Regulatory Matters (Consumers Energy Company [Member])	6 Months Ended
Jun. 30, 2012
Consumers Energy Company [Member]
Regulatory Matters	4: REGULATORY MATTERS Rate matters are critical to Consumers. The Michigan Attorney General, ABATE, the MPSC Staff, and certain other parties typically participate in MPSC proceedings concerning Consumers and often appeal significant MPSC orders. Depending upon the specific issues, the outcomes of rate cases and proceedings, including judicial proceedings challenging MPSC orders or other actions, could have a material adverse effect on CMS Energy's and Consumers' liquidity, financial condition, and results of operations. Consumers cannot predict the outcome of these proceedings. CONSUMERS' ELECTRIC UTILITY *Electric Rate Case:* In June 2011, Consumers filed an application with the MPSC seeking an annual rate increase of $195 million, based on a 10.7 percent authorized return on equity, in order to recover new investment in system reliability, environmental compliance, and technology enhancements. Consumers self-implemented an annual rate increase of $118 million in December 2011, subject to refund with interest. In June 2012, the MPSC authorized an annual rate increase of $118 million, based on a 10.3 percent return on equity. Consumers has until September 2012 to file a reconciliation of total revenues collected during self-implementation to those that would have been collected under final rates. While it cannot predict the outcome of this case, Consumers does not consider it probable that a refund of its self-implemented rates will be required. The annual rate increase authorized by the MPSC included a $20 million increase in annual depreciation expense resulting from the new depreciation rates that the MPSC approved in June 2011 in Consumers' electric depreciation case. These new depreciation rates went into effect with the June 2012 electric rate case order. Also included in the authorized annual rate increase was the recovery of $14 million of development costs associated with Consumers' proposed 830-MW coal-fueled plant. The MPSC authorized Consumers to recover these costs over a three-year period. Consumers canceled its plans to build this plant in December 2011, after having written off its development costs of $22 million in 2010. At June 30, 2012, Consumers recorded a $14 million regulatory asset for the recovery of these costs with a corresponding benefit recognized in earnings. *Big Rock Nuclear Decommissioning:* The MPSC and FERC regulate the recovery of Consumers' costs to decommission Big Rock. Subsequent to 2000, Consumers stopped funding a Big Rock decommissioning trust fund because the collection period for an MPSC-authorized decommissioning surcharge expired. In 2010, the MPSC concluded that certain revenues collected during a statutory rate freeze from 2001 through 2003 should have been deposited in the Big Rock decommissioning trust fund and ordered Consumers to refund $85 million of revenue collected in excess of decommissioning costs plus interest. Consumers completed this refund in 2011. Consumers filed an appeal with the Michigan Court of Appeals in 2010 to dispute the MPSC's conclusion that the collections received during the rate freeze should be subject to refund. In January 2012, the Michigan Court of Appeals rejected Consumers' appeal. In March 2012, Consumers filed an appeal with the Michigan Supreme Court to dispute this decision. The Michigan Supreme Court denied Consumers' appeal in June 2012. Consumers has an $85 million regulatory asset recorded for $30 million it paid to Entergy to assume ownership responsibility for the Big Rock ISFSI and for $55 million of nuclear fuel storage costs it incurred as a result of the DOE's failure to accept nuclear fuel. Consumers filed a complaint against the DOE in 2002 for this failure. In July 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million; Consumers recorded a $120 million regulatory liability related to this settlement. In September 2011, Consumers filed an application with the MPSC requesting authority to utilize $85 million of the settlement amount as recovery of its regulatory asset, and to refund to customers $23 million previously collected through rates for spent nuclear fuel costs. Various parties are opposing this request, seeking additional refunds, or seeking other relief. If the MPSC concludes that Consumers may retain any portion of the remaining $12 million of the settlement amount, Consumers will recognize that amount in earnings. For further information, see Note 3: Contingencies and Commitments – Consumers Electric Utility Contingencies – Nuclear Matters. *Electric Revenue Decoupling Mechanism:* The MPSC's 2009 electric rate case order authorized Consumers to implement an electric revenue decoupling mechanism, subject to certain conditions. This decoupling mechanism, which was extended through November 2011 in the 2010 electric rate case order, allowed Consumers to adjust future electric rates to compensate for changes in sales volumes resulting from the difference between the level of average sales per customer adopted in the order and actual average sales per customer. Various parties have filed appeals concerning Consumers' electric revenue decoupling mechanism. In March 2011, Consumers filed its first reconciliation of the electric revenue decoupling mechanism with the MPSC, requesting recovery of $27 million from customers for the period December 2009 through November 