Revenue

9 Months Ended

Sep. 30, 2020

Revenue, Initial Application Period Cumulative Effect Transition [Line Items]

Revenue

Revenue

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

In Millions
Three Months Ended September 30, 2020	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	1,255		$	192		$	—		$	—		$	1,447
Other		—			—			21			—			21
Revenue recognized from contracts with customers		$	1,255		$	192		$	21		$	—		$	1,468
Leasing income		—			—			36			—			36
Financing income		2			1			—			68			71
Total operating revenue – CMS Energy		$	1,257		$	193		$	57		$	68		$	1,575
Consumers
Consumers utility revenue
Residential		$	624		$	120								$	744
Commercial		413			27									440
Industrial		161			5									166
Other		57			40									97
Revenue recognized from contracts with customers		$	1,255		$	192								$	1,447
Financing income		2			1									3
Total operating revenue – Consumers		$	1,257		$	193								$	1,450

¹  Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. The enterprises segment’s sales of energy commodities are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. The enterprises segment’s leasing income included variable lease payments of $23 million for the three months ended September 30, 2020.

In Millions
Three Months Ended September 30, 2019	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	1,247		$	178		$	—		$	—		$	1,425
Other		—			—			17			—			17
Revenue recognized from contracts with customers		$	1,247		$	178		$	17		$	—		$	1,442
Leasing income		—			—			42			—			42
Financing income		3			1			—			58			62
Total operating revenue – CMS Energy		$	1,250		$	179		$	59		$	58		$	1,546
Consumers
Consumers utility revenue
Residential		$	585		$	111								$	696
Commercial		427			27									454
Industrial		175			3									178
Other		60			37									97
Revenue recognized from contracts with customers		$	1,247		$	178								$	1,425
Financing income		3			1									4
Total operating revenue – Consumers		$	1,250		$	179								$	1,429

¹  Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. The enterprises segment’s sales of energy commodities are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. The enterprises segment’s leasing income included variable lease payments of $28 million for the three months ended September 30, 2019.

In Millions
Nine Months Ended September 30, 2020	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	3,300		$	1,212		$	—		$	—		$	4,512
Other		—			—			57			—			57
Revenue recognized from contracts with customers		$	3,300		$	1,212		$	57		$	—		$	4,569
Leasing income		—			—			110			—			110
Financing income		7			5			—			191			203
Total operating revenue – CMS Energy		$	3,307		$	1,217		$	167		$	191		$	4,882
Consumers
Consumers utility revenue
Residential		$	1,612		$	819								$	2,431
Commercial		1,093			227									1,320
Industrial		427			32									459
Other		168			134									302
Revenue recognized from contracts with customers		$	3,300		$	1,212								$	4,512
Financing income		7			5									12
Total operating revenue – Consumers		$	3,307		$	1,217								$	4,524

¹  Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. The enterprises segment’s sales of energy commodities are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. The enterprises segment’s leasing income included variable lease payments of $69 million for the nine months ended September 30, 2020.

In Millions
Nine Months Ended September 30, 2019	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	3,373		$	1,321		$	—		$	—		$	4,694
Other		—			—			52			—			52
Revenue recognized from contracts with customers		$	3,373		$	1,321		$	52		$	—		$	4,746
Leasing income		—			—			132			—			132
Financing income		7			5			—			160			172
Total operating revenue – CMS Energy		$	3,380		$	1,326		$	184		$	160		$	5,050
Consumers
Consumers utility revenue
Residential		$	1,531		$	898								$	2,429
Commercial		1,140			259									1,399
Industrial		511			36									547
Other		191			128									319
Revenue recognized from contracts with customers		$	3,373		$	1,321								$	4,694
Financing income		7			5									12
Total operating revenue – Consumers		$	3,380		$	1,326								$	4,706

¹  Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. The enterprises segment’s sales of energy commodities are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. The enterprises segment’s leasing income included variable lease payments of $91 million for the nine months ended September 30, 2019.

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.

• 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.

• 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.

Accounts Receivable and Unbilled Revenues: Accounts receivable comprise trade receivables and unbilled receivables. CMS Energy and Consumers record their accounts receivable at cost, less an allowance for uncollectible accounts. The allowance is increased for uncollectible accounts expense and decreased for account write-offs net of recoveries. CMS Energy and Consumers establish the allowance based on historical losses, management’s assessment of existing economic conditions, customer payment trends, and reasonable and supported forecast information. CMS Energy and Consumers assess late payment fees on trade receivables based on contractual past‑due terms established with customers. Accounts are written off when deemed uncollectible, which is generally when they become six months past due.

CMS Energy and Consumers recorded uncollectible accounts expense of $5 million for the three months ended September 30, 2020 and $9 million for the three months ended September 30, 2019. CMS Energy and Consumers recorded uncollectible accounts expense of $18 million for the nine months ended September 30, 2020 and $21 million for the nine months ended September 30, 2019. At September 30, 2020, Consumers had deferred $5 million of incremental uncollectible accounts expense as a non‑current regulatory asset. For additional information see Note 2, Regulatory Matters.

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 and accrued revenue on CMS Energy’s and Consumers’ consolidated balance sheets, were $267 million at September 30, 2020 and $426 million at December 31, 2019.

