Plant, Property, and Equipment

12 Months Ended

Dec. 31, 2021

Public Utility, Property, Plant and Equipment [Line Items]

Plant, Property, and Equipment

Plant, Property, and Equipment

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

In Millions
December 31	Estimated Depreciable Life in Years	2021			2020
CMS Energy, including Consumers
Plant, property, and equipment, gross
Consumers	3 - 125		$	28,771		$	26,757
Enterprises
Independent power production1	2 - 40		1,121			1,112
Other	3 - 5		1			1
Plant, property, and equipment, gross			$	29,893		$	27,870
Construction work in progress			961			1,085
Accumulated depreciation and amortization			(8,502)			(7,938)
Total plant, property, and equipment2			$	22,352		$	21,017
Consumers
Plant, property, and equipment, gross
Electric
Generation	22 - 125		$	6,704		$	6,376
Distribution	20 - 75		9,815			9,130
Other	5 - 50		1,309			1,326
Assets under finance leases and other financing3			319			323
Gas
Distribution	20 - 85		6,338			5,702
Transmission	17 - 75		2,319			2,003
Underground storage facilities4	27 - 75		1,117			1,046
Other	5 - 50		814			817
Assets under finance leases3			13			13
Other non-utility property	3 - 51		23			21
Plant, property, and equipment, gross			$	28,771		$	26,757
Construction work in progress			915			1,058
Accumulated depreciation and amortization			(8,371)			(7,844)
Total plant, property, and equipment2			$	21,315		$	19,971

1A significant portion of independent power production assets are leased to others under operating leases. For information regarding CMS Energy’s operating leases of owned assets, see Note 8, Leases and Palisades Financing.

2Consumers’ plant additions were $2.4 billion for the year ended December 31, 2021 and $2.0 billion for the year ended December 31, 2020. Consumers’ plant retirements, which include the impact of disallowances and transfers to held for sale, were $361 million for the year ended December 31, 2021, and $220 million for the year ended December 31, 2020.

3For information regarding the amortization terms of Consumers’ assets under finance leases and other financing, see Note 8, Leases and Palisades Financing.

4Underground storage includes base natural gas of $26 million at December 31, 2021 and 2020. Base natural gas is not subject to depreciation.

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

In Millions
Description	Amortization Life in Years	December 31, 2021						December 31, 2020
		Gross Cost1			Accumulated Amortization			Gross Cost1			Accumulated Amortization
CMS Energy, including Consumers
Software development	3 - 15		$	840		$	592		$	856		$	568
Rights of way	50 - 85		211			60			197			57
Franchises and consents	5 - 50		16			10			16			10
Leasehold improvements	various2		9			6			10			7
Other intangibles	various		26			16			26			16
Total			$	1,102		$	684		$	1,105		$	658
Consumers
Software development	3 - 15		$	840		$	592		$	856		$	568
Rights of way	50 - 85		211			60			197			57
Franchises and consents	5 - 50		16			10			16			10
Leasehold improvements	various2		9			6			10			7
Other intangibles	various		26			16			25			16
Total			$	1,102		$	684		$	1,104		$	658

1Consumers’ intangible asset additions were $88 million for the year ended December 31, 2021 and $69 million for the year ended December 31, 2020. Consumers’ intangible asset retirements were $91 million for the year ended December 31, 2021 and $65 million for the year ended December 31, 2020.

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

Capitalization: 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 ratemaking process.

With the exception of utility property for which the remaining book value has been securitized, mothballed utility property stays in rate base and continues to be depreciated at the same rate as before the mothball period. 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.

Software: CMS Energy and Consumers capitalize the costs to purchase and develop 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.

AFUDC: Consumers capitalizes AFUDC on regulated major construction projects, except pollution control facilities on its fossil-fuel-fired 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’ average AFUDC capitalization rates:

Years Ended December 31	2021		2020		2019
Electric	6.2	%	6.9	%	6.4	%
Gas	5.6		5.7		5.8

Assets Under Finance Leases and Other Financing: Presented in the following table are further details about changes in Consumers’ assets under finance leases and other financing:

In Millions
Years Ended December 31	2021			2020
Consumers
Balance at beginning of period		$	336		$	340
Additions		—			—
Net retirements and other adjustments		(4)			(4)
Balance at end of period		$	332		$	336

Assets under finance leases and other financing are presented as gross amounts. Consumers’ accumulated amortization of assets under finance leases and other financing was $272 million at December 31, 2021 and $254 million at December 31, 2020.