2010. In February 2012, the administrative law judge recommended that the MPSC approve Consumers' reconciliation of the electric revenue decoupling mechanism for the full amount of its request. Consumers filed its second reconciliation of the electric revenue decoupling mechanism in March 2012, requesting recovery of $32 million from customers for the period December 2010 through November 2011. In April 2012, the Michigan Court of Appeals ruled in an appeal filed by ABATE that disputed the MPSC's decision to authorize an electric revenue decoupling mechanism for Detroit Edison. The Court concluded that the MPSC lacks statutory authority to approve or direct the use of a revenue decoupling mechanism for electric providers. Consumers cannot predict whether this decision will be appealed to the Michigan Supreme Court or the timing or outcome of any such appeal. As a result, Consumers determined that it no longer met the accounting criteria for recognition of a regulatory asset under an alternative revenue program, and wrote off its $59 million electric revenue decoupling mechanism regulatory asset at March 31, 2012. Although the case before the Court of Appeals related specifically to Detroit Edison, Consumers will continue to pursue all of its legal and regulatory avenues to recover its decoupling revenues. As a result of the Court of Appeals decision in the Detroit Edison case, the MPSC requested all interested parties to submit comments regarding the future use of electric revenue decoupling mechanisms in Michigan. In May 2012, Consumers filed its comments with the MPSC. Consumers is unable to predict the outcome of this matter. *Renewable Energy Plan:* In June 2011, Consumers filed with the MPSC its second annual report and reconciliation for its renewable energy plan, requesting approval of its plan costs for 2010. In March 2012, the MPSC approved Consumers' renewable energy plan reconciliation. Consumers filed its third annual report and reconciliation with the MPSC in June 2012, requesting approval of its reconciliation of renewable energy plan costs for 2011. In October 2011, Consumers filed an application for the biennial review and approval of its renewable energy plan. In May 2012, the MPSC approved Consumers' settlement agreement in this case, reducing the renewable energy surcharge by an annual amount of $3 million, to $20 million. *Energy Optimization Plan:* In August 2011, Consumers filed an amended energy optimization plan with the MPSC, requesting approval of the additional spending necessary to exceed the statutory savings targets for 2012 through 2015 specified in the 2008 Energy Law. The MPSC approved Consumers' amended energy optimization plan in April 2012. In May 2012, Consumers filed its third annual report and reconciliation for its energy optimization plan, requesting approval of Consumers' reconciliation of energy optimization plan costs for 2011. Consumers also requested approval to collect $15 million from customers as an incentive payment for exceeding statutory savings targets under both its gas and electric energy optimization plans during 2011. Consumers estimates that, through its gas and electric energy optimization programs, its customers realized $115 million in energy savings during 2011. CONSUMERS' GAS UTILITY *Gas Rate Case:* In September 2011, Consumers filed an application with the MPSC seeking an annual rate increase of $49 million, based on a 10.7 percent authorized return on equity, in order to recover investments made to enhance safety, system reliability, and operational efficiencies that improve service to customers. Consumers self-implemented an annual rate increase of $23 million in March 2012, subject to refund with interest. In June 2012, the MPSC approved Consumers' settlement agreement and authorized an annual rate increase of $16 million, based on a 10.3 percent return on equity. The MPSC directed Consumers to refund to customers the difference between the rates it self-implemented in March 2012 and the rates authorized in the June 2012 order, plus interest, subject to a reconciliation proceeding. At June 30, 2012, CMS Energy and Consumers had a $1 million regulatory liability recorded for this refund. *Gas Revenue Decoupling Mechanism:* The MPSC's 2009 gas rate case order authorized Consumers to implement a gas revenue decoupling mechanism, subject to certain conditions. This decoupling mechanism, which was extended through April 2012, allowed Consumers to adjust future gas rates to compensate for changes in sales volumes resulting from the difference between the level of average sales per customer adopted in the order and actual average weather-adjusted sales per customer. This mechanism was not affected by the Court of Appeals decision on electric decoupling. In September 2011, Consumers filed its first reconciliation of the gas revenue decoupling mechanism with the MPSC, requesting recovery of $16 million from customers for the period June 2010 through May 2011. The matter remains pending before the MPSC. Certain parties have filed in opposition to this reconciliation. At June 30, 2012, Consumers had a $33 million non-current regulatory asset recorded for gas revenue decoupling. If the MPSC were to reject all or a major portion of Consumers' requested recovery from its gas revenue decoupling mechanism or if the recovery period were to be substantially delayed, Consumers could be required to write off all or portions of the related regulatory asset.

