Retirement Benefits (Tables)

12 Months Ended

Dec. 31, 2012

Schedule Of SERP Trust Assets, ABO And Contributions



In Millions
Years Ended December 31	2012			2011
CMS Energy, including Consumers
Trust assets		$	128		$	114
ABO			130			117
Contributions			13			27
Consumers
Trust assets		$	87		$	75
ABO			86			76
Contributions			9			20

Schedule Of Effect Of One-Percentage-Point Change In Assumed Health Care Cost Trend Rates



In Millions
	One Percentage			One Percentage
Years Ended December 31	Point Increase			Point Decrease
CMS Energy, including Consumers
Effect on total service and interest cost component		$	23		$	(19)
Effect on PBO			281			(242)
Consumers
Effect on total service and interest cost component		$	22		$	(18)
Effect on PBO			273			(235)

Schedule Of Assumptions Used



	Pension and DB SERP									OPEB
December 31	2012			2011			2010			2012			2011			2010
CMS Energy, including Consumers
Weighted average for benefit obligations
Discount rate¹		4.10	%		4.90	%		5.40	%		4.40	%		5.10	%		5.60	%
Mortality table²		2000			2000			2000			2000			2000			2000
Rate of compensation increase
Pension		3.00	%		3.50	%		4.00	%
DB SERP		5.50	%		5.50	%		5.50	%
Weighted average for net periodic benefit cost obligations
Discount rate¹		4.90	%		5.40	%		5.85	%		5.10	%		5.60	%		6.00	%
Expected long-term rate of return on plan assets³		7.75	%		8.00	%		8.00	%		7.25	%		7.50	%		7.50	%
Mortality table²		2000			2000			2000			2000			2000			2000
Rate of compensation increase
Pension		3.50	%		4.00	%		4.00	%
DB SERP		5.50	%		5.50	%		5.50	%

¹The discount rate reflects the rate at which benefits could be effectively settled and is equal to the equivalent single rate resulting from a yield curve analysis. This analysis incorporated the projected benefit payments specific to CMS Energy’s and Consumers’ Pension Plan and OPEB plan and the yields on high quality corporate bonds rated Aa or better.

²The mortality assumption was based on the RP-2000 mortality tables with projection of future mortality improvements using Scale AA, which aligned with the IRS prescriptions for cash funding valuations under the Pension Protection Act of 2006.

³CMS Energy and Consumers determined the long-term rate of return using historical market returns, the present and expected future economic environment, the capital market principles of risk and return, and the expert opinions of individuals and firms with financial market knowledge. CMS Energy and Consumers considered the asset allocation of the portfolio in forecasting the future expected total return of the portfolio. The goal was to determine a long-term rate of return that could be incorporated into the planning of future cash flow requirements in conjunction with the change in the liability. Annually, CMS Energy and Consumers review for reasonableness and appropriateness the forecasted returns for various classes of assets used to construct an expected return model. CMS Energy’s and Consumers’ expected long-term rate of return on Pension Plan assets was 7.75 percent in 2012. The actual return on Pension Plan assets was 14.1 percent in 2012, four percent in 2011, and 13 percent in 2010.

Schedule Of Net Benefit Costs



In Millions
	Pension and DB SERP
Years Ended December 31	2012			2011			2010
CMS Energy, including Consumers
Net periodic pension and DB SERP cost
Service cost		$	49		$	49		$	45
Interest expense			105			106			104
Expected return on plan assets			(125)			(112)			(92)
Amortization of:
Net loss			79			65			52
Prior service cost			5			5			5
Net periodic pension and DB SERP cost		$	113		$	113		$	114
Regulatory adjustment¹			-			-			30
Net periodic pension and DB SERP cost after regulatory adjustment		$	113		$	113		$	144
Consumers
Net periodic pension and DB SERP cost
Service cost		$	48		$	48		$	44
Interest expense			100			101			99
Expected return on plan assets			(122)			(109)			(89)
Amortization of:
Net loss			77			63			50
Prior service cost			5			5			5
Net periodic pension and DB SERP cost		$	108		$	108		$	109
Regulatory adjustment¹			-			-			30
Net periodic pension and DB SERP cost after regulatory adjustment		$	108		$	108		$	139