Depreciation and Amortization: Presented in the following table are further details about CMS Energy’s and Consumers’ accumulated depreciation and amortization:

In Millions
Years Ended December 31	2021			2020
CMS Energy, including Consumers
Utility plant assets		$	8,366		$	7,841
Non-utility plant assets		136			97
Consumers
Utility plant assets		$	8,366		$	7,841
Non-utility plant assets		5			3

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	2021		2020		2019
Electric utility property	3.9	%	3.9	%	3.9	%
Gas utility property	2.9		2.9		2.9
Other property	9.4		9.8		10.0

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.

Presented in the following table are the components of CMS Energy’s and Consumers’ depreciation and amortization expense:

In Millions
Years Ended December 31	2021			2020			2019
CMS Energy, including Consumers
Depreciation expense – plant, property, and equipment		$	975		$	901		$	841
Amortization expense
Software		108			112			119
Other intangible assets		4			4			3
Securitized regulatory assets		27			26			26
Total depreciation and amortization expense		$	1,114		$	1,043		$	989
Consumers
Depreciation expense – plant, property, and equipment		$	938		$	881		$	827
Amortization expense
Software		108			112			119
Other intangible assets		4			4			3
Securitized regulatory assets		27			26			26
Total depreciation and amortization expense		$	1,077		$	1,023		$	975

Presented in the following table is CMS Energy’s and Consumers’ estimated amortization expense on intangible assets for each of the next five years:

In Millions
	2022			2023			2024			2025			2026
CMS Energy, including Consumers
Intangible asset amortization expense		$	108		$	94		$	84		$	86		$	84
Consumers
Intangible asset amortization expense		$	108		$	94		$	84		$	86		$	84

Jointly Owned Regulated Utility Facilities

Presented in the following table are Consumers’ investments in jointly owned regulated utility facilities at December 31, 2021:

In Millions, Except Ownership Share
	J.H. Campbell Unit 3				Ludington				Other
Ownership share		93.3		%		51.0		%		various
Utility plant in service		$	1,751			$	499			$	395
Accumulated depreciation		(897)				(198)				(112)
Construction work in progress		21				92				13
Net investment		$	875			$	393			$	296

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

Public Utility, Property, Plant and Equipment [Line Items]

Plant, Property, and Equipment

Plant, Property, and Equipment

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

In Millions
December 31	Estimated Depreciable Life in Years	2021			2020
CMS Energy, including Consumers
Plant, property, and equipment, gross
Consumers	3 - 125		$	28,771		$	26,757
Enterprises
Independent power production1	2 - 40		1,121			1,112
Other	3 - 5		1			1
Plant, property, and equipment, gross			$	29,893		$	27,870
Construction work in progress			961			1,085
Accumulated depreciation and amortization			(8,502)			(7,938)
Total plant, property, and equipment2			$	22,352		$	21,017
Consumers
Plant, property, and equipment, gross
Electric
Generation	22 - 125		$	6,704		$	6,376
Distribution	20 - 75		9,815			9,130
Other	5 - 50		1,309			1,326
Assets under finance leases and other financing3			319			323
Gas
Distribution	20 - 85		6,338			5,702
Transmission	17 - 75		2,319			2,003
Underground storage facilities4	27 - 75		1,117			1,046
Other	5 - 50		814			817
Assets under finance leases3			13			13
Other non-utility property	3 - 51		23			21
Plant, property, and equipment, gross			$	28,771		$	26,757
Construction work in progress			915			1,058
Accumulated depreciation and amortization			(8,371)			(7,844)
Total plant, property, and equipment2			$	21,315		$	19,971

1A significant portion of independent power production assets are leased to others under operating leases. For information regarding CMS Energy’s operating leases of owned assets, see Note 8, Leases and Palisades Financing.

2Consumers’ plant additions were $2.4 billion for the year ended December 31, 2021 and $2.0 billion for the year ended December 31, 2020. Consumers’ plant retirements, which include the impact of disallowances and transfers to held for sale, were $361 million for the year ended December 31, 2021, and $220 million for the year ended December 31, 2020.

3For information regarding the amortization terms of Consumers’ assets under finance leases and other financing, see Note 8, Leases and Palisades Financing.

4Underground storage includes base natural gas of $26 million at December 31, 2021 and 2020. Base natural gas is not subject to depreciation.