4: REGULATORY MATTERS

Rate matters are critical to Consumers. The Michigan Attorney General, ABATE, the MPSC Staff, and certain other parties typically participate in MPSC proceedings concerning Consumers and often appeal significant MPSC orders. Depending upon the specific issues, the outcomes of rate cases and proceedings, including judicial proceedings challenging MPSC orders or other actions, could have a material adverse effect on CMS Energy's and Consumers' liquidity, financial condition, and results of operations. Consumers cannot predict the outcome of these proceedings.

CONSUMERS' ELECTRIC UTILITY

Electric Rate Case: In June 2011, Consumers filed an application with the MPSC seeking an annual rate increase of $195 million, based on a 10.7 percent authorized return on equity, in order to recover new investment in system reliability, environmental compliance, and technology enhancements. Consumers self-implemented an annual rate increase of $118 million in December 2011, subject to refund with interest. In June 2012, the MPSC authorized an annual rate increase of $118 million, based on a 10.3 percent return on equity. Consumers has until September 2012 to file a reconciliation of total revenues collected during self-implementation to those that would have been collected under final rates. While it cannot predict the outcome of this case, Consumers does not consider it probable that a refund of its self-implemented rates will be required.

The annual rate increase authorized by the MPSC included a $20 million increase in annual depreciation expense resulting from the new depreciation rates that the MPSC approved in June 2011 in Consumers' electric depreciation case. These new depreciation rates went into effect with the June 2012 electric rate case order.

Also included in the authorized annual rate increase was the recovery of $14 million of development costs associated with Consumers' proposed 830-MW coal-fueled plant. The MPSC authorized Consumers to recover these costs over a three-year period. Consumers canceled its plans to build this plant in December 2011, after having written off its development costs of $22 million in 2010. At June 30, 2012, Consumers recorded a $14 million regulatory asset for the recovery of these costs with a corresponding benefit recognized in earnings.

Big Rock Nuclear Decommissioning: The MPSC and FERC regulate the recovery of Consumers' costs to decommission Big Rock. Subsequent to 2000, Consumers stopped funding a Big Rock decommissioning trust fund because the collection period for an MPSC-authorized decommissioning surcharge expired.

In 2010, the MPSC concluded that certain revenues collected during a statutory rate freeze from 2001 through 2003 should have been deposited in the Big Rock decommissioning trust fund and ordered Consumers to refund $85 million of revenue collected in excess of decommissioning costs plus interest. Consumers completed this refund in 2011. Consumers filed an appeal with the Michigan Court of Appeals in 2010 to dispute the MPSC's conclusion that the collections received during the rate freeze should be subject to refund. In January 2012, the Michigan Court of Appeals rejected Consumers' appeal. In March 2012, Consumers filed an appeal with the Michigan Supreme Court to dispute this decision. The Michigan Supreme Court denied Consumers' appeal in June 2012.

Consumers has an $85 million regulatory asset recorded for $30 million it paid to Entergy to assume ownership responsibility for the Big Rock ISFSI and for $55 million of nuclear fuel storage costs it incurred as a result of the DOE's failure to accept nuclear fuel. Consumers filed a complaint against the DOE in 2002 for this failure. In July 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million; Consumers recorded a $120 million regulatory liability related to this settlement. In September 2011, Consumers filed an application with the MPSC requesting authority to utilize $85 million of the settlement amount as recovery of its regulatory asset, and to refund to customers $23 million previously collected through rates for spent nuclear fuel costs. Various parties are opposing this request, seeking additional refunds, or seeking other relief. If the MPSC concludes that Consumers may retain any portion of the remaining $12 million of the settlement amount, Consumers will recognize that amount in earnings. For further information, see Note 3: Contingencies and Commitments – Consumers Electric Utility Contingencies – Nuclear Matters.

Electric Revenue Decoupling Mechanism: The MPSC's 2009 electric rate case order authorized Consumers to implement an electric revenue decoupling mechanism, subject to certain conditions. This decoupling mechanism, which was extended through November 2011 in the 2010 electric rate case order, allowed Consumers to adjust future electric rates to compensate for changes in sales volumes resulting from the difference between the level of average sales per customer adopted in the order and actual average sales per customer. Various parties have filed appeals concerning Consumers' electric revenue decoupling mechanism.