In Millions
	OPEB
Years Ended December 31	2012			2011			2010
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost		$	32		$	27		$	26
Interest expense			82			77			80
Expected return on plan assets			(66)			(66)			(60)
Amortization of:
Net loss			46			30			32
Prior service credit			(20)			(20)			(17)
Net periodic OPEB cost		$	74		$	48		$	61
Regulatory adjustment¹			-			-			5
Net periodic OPEB cost after regulatory adjustment		$	74		$	48		$	66
Consumers
Net periodic OPEB cost
Service cost		$	31		$	26		$	25
Interest expense			79			74			77
Expected return on plan assets			(61)			(61)			(56)
Amortization of:
Net loss			47			31			33
Prior service credit			(20)			(20)			(16)
Net periodic OPEB cost		$	76		$	50		$	63
Regulatory adjustment¹			-			-			5
Net periodic OPEB cost after regulatory adjustment		$	76		$	50		$	68

¹Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, which resulted in no impact to net income for the years presented. The pension and OPEB regulatory asset was less than $1 million at December 31, 2012 and 2011.

Schedule Of Benefit Obligations In Excess Of Fair Value Of Plan Assets



In Millions
	Pension Plan
Years Ended December 31	2012			2011
CMS Energy, including Consumers
Benefit obligation at beginning of period		$	2,072		$	1,896
Service cost			48			48
Interest cost			99			100
Actuarial loss			249			107
Benefits paid			(114)			(79)
Benefit obligation at end of period			2,354			2,072
Plan assets at fair value at beginning of period		$	1,626		$	1,401
Actual return on plan assets			215			54
Company contribution			-			250
Actual benefits paid			(114)			(79)
Plan assets at fair value at end of period			1,727			1,626
Funded status¹		$	(627)		$	(446)



In Millions
	DB SERP						OPEB
Years Ended December 31	2012			2011			2012			2011
CMS Energy, including Consumers
Benefit obligation at beginning of period		$	127		$	118		$	1,641		$	1,410
Service cost			1			1			32			27
Interest cost			6			6			82			77
Actuarial loss			16			8			25			180
Benefits paid			(6)			(6)			(51)	²		(53)	²
Benefit obligation at end of period		$	144		$	127		$	1,729	³	$	1,641	³
Plan assets at fair value at beginning of period		$	-		$	-		$	924		$	887
Actual return on plan assets			-			-			108			23
Company contribution			6			6			65			67
Actual benefits paid			(6)			(6)			(50)	²		(53)	²
Plan assets at fair value at end of period		$	-		$	-		$	1,047		$	924
Funded status		$	(144)		$	(127)		$	(682)		$	(717)
Consumers
Benefit obligation at beginning of period		$	85		$	77		$	1,585		$	1,358
Service cost			1			1			31			26
Interest cost			4			4			79			74
Actuarial loss			13			6			24			178
Benefits paid			(3)			(3)			(49)	²		(51)	²
Benefit obligation at end of period		$	100		$	85		$	1,670	³	$	1,585	³
Plan assets at fair value at beginning of period		$	-		$	-		$	861		$	825
Actual return on plan assets			-			-			101			21
Company contribution			3			3			64			66
Actual benefits paid			(3)			(3)			(48)	²		(51)	²
Plan assets at fair value at end of period		$	-		$	-		$	978		$	861
Funded status		$	(100)		$	(85)		$	(692)		$	(724)

¹ At December 31, 2012, $590 million of the total funded status of the Pension Plan was attributable to Consumers based on an allocation of expenses. At December 31, 2011, $414 million of the funded status of the Pension Plan was attributable to Consumers based on an allocation of expenses.

² CMS Energy received payments of $5 million in each of 2012, 2011, and 2010 for the Medicare Part D subsidies. Consumers received payments of $5 million in each of 2012, 2011, and 2010 for the Medicare Part D subsidies. The Medicare Part D subsidy payments are used to pay OPEB plan benefits.

³ The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established a prescription drug benefit under Medicare (Medicare Part D) and a federal subsidy, which is tax-exempt, to sponsors of retiree health care benefit plans that provide a benefit that is actuarially equivalent to Medicare Part D. In 2010, the Health Care Acts repealed these tax-exempt deductions for years beginning after December 31, 2012. The Medicare Part D annualized reduction in net OPEB cost for CMS Energy was $20 million for 2012, $26 million for 2011, and $28 million for 2010. Consumers’ Medicare Part D annualized reduction in net OPEB costs was $19 million for 2012, $25 million for 2011, and $26 million for 2010. The reduction for CMS Energy and Consumers included $7 million for 2012, $9 million for 2011, and $10 million for 2010 in capitalized OPEB costs.

