciates utility property on an asset-group basis, in which it applies a single MPSC-approved depreciation rate to the gross investment in a particular class of property within the electric and gas segments. Consumers performs depreciation studies periodically to determine appropriate group lives. Presented in the following table are the composite depreciation rates for Consumers' segment properties:


Years Ended December 31	2011			2010			2009
Electric utility property		3.0	%		3.0	%		3.0	%
Gas utility property		2.9	%		2.9	%		2.9	%
Other property		7.4	%		7.4	%		7.6	%

CMS Energy and Consumers record plant, property, and equipment at original cost when placed into service. The cost includes labor, material, applicable taxes, overhead such as pension and other benefits, and AFUDC, if applicable. Consumers' plant, property, and equipment is generally recoverable through its general rate making process. For additional details see Note 6, Regulatory Matters.

When utility property is retired or otherwise disposed of in the ordinary course of business, Consumers records the original cost to accumulated depreciation, along with associated cost of removal, net of salvage. CMS Energy and Consumers recognize gains or losses on the retirement or disposal of non-regulated assets in income. Cost of removal collected from customers, but not spent, is recorded as a regulatory liability.

When utility property is retired or otherwise disposed of in the ordinary course of business, Consumers records the original cost to accumulated depreciation, along with associated cost of removal, net of salvage. CMS Energy and Consumers recognize gains or losses on the retirement or disposal of non-regulated assets in income. Consumers records cost of removal collected from customers, but not spent, as a regulatory liability.

Consumers capitalizes AFUDC on regulated major construction projects, except pollution control facilities on its fossil-fueled power plants. AFUDC represents the estimated cost of debt and authorized return-on-equity funds used to finance construction additions. Consumers records the offsetting credit as a reduction of interest for the amount representing the borrowed funds component and as other income for the equity funds component on the consolidated statements of income. When construction is completed and the property is placed in service, Consumers depreciates and recovers the capitalized AFUDC from customers over the life of the related asset. Presented in the following table are Consumers' composite AFUDC capitalization rates:


Years Ended December 31	2011			2010			2009
AFUDC capitalization rate		7.6	%		7.6	%		7.6	%

CMS Energy and Consumers capitalize the purchase and development of internal-use computer software. These costs are expensed evenly over the estimated useful life of the internal-use computer software. If computer software is integral to computer hardware, then its cost is capitalized and depreciated with the hardware. The types of costs capitalized are consistent for all periods presented by the financial statements.

Intangible Assets: Included in net plant, property, and equipment are intangible assets. Presented in the following table are CMS Energy's and Consumers' intangible assets:


In Millions
Years Ended December 31				2011				2010
Description	Amortization Life in years			Gross Cost¹		Accumulated Amortization		Gross Cost¹		Accumulated Amortization
CMS ENERGY, INCLUDING CONSUMERS
Software development		3– 15			$ 361		$ 142		$ 323		$ 125
Plant acquisition adjustments		40 – 46			214		22		213		16
Rights of way		50 – 75			128		38		140		37
Leasehold improvements		various	²		11		9		13		9
Franchises and consents		5– 30			15		7		15		6
Other intangibles		various			19		14		20		14
Total					$ 748		$ 232		$ 724		$ 207
CONSUMERS
Software development		3 – 15			$ 360		$ 141		$ 323		$ 125
Plant acquisition adjustments		40 – 46			214		22		213		16
Rights of way		50 – 75			128		38		140		37
Leasehold improvements		various	²		11		9		13		9
Franchises and consents		5 – 30			15		7		15		6
Other intangibles		various			18		14		18		14
Total					$ 746		$ 231		$ 722		$ 207

¹	Net intangible asset additions for Consumers' utility plant were $23 million during 2011 and $25 million during 2010.

²	Leasehold improvements are amortized over the life of the lease, which may change whenever the lease is renewed or extended.

Presented in the following table is CMS Energy's and Consumers' amortization expense related to intangible assets:


In Millions
	CMS Energy, including Consumers				Consumers
Years Ended December 31	Total Amortization Expense		Software Amortization Expense		Total Amortization Expense		Software Amortization Expense
2011		$ 32		$ 24		$ 32		$ 24
2010		28		19		27		19
2009		30		22		30		22

Amortization of intangible assets is expected to range between $39 million and $50 million per year over the next five years.

JOINTLY OWNED REGULATED UTILITY FACILITIES

Presented in the following table are Consumers' investments in jointly owned regulated utility facilities at December 31, 2011:


In Millions, Except Ownership Share
	Campbell Unit 3			Ludington			Distribution
Ownership share		93.3	%		51.0	%		various
Utility plant in service		$ 1,059			$ 175			$ 168
Accumulated depreciation		(430	)		(118	)		(46	)
Construction work-in-progress		55			43			7
Net investment		$ 684			$ 100			$ 129

Consumers includes its share of the direct expenses of the jointly owned plants in operating expenses. Consumers shares operation, maintenance, and other expenses of these jointly owned utility facilities in proportion to each participant's undivided ownership interest. Consumers is required to provide only its share of financing for the jointly owned utility facilities.

