Revenue

12 Months Ended

Dec. 31, 2018

Disaggregation of Revenue [Line Items]

Presented in the following tables are the components of operating revenue:



In Millions
Year Ended December 31, 2018	Electric Utility			Gas Utility			Enterprises¹			Other Reconciling²			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	4,528		$	1,882		$	—		$	—		$	6,410
Other		—			—			92			—			92
Revenue recognized from contracts with customers		4,528			1,882			92			—			6,502
Leasing income		—			—			160			—			160
Financing income		10			5			—			157			172
Consumers alternative revenue programs		23			16			—			—			39
Total operating revenue – CMS Energy		$	4,561		$	1,903		$	252		$	157		$	6,873
Consumers
Consumers utility revenue
Residential		$	2,049		$	1,284		$	—		$	—		$	3,333
Commercial		1,545			367			—			—			1,912
Industrial		674			55			—			—			729
Other		260			176			—			—			436
Revenue recognized from contracts with customers		4,528			1,882			—			—			6,410
Leasing income		—			—			—			—			—
Financing income		10			5			—			—			15
Alternative revenue programs		23			16			—			—			39
Total operating revenue – Consumers		$	4,561		$	1,903		$	—		$	—		$	6,464


¹	Amounts represent the enterprises segment’s operating revenue from independent power production and CMS ERM’s sales of energy commodities in support of the independent power production portfolio.


²	Amount represents EnerBank’s operating revenue from providing primarily unsecured consumer installment loans for financing home improvements.

Electric and Gas Utilities

Consumers Utility Revenue: Consumers recognizes revenue primarily from the sale of electric and gas utility services at tariff-based rates regulated by the MPSC. Consumers’ customer base consists of a mix of residential, commercial, and diversified industrial customers. Consumers’ tariff-based sales performance obligations are described below.

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Consumers has performance obligations for the service of standing ready to deliver electricity or natural gas to customers, and it satisfies these performance obligations over time. Consumers recognizes revenue at a fixed rate as it provides these services. These arrangements generally do not have fixed terms and remain in effect as long as the customer consumes the utility service. The rates are set by the MPSC through the rate-making process and represent the stand-alone selling price of Consumers’ service to stand ready to deliver.

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Consumers has performance obligations for the service of delivering the commodity of electricity or natural gas to customers, and it satisfies these performance obligations upon delivery. Consumers recognizes revenue at a price per unit of electricity or natural gas delivered, based on the tariffs established by the MPSC. These arrangements generally do not have fixed terms and remain in effect as long as the customer consumes the utility service. The rates are set by the MPSC through the rate-making process and represent the stand-alone selling price of a bundled product comprising the commodity, electricity or natural gas, and the service of delivering such commodity.

In some instances, Consumers has specific fixed-term contracts with large commercial and industrial customers to provide electricity or gas at certain tariff rates or to provide gas transportation services at contracted rates. The amount of electricity and gas to be delivered under these contracts and the associated future revenue to be received are generally dependent on the customers’ needs. Accordingly, Consumers recognizes revenues at the tariff or contracted rate as electricity or gas is delivered to the customer. Consumers also has other miscellaneous contracts with customers related to pole and other property rentals, appliance service plans, and utility contract work. Generally, these contracts are short term or evergreen in nature.

EnerBank: EnerBank provides four types of unsecured consumer installment loans: same-as-cash, zero interest, reduced interest, and traditional. Under EnerBank’s same-as-cash programs, authorized contractors pay EnerBank a fee to provide a borrower with the option to pay off the loan interest-free during the same-as-cash period. EnerBank recognizes the fee on a straight-line basis over the same-as-cash period, which typically ranges from three to 24 months. If a borrower does not exercise its option to pay off its loan interest-free during the same-as-cash period, EnerBank charges the borrower accrued interest at the loan’s contractual rate on the outstanding balance from the origination date. Under the zero interest and reduced interest programs, authorized contractors pay EnerBank a fee to provide a borrower with no interest or reduced rates of interest for the entire term of the loan. EnerBank recognizes the fee using the interest method over the term of the loan, which ranges from one to 12 years.