Schedule Of Accumulated And Projected Benefit Obligations



In Millions
Years Ended December 31	2012			2011
CMS Energy, including Consumers
Pension PBO		$	2,354		$	2,072
Pension ABO			2,054			1,765
Fair value of Pension Plan assets			1,727			1,626

Schedule Of Net Periodic Benefit Cost Not Yet Recognized Including Regulatory Assets



In Millions
	Pension and DB SERP						OPEB
Years Ended December 31	2012			2011			2012			2011
CMS Energy, including Consumers
Regulatory assets
Net loss		$	1,095		$	1,014		$	704		$	766
Prior service cost (credit)			13			17			(112)			(132)
AOCI
Net loss (gain)			98			81			(7)			(5)
Prior service cost (credit)			-			2			(3)			(3)
Total amounts recognized in regulatory assets and AOCI		$	1,206		$	1,114		$	582		$	626
Consumers
Regulatory assets
Net loss		$	1,095		$	1,014		$	704		$	766
Prior service cost (credit)			13			17			(112)			(132)
AOCI
Net loss			38			27			-			-
Total amounts recognized in regulatory assets and AOCI		$	1,146		$	1,058		$	592		$	634

Schedule Of Allocation Of Plan Assets



In Millions
	Pension Plan
December 31, 2012	Total			Level 1			Level 2
CMS Energy, including Consumers
Asset category
Cash and short-term investments¹		$	33		$	33		$	-
U.S. government and agencies securities²			26			-			26
Corporate debt³			277			-			277
State and municipal bonds⁵			8			-			8
Foreign corporate bonds⁶			27			-			27
Mutual funds⁸			319			319			-
Pooled funds⁹			1,037			-			1,037
Total		$	1,727		$	352		$	1,375



In Millions
	Pension Plan
December 31, 2011	Total			Level 1			Level 2
CMS Energy, including Consumers
Asset category
Cash and short-term investments¹		$	241		$	241		$	-
U.S. government and agencies securities²			24			-			24
Corporate debt³			236			-			236
State and municipal bonds⁵			10			-			10
Foreign corporate bonds⁶			23			-			23
Mutual funds⁸			257			257			-
Pooled funds⁹			835			-			835
Total		$	1,626		$	498		$	1,128



In Millions
	OPEB Plan
December 31, 2012	Total			Level 1			Level 2
CMS Energy, including Consumers
Asset category
Cash and short-term investments¹		$	118		$	118		$	-
U.S. government and agencies securities²			4			-			4
Corporate debt⁴			38			-			38
State and municipal bonds⁵			1			-			1
Foreign corporate bonds⁶			4			-			4
Common stocks⁷			75			75			-
Mutual funds⁸			300			300			-
Pooled funds¹⁰			507			-			507
Total		$	1,047		$	493		$	554
Consumers
Asset category
Cash and short-term investments¹		$	111		$	111		$	-
U.S. government and agencies securities²			3			-			3
Corporate debt⁴			35			-			35
State and municipal bonds⁵			1			-			1
Foreign corporate bonds⁶			3			-			3
Common stocks⁷			70			70			-
Mutual funds⁸			281			281			-
Pooled funds¹⁰			474			-			474
Total		$	978		$	462		$	516



In Millions
	OPEB Plan
December 31, 2011	Total			Level 1			Level 2
CMS Energy, including Consumers
Asset category
Cash and short-term investments¹		$	64		$	64		$	-
U.S. government and agencies securities²			203			-			203
Corporate debt⁴			28			-			28
State and municipal bonds⁵			71			-			71
Foreign corporate bonds⁶			3			-			3
Common stocks⁷			113			113			-
Mutual funds⁸			31			31			-
Pooled funds¹⁰			411			-			411
Total		$	924		$	208		$	716
Consumers
Asset category
Cash and short-term investments¹		$	60		$	60		$	-
U.S. government and agencies securities²			189			-			189
Corporate debt⁴			26			-			26
State and municipal bonds⁵			66			-			66
Foreign corporate bonds⁶			3			-			3
Common stocks⁷			105			105			-
Mutual funds⁸			29			29			-
Pooled funds¹⁰			383			-			383
Total		$	861		$	194		$	667

¹ Cash and short-term investments consist of money market funds with daily liquidity.

¹	U.S. government and agencies securities consist of U.S. Treasury notes and other debt securities backed by the U.S. government and related agencies. These securities were valued based on quoted market prices.

At December 31, 2012, corporate debt investments in the Pension Plan comprised investment grade bonds (68 percent) and non-investment grade, high-yield bonds (32 percent) of U.S. issuers from diverse industries. At December 31, 2011, corporate debt investments in the Pension Plan comprised investment grade bonds (69 percent) and non-investment grade, high-yield bonds (31 percent) of U.S. issuers from diverse industries. These securities are valued based on quoted market prices, when available, or yields presently available on comparable securities of issuers with similar credit ratings.