Consumers Energy Company [Member]

Plant, Property, and Equipment

16: PLANT, PROPERTY, AND EQUIPMENT

Presented in the following table are details of CMS Energy's and Consumers' plant, property, and equipment:


In Millions
Years Ended December 31	Estimated Depreciable Life in Years		2011		2010
CMS ENERGY, INCLUDING CONSUMERS
Electric
Generation		18 – 85		$ 3,936		$ 3,812
Distribution		12 – 75		5,538		5,250
Other		7– 40		651		609
Capital and finance leases				275		273
Gas
Underground storage facilities¹		30– 65		322		311
Transmission		13– 75		722		713
Distribution		30– 80		2,754		2,654
Other		5– 50		403		380
Capital leases				5		5
Enterprises
Independent power production		3 – 30		89		85
Other		3 – 40		20		17
Other		1– 51		36		36
Construction work in progress				783		570
Less accumulated depreciation and amortization				4,901		4,646
Net plant, property, and equipment²				$ 10,633		$ 10,069
CONSUMERS
Electric
Generation		18– 85		$ 3,936		$3,812
Distribution		12– 75		5,538		5,250
Other		7– 40		651		609
Capital and finance leases				275		273
Gas
Underground storage facilities¹		30– 65		322		311
Transmission		13– 75		722		713
Distribution		30– 80		2,754		2,654
Other		5– 50		403		380
Capital leases				5		5
Other non-utility property		8– 51		15		15
Construction work in progress				782		566
Less accumulated depreciation and amortization				4,846		4,593
Net plant, property, and equipment²				$ 10,557		$ 9,995

¹	Underground storage includes base natural gas of $26 million at December 31, 2011 and 2010. Base natural gas is not subject to depreciation.

²	For the year ended December 31, 2011, utility plant additions were $700 million and utility plant retirements were $104 million. For the year ended December 31, 2010, utility plant additions were $783 million and utility plant retirements were $85 million.

Presented in the following table is further detail on changes in Consumers' capital and finance leases:


In Millions
Years Ended December 31	2011			2010
CONSUMERS
Balance at beginning of period		$ 278			$ 306
Additions		4			15
Net retirements and other adjustments		(2	)		(43	)
Balance at end of period		$ 280			$ 278

Capital and finance leases presented are gross amounts. Accumulated amortization of capital and finance leases was $87 million at December 31, 2011 and $65 million at December 31, 2010 for Consumers.

Presented in the following table is further detail on CMS Energy's and Consumers' accumulated depreciation and amortization:


In Millions
Years Ended December 31	2011		2010
CMS ENERGY, INCLUDING CONSUMERS
Utility plant assets		$ 4,844		$ 4,592
Non-utility plant assets		57		54
CONSUMERS
Utility plant assets		$ 4,844		$ 4,592
Non-utility plant assets		2		1


Years Ended December 31	2011			2010			2009
Electric utility property		3.0	%		3.0	%		3.0	%
Gas utility property		2.9	%		2.9	%		2.9	%
Other property		7.4	%		7.4	%		7.6	%

When utility property is retired or otherwise disposed of in the ordinary course of business, Consumers records the original cost to accumulated depreciation, along with associated cost of removal, net of salvage. CMS Energy and Consumers recognize gains or losses on the retirement or disposal of non-regulated assets in income. Consumers records cost of removal collected from customers, but not spent, as a regulatory liability.


Years Ended December 31	2011			2010			2009
AFUDC capitalization rate		7.6	%		7.6	%		7.6	%

Intangible Assets: Included in net plant, property, and equipment are intangible assets. Presented in the following table are CMS Energy's and Consumers' intangible assets:


In Millions
Years Ended December 31				2011				2010
Description	Amortization Life in years			Gross Cost¹		Accumulated Amortization		Gross Cost¹		Accumulated Amortization
CMS ENERGY, INCLUDING CONSUMERS
Software development		3 – 15			$ 361		$ 142		$ 323		$ 125
Plant acquisition adjustments		40 – 46			214		22		213		16
Rights of way		50 – 75			128		38		140		37
Leasehold improvements		various	²		11		9		13		9
Franchises and consents		5 – 30			15		7		15		6
Other intangibles		various			19		14		20		14
Total					$ 748		$ 232		$ 724		$ 207
CONSUMERS
Software development		3– 15			$ 360		$ 141		$ 323		$ 125
Plant acquisition adjustments		40 – 46			214		22		213		16
Rights of way		50– 75			128		38		140		37
Leasehold improvements		various	²		11		9		13		9
Franchises and consents		5– 30			15		7		15		6
Other intangibles		various			18		14		18		14
Total					$ 746		$ 231		$ 722		$ 207

¹	Net intangible asset additions for Consumers' utility plant were $23 million during 2011 and $25 million during 2010.

²	Leasehold improvements are amortized over the life of the lease, which may change whenever the lease is renewed or extended.

Presented in the following table is CMS Energy's and Consumers' amortization expense related to intangible assets:


In Millions
	CMS Energy, including Consumers				Consumers
Years Ended December 31	Total Amortization Expense		Software Amortization Expense		Total Amortization Expense		Software Amortization Expense
2011		$ 32		$ 24		$ 32		$ 24
2010		28		19		27		19
2009		30		22		30		22

Amortization of intangible assets is expected to range between $39 million and $50 million per year over the next five years.

JOINTLY OWNED REGULATED UTILITY FACILITIES

Presented in the following table are Consumers' investments in jointly owned regulated utility facilities at December 31, 2011:


In Millions, Except Ownership Share
	Campbell Unit 3			Ludington			Distribution
Ownership share		93.3	%		51.0	%		various
Utility plant in service		$ 1,059			$ 175			$ 168
Accumulated depreciation		(430	)		(118	)		(46	)
Construction work-in-progress		55			43			7
Net investment		$ 684			$ 100			$ 129

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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