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

In Millions
Description	Amortization Life in Years	December 31, 2021						December 31, 2020
		Gross Cost1			Accumulated Amortization			Gross Cost1			Accumulated Amortization
CMS Energy, including Consumers
Software development	3 - 15		$	840		$	592		$	856		$	568
Rights of way	50 - 85		211			60			197			57
Franchises and consents	5 - 50		16			10			16			10
Leasehold improvements	various2		9			6			10			7
Other intangibles	various		26			16			26			16
Total			$	1,102		$	684		$	1,105		$	658
Consumers
Software development	3 - 15		$	840		$	592		$	856		$	568
Rights of way	50 - 85		211			60			197			57
Franchises and consents	5 - 50		16			10			16			10
Leasehold improvements	various2		9			6			10			7
Other intangibles	various		26			16			25			16
Total			$	1,102		$	684		$	1,104		$	658

1Consumers’ intangible asset additions were $88 million for the year ended December 31, 2021 and $69 million for the year ended December 31, 2020. Consumers’ intangible asset retirements were $91 million for the year ended December 31, 2021 and $65 million for the year ended December 31, 2020.

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

Capitalization: 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 ratemaking process.

With the exception of utility property for which the remaining book value has been securitized, mothballed utility property stays in rate base and continues to be depreciated at the same rate as before the mothball period. 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.

Software: CMS Energy and Consumers capitalize the costs to purchase and develop 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.

AFUDC: Consumers capitalizes AFUDC on regulated major construction projects, except pollution control facilities on its fossil-fuel-fired 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’ average AFUDC capitalization rates:

Years Ended December 31	2021		2020		2019
Electric	6.2	%	6.9	%	6.4	%
Gas	5.6		5.7		5.8

Assets Under Finance Leases and Other Financing: Presented in the following table are further details about changes in Consumers’ assets under finance leases and other financing:

In Millions
Years Ended December 31	2021			2020
Consumers
Balance at beginning of period		$	336		$	340
Additions		—			—
Net retirements and other adjustments		(4)			(4)
Balance at end of period		$	332		$	336

Assets under finance leases and other financing are presented as gross amounts. Consumers’ accumulated amortization of assets under finance leases and other financing was $272 million at December 31, 2021 and $254 million at December 31, 2020.

Depreciation and Amortization: Presented in the following table are further details about CMS Energy’s and Consumers’ accumulated depreciation and amortization:

In Millions
Years Ended December 31	2021			2020
CMS Energy, including Consumers
Utility plant assets		$	8,366		$	7,841
Non-utility plant assets		136			97
Consumers
Utility plant assets		$	8,366		$	7,841
Non-utility plant assets		5			3

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	2021		2020		2019
Electric utility property	3.9	%	3.9	%	3.9	%
Gas utility property	2.9		2.9		2.9
Other property	9.4		9.8		10.0

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.

Presented in the following table are the components of CMS Energy’s and Consumers’ depreciation and amortization expense:

In Millions
Years Ended December 31	2021			2020			2019
CMS Energy, including Consumers
Depreciation expense – plant, property, and equipment		$	975		$	901		$	841
Amortization expense
Software		108			112			119
Other intangible assets		4			4			3
Securitized regulatory assets		27			26			26
Total depreciation and amortization expense		$	1,114		$	1,043		$	989
Consumers
Depreciation expense – plant, property, and equipment		$	938		$	881		$	827
Amortization expense
Software		108			112			119
Other intangible assets		4			4			3
Securitized regulatory assets		27			26			26
Total depreciation and amortization expense		$	1,077		$	1,023		$	975

Presented in the following table is CMS Energy’s and Consumers’ estimated amortization expense on intangible assets for each of the next five years:

In Millions
	2022			2023			2024			2025			2026
CMS Energy, including Consumers
Intangible asset amortization expense		$	108		$	94		$	84		$	86		$	84
Consumers
Intangible asset amortization expense		$	108		$	94		$	84		$	86		$	84

Jointly Owned Regulated Utility Facilities

Presented in the following table are Consumers’ investments in jointly owned regulated utility facilities at December 31, 2021:

In Millions, Except Ownership Share
	J.H. Campbell Unit 3				Ludington				Other
Ownership share		93.3		%		51.0		%		various
Utility plant in service		$	1,751			$	499			$	395
Accumulated depreciation		(897)				(198)				(112)
Construction work in progress		21				92				13
Net investment		$	875			$	393			$	296

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.