At December 31, 2012, corporate debt investments in the OPEB plan comprised investment grade bonds (68 percent) and non-investment grade, high-yield bonds (32 percent) of U.S. issuers from diverse industries. At December 31, 2011, corporate debt investments in the OPEB plan comprised investment grade bonds (69 percent) and non-investment grade, high-yield bonds (31 percent) of U.S. issuers from diverse industries. These securities are valued based on quoted market prices, when available, or yields presently available on comparable securities of issuers with similar credit ratings.

⁴

State and municipal bonds were valued using a matrix-pricing model that incorporates Level 2 market-based information. The fair value of the bonds was derived from various observable inputs, including benchmark yields, reported securities trades, broker/dealer quotes, bond ratings, and general information on market movements for investment grade state and municipal securities normally considered by market participants when pricing such debt securities.

⁵	Foreign corporate debt securities were valued based on quoted market prices, when available, or on yields available on comparable securities of issuers with similar credit ratings.

⁶	Common stocks in the OPEB plan consist of equity securities with low transaction costs that were actively managed and tracked by the S&P 500 Index. These securities were valued at their quoted closing prices.

⁷	Mutual funds represent shares in registered investment companies that are priced based on the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in the funds.

⁸

Pooled funds in the Pension Plan include both common and collective trust funds as well as special funds that contain only employee benefit plan assets from two or more unrelated benefit plans. At December 31, 2012, these funds comprised investments in U.S. equity securities (51 percent), foreign equity securities (26 percent), foreign fixed-income securities (14 percent), U.S. fixed-income securities (four percent), and alternative investments (five percent). At December 31, 2011, these funds comprised investments in U.S. equity securities (53 percent), foreign equity securities (22 percent), foreign fixed-income securities (16 percent), U.S. fixed-income securities (five percent), and alternative investments (four percent). These investments were valued at the quoted NAV provided by the fund managers that is the basis for transactions to buy or sell shares in the funds.

⁹

Pooled funds in the OPEB plan include both common and collective trust funds as well as special funds that contain only employee benefit plan assets from two or more unrelated benefit plans. At December 31, 2012, these funds comprised investments in U.S. equity securities (65 percent), foreign equity securities (21 percent), foreign fixed-income securities (nine percent), U.S. fixed-income securities (three percent), and alternative investments (two percent). At December 31, 2011, these funds comprised investments in U.S. equity securities (88 percent), foreign equity securities (six percent), foreign fixed-income securities (four percent), U.S. fixed-income securities (one percent), and alternative investments (one percent). These investments are valued at the quoted NAV provided by the fund managers that is the basis for transactions to buy or sell shares in the funds.

Schedule Of Plan Contributions



In Millions
Years Ended December 31	2012			2011
CMS Energy, including Consumers
OPEB¹
VEBA trust		$	45		$	48
401(h) component			20			19
		$	65		$	67
Pension²		$	-		$	250
Consumers
OPEB¹
VEBA trust		$	45		$	47
401(h) component			19			19
		$	64		$	66
Pension²		$	-		$	245

¹	CMS Energy, including Consumers, plans to contribute $74 million to the OPEB plan in 2013, of which Consumers plans to contribute $73 million.

²	CMS Energy, including Consumers, planned to contribute $50 million to the Pension Plan in 2013, of which Consumers planned to contribute $49 million. This Pension Plan contribution was made in January 2013.

Schedule Of Expected Benefit Payments



In Millions
	Pension			DB SERP			OPEB¹
CMS Energy, including Consumers
2013		$	120		$	7		$	61
2014			128			8			65
2015			138			8			70
2016			144			8			74
2017			149			8			79
2018-2022			793			46			451
Consumers
2013		$	117		$	4		$	59
2014			125			4			63
2015			134			4			67
2016			140			4			71
2017			146			4			76
2018-2022			773			20			432

CMS Energy’s and Consumers’ OPEB benefit payments are net of employee contributions and expected Medicare Part D prescription drug subsidy payments. For CMS Energy, subsidies to be received are estimated to be $6 million for 2013, $7 million for each of 2014 and 2015, $8 million for each of 2016 and 2017, and $51 million combined for 2018 through 2022. For Consumers, subsidies to be received are estimated to be $6 million for each of 2013 and 2014, $7 million for each of 2015 and 2016, $8 million for 2017, and $48 million combined for 2018 through 2022.

Consumers Energy Company [Member]