In March 2011, Consumers filed its first reconciliation of the electric revenue decoupling mechanism with the MPSC, requesting recovery of $27 million from customers for the period December 2009 through November 2010. In February 2012, the administrative law judge recommended that the MPSC approve Consumers' reconciliation of the electric revenue decoupling mechanism for the full amount of its request. Consumers filed its second reconciliation of the electric revenue decoupling mechanism in March 2012, requesting recovery of $32 million from customers for the period December 2010 through November 2011.

In April 2012, the Michigan Court of Appeals ruled in an appeal filed by ABATE that disputed the MPSC's decision to authorize an electric revenue decoupling mechanism for Detroit Edison. The Court concluded that the MPSC lacks statutory authority to approve or direct the use of a revenue decoupling mechanism for electric providers. Consumers cannot predict whether this decision will be appealed to the Michigan Supreme Court or the timing or outcome of any such appeal. As a result, Consumers determined that it no longer met the accounting criteria for recognition of a regulatory asset under an alternative revenue program, and wrote off its $59 million electric revenue decoupling mechanism regulatory asset at March 31, 2012. Although the case before the Court of Appeals related specifically to Detroit Edison, Consumers will continue to pursue all of its legal and regulatory avenues to recover its decoupling revenues.

As a result of the Court of Appeals decision in the Detroit Edison case, the MPSC requested all interested parties to submit comments regarding the future use of electric revenue decoupling mechanisms in Michigan. In May 2012, Consumers filed its comments with the MPSC. Consumers is unable to predict the outcome of this matter.

Renewable Energy Plan: In June 2011, Consumers filed with the MPSC its second annual report and reconciliation for its renewable energy plan, requesting approval of its plan costs for 2010. In March 2012, the MPSC approved Consumers' renewable energy plan reconciliation.

Consumers filed its third annual report and reconciliation with the MPSC in June 2012, requesting approval of its reconciliation of renewable energy plan costs for 2011.

In October 2011, Consumers filed an application for the biennial review and approval of its renewable energy plan. In May 2012, the MPSC approved Consumers' settlement agreement in this case, reducing the renewable energy surcharge by an annual amount of $3 million, to $20 million.

Energy Optimization Plan: In August 2011, Consumers filed an amended energy optimization plan with the MPSC, requesting approval of the additional spending necessary to exceed the statutory savings targets for 2012 through 2015 specified in the 2008 Energy Law. The MPSC approved Consumers' amended energy optimization plan in April 2012.

In May 2012, Consumers filed its third annual report and reconciliation for its energy optimization plan, requesting approval of Consumers' reconciliation of energy optimization plan costs for 2011. Consumers also requested approval to collect $15 million from customers as an incentive payment for exceeding statutory savings targets under both its gas and electric energy optimization plans during 2011. Consumers estimates that, through its gas and electric energy optimization programs, its customers realized $115 million in energy savings during 2011.

CONSUMERS' GAS UTILITY

Gas Rate Case: In September 2011, Consumers filed an application with the MPSC seeking an annual rate increase of $49 million, based on a 10.7 percent authorized return on equity, in order to recover investments made to enhance safety, system reliability, and operational efficiencies that improve service to customers. Consumers self-implemented an annual rate increase of $23 million in March 2012, subject to refund with interest.

In June 2012, the MPSC approved Consumers' settlement agreement and authorized an annual rate increase of $16 million, based on a 10.3 percent return on equity. The MPSC directed Consumers to refund to customers the difference between the rates it self-implemented in March 2012 and the rates authorized in the June 2012 order, plus interest, subject to a reconciliation proceeding. At June 30, 2012, CMS Energy and Consumers had a $1 million regulatory liability recorded for this refund.

Gas Revenue Decoupling Mechanism: The MPSC's 2009 gas rate case order authorized Consumers to implement a gas revenue decoupling mechanism, subject to certain conditions. This decoupling mechanism, which was extended through April 2012, allowed Consumers to adjust future gas rates to compensate for changes in sales volumes resulting from the difference between the level of average sales per customer adopted in the order and actual average weather-adjusted sales per customer. This mechanism was not affected by the Court of Appeals decision on electric decoupling.

In September 2011, Consumers filed its first reconciliation of the gas revenue decoupling mechanism with the MPSC, requesting recovery of $16 million from customers for the period June 2010 through May 2011. The matter remains pending before the MPSC. Certain parties have filed in opposition to this reconciliation.

At June 30, 2012, Consumers had a $33 million non-current regulatory asset recorded for gas revenue decoupling. If the MPSC were to reject all or a major portion of Consumers' requested recovery from its gas revenue decoupling mechanism or if the recovery period were to be substantially delayed, Consumers could be required to write off all or portions of the related regulatory asset.