EnerBank recognizes interest income using the interest method and amortizes loan origination fees, net of certain direct origination costs, over the loan term. EnerBank ceases recognizing interest income when a loan loss is confirmed or when a loan becomes 120 days past due, at which time the loan principal is charged against the allowance for loan losses. At that time, EnerBank recognizes any interest accrued but not received for such loan losses as a reversal of interest income.

Alternative-Revenue Programs: The energy waste reduction incentive mechanism provides a financial incentive if the energy savings of Consumers’ customers exceed annual targets established by the MPSC. The maximum incentive that Consumers may earn under this mechanism is 20 percent of the amount it spends on energy waste reduction programs. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizing revenue related to the incentive as soon as energy savings exceed the annual targets established by the MPSC.

Under a gas revenue decoupling mechanism authorized by the MPSC, Consumers is allowed to adjust future gas rates for differences between Consumers’ actual weather-normalized non‑fuel revenues and the revenues approved by the MPSC. Consumers accounts for this program as an alternative-revenue program that meets the criteria for recognizing the effects of decoupling adjustments on revenue as gas is delivered.

Consumers does not reclassify revenue from its alternative-revenue programs to revenue from contracts with customers at the time the amounts are collected from customers.

Accounts Receivable and Unbilled Revenues: Accounts receivable comprise trade receivables and unbilled receivables. CMS Energy and Consumers record their accounts receivable at cost, which approximates fair value. CMS Energy and Consumers establish an allowance for uncollectible accounts based on historical losses, management’s assessment of existing economic conditions, customer payment trends, and other factors. CMS Energy and Consumers assess late payment fees on trade receivables based on contractual past-due terms established with customers. CMS Energy and Consumers charge off accounts deemed uncollectible to operating expense. Uncollectible expense for CMS Energy, including Consumers, was $29 million for the year ended December 31, 2018. Uncollectible expense for Consumers was $29 million for the year ended December 31, 2018.

Consumers’ customers are billed monthly in cycles having billing dates that do not generally coincide with the end of a calendar month. This results in customers having received electricity or natural gas that they have not been billed for as of the month-end. Consumers estimates its unbilled revenues by applying an average billed rate to total unbilled deliveries for each customer class. Unbilled revenues, which are recorded as accounts receivable on CMS Energy’s and Consumers’ consolidated balance sheets, were $409 million at December 31, 2018 and $481 million at December 31, 2017.

Consumers Energy Company

Disaggregation of Revenue [Line Items]

Revenue

Presented in the following tables are the components of operating revenue:



In Millions
Year Ended December 31, 2018	Electric Utility			Gas Utility			Enterprises¹			Other Reconciling²			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	4,528		$	1,882		$	—		$	—		$	6,410
Other		—			—			92			—			92
Revenue recognized from contracts with customers		4,528			1,882			92			—			6,502
Leasing income		—			—			160			—			160
Financing income		10			5			—			157			172
Consumers alternative revenue programs		23			16			—			—			39
Total operating revenue – CMS Energy		$	4,561		$	1,903		$	252		$	157		$	6,873
Consumers
Consumers utility revenue
Residential		$	2,049		$	1,284		$	—		$	—		$	3,333
Commercial		1,545			367			—			—			1,912
Industrial		674			55			—			—			729
Other		260			176			—			—			436
Revenue recognized from contracts with customers		4,528			1,882			—			—			6,410
Leasing income		—			—			—			—			—
Financing income		10			5			—			—			15
Alternative revenue programs		23			16			—			—			39
Total operating revenue – Consumers		$	4,561		$	1,903		$	—		$	—		$	6,464


¹	Amounts represent the enterprises segment’s operating revenue from independent power production and CMS ERM’s sales of energy commodities in support of the independent power production portfolio.


²	Amount represents EnerBank’s operating revenue from providing primarily unsecured consumer installment loans for financing home improvements.

Electric and Gas Utilities

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Consumers does not reclassify revenue from its alternative-revenue programs to revenue from contracts with customers at the time the amounts are collected from customers.