Consumers Energy Company

Revenue, Initial Application Period Cumulative Effect Transition [Line Items]

Revenue

Revenue

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

In Millions
Three Months Ended September 30, 2020	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	1,255		$	192		$	—		$	—		$	1,447
Other		—			—			21			—			21
Revenue recognized from contracts with customers		$	1,255		$	192		$	21		$	—		$	1,468
Leasing income		—			—			36			—			36
Financing income		2			1			—			68			71
Total operating revenue – CMS Energy		$	1,257		$	193		$	57		$	68		$	1,575
Consumers
Consumers utility revenue
Residential		$	624		$	120								$	744
Commercial		413			27									440
Industrial		161			5									166
Other		57			40									97
Revenue recognized from contracts with customers		$	1,255		$	192								$	1,447
Financing income		2			1									3
Total operating revenue – Consumers		$	1,257		$	193								$	1,450

¹  Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. The enterprises segment’s sales of energy commodities are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. The enterprises segment’s leasing income included variable lease payments of $23 million for the three months ended September 30, 2020.

In Millions
Three Months Ended September 30, 2019	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	1,247		$	178		$	—		$	—		$	1,425
Other		—			—			17			—			17
Revenue recognized from contracts with customers		$	1,247		$	178		$	17		$	—		$	1,442
Leasing income		—			—			42			—			42
Financing income		3			1			—			58			62
Total operating revenue – CMS Energy		$	1,250		$	179		$	59		$	58		$	1,546
Consumers
Consumers utility revenue
Residential		$	585		$	111								$	696
Commercial		427			27									454
Industrial		175			3									178
Other		60			37									97
Revenue recognized from contracts with customers		$	1,247		$	178								$	1,425
Financing income		3			1									4
Total operating revenue – Consumers		$	1,250		$	179								$	1,429

¹  Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. The enterprises segment’s sales of energy commodities are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. The enterprises segment’s leasing income included variable lease payments of $28 million for the three months ended September 30, 2019.

In Millions
Nine Months Ended September 30, 2020	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	3,300		$	1,212		$	—		$	—		$	4,512
Other		—			—			57			—			57
Revenue recognized from contracts with customers		$	3,300		$	1,212		$	57		$	—		$	4,569
Leasing income		—			—			110			—			110
Financing income		7			5			—			191			203
Total operating revenue – CMS Energy		$	3,307		$	1,217		$	167		$	191		$	4,882
Consumers
Consumers utility revenue
Residential		$	1,612		$	819								$	2,431
Commercial		1,093			227									1,320
Industrial		427			32									459
Other		168			134									302
Revenue recognized from contracts with customers		$	3,300		$	1,212								$	4,512
Financing income		7			5									12
Total operating revenue – Consumers		$	3,307		$	1,217								$	4,524

¹  Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. The enterprises segment’s sales of energy commodities are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. The enterprises segment’s leasing income included variable lease payments of $69 million for the nine months ended September 30, 2020.

In Millions
Nine Months Ended September 30, 2019	Electric Utility			Gas Utility			Enterprises¹			EnerBank			Consolidated
CMS Energy, including Consumers
Consumers utility revenue		$	3,373		$	1,321		$	—		$	—		$	4,694
Other		—			—			52			—			52
Revenue recognized from contracts with customers		$	3,373		$	1,321		$	52		$	—		$	4,746
Leasing income		—			—			132			—			132
Financing income		7			5			—			160			172
Total operating revenue – CMS Energy		$	3,380		$	1,326		$	184		$	160		$	5,050
Consumers
Consumers utility revenue
Residential		$	1,531		$	898								$	2,429
Commercial		1,140			259									1,399
Industrial		511			36									547
Other		191			128									319
Revenue recognized from contracts with customers		$	3,373		$	1,321								$	4,694
Financing income		7			5									12
Total operating revenue – Consumers		$	3,380		$	1,326								$	4,706

¹  Amounts represent the enterprises segment’s operating revenue from independent power production and its sales of energy commodities. The enterprises segment’s sales of energy commodities are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. The enterprises segment’s leasing income included variable lease payments of $91 million for the nine months ended September 30, 2019.

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.

• 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.

• 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.

Accounts Receivable and Unbilled Revenues: Accounts receivable comprise trade receivables and unbilled receivables. CMS Energy and Consumers record their accounts receivable at cost, less an allowance for uncollectible accounts. The allowance is increased for uncollectible accounts expense and decreased for account write-offs net of recoveries. CMS Energy and Consumers establish the allowance based on historical losses, management’s assessment of existing economic conditions, customer payment trends, and reasonable and supported forecast information. CMS Energy and Consumers assess late payment fees on trade receivables based on contractual past‑due terms established with customers. Accounts are written off when deemed uncollectible, which is generally when they become six months past due.

CMS Energy and Consumers recorded uncollectible accounts expense of $5 million for the three months ended September 30, 2020 and $9 million for the three months ended September 30, 2019. CMS Energy and Consumers recorded uncollectible accounts expense of $18 million for the nine months ended September 30, 2020 and $21 million for the nine months ended September 30, 2019. At September 30, 2020, Consumers had deferred $5 million of incremental uncollectible accounts expense as a non‑current regulatory asset. For additional information see Note 2, Regulatory Matters.

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 and accrued revenue on CMS Energy’s and Consumers’ consolidated balance sheets, were $267 million at September 30, 2020 and $426 million at December 31, 2019.