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þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission | Registrant; State of Incorporation; | IRS Employer | ||
File Number | Address; and Telephone Number | Identification No. | ||
1-9513 | CMS ENERGY CORPORATION | 38-2726431 | ||
(A Michigan Corporation) | ||||
One Energy Plaza, Jackson, Michigan 49201 | ||||
(517) 788-0550 |
1-5611 | CONSUMERS ENERGY COMPANY | 38-0442310 | ||
(A Michigan Corporation) | ||||
One Energy Plaza, Jackson, Michigan 49201 | ||||
(517) 788-0550 |
Large accelerated filer þ | Accelerated filer o | Non-Accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Large accelerated filer o | Accelerated filer o | Non-Accelerated filer þ (Do not check if a smaller reporting company) | Smaller reporting company o |
CMS Energy Common Stock, $0.01 par value
|
230,179,070 |
Consumers Energy Common Stock, $10 par value, privately held by CMS Energy Corporation
|
84,108,789 |
Page | ||||||||
3 | ||||||||
7 | ||||||||
7 | ||||||||
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PART I — FINANCIAL INFORMATION
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Item 1. Financial Statements (unaudited)
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32 | ||||||||
40 | ||||||||
47 | ||||||||
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12 | ||||||||
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82 | ||||||||
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82 | ||||||||
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82 | ||||||||
82 | ||||||||
83 | ||||||||
83 | ||||||||
83 | ||||||||
84 | ||||||||
86 | ||||||||
EX-10.1 | ||||||||
EX-12.1 | ||||||||
EX-12.2 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-31.3 | ||||||||
EX-31.4 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
2
2008 Energy Legislation
|
Comprehensive energy reform package enacted in October 2008 with the approval of Michigan Senate Bill 213 and Michigan House Bill 5524 | |
|
||
2009 Form 10-K
|
Each of CMS Energy’s and Consumers’ Annual Report on Form 10-K for the year ended December 31, 2009 | |
|
||
ALJ
|
Administrative Law Judge | |
|
||
AOC
|
Administrative Order on Consent | |
|
||
AOCL
|
Accumulated Other Comprehensive Loss | |
|
||
ASU
|
FASB Accounting Standards Update | |
|
||
Bay Harbor
|
A residential/commercial real estate area located near Petoskey, Michigan. In 2002, CMS Energy sold its interest in Bay Harbor. | |
|
||
bcf
|
Billion cubic feet of gas | |
|
||
Beeland
|
Beeland Group LLC, a wholly owned subsidiary of CMS Land | |
|
||
Big Rock
|
Big Rock Point nuclear power plant, formerly owned by Consumers | |
|
||
CAIR
|
The Clean Air Interstate Rule | |
|
||
Cantera Gas Company
|
Cantera Gas Company LLC, a non-affiliated company | |
|
||
Cantera Natural Gas, Inc.
|
Cantera Natural Gas, Inc., a non-affiliated company that purchased CMS Field Services | |
|
||
CCB
|
Coal combustion by-product | |
|
||
CEO
|
Chief Executive Officer | |
|
||
CFO
|
Chief Financial Officer | |
|
||
Chrysler
|
Chrysler LLC, a non-affiliated company | |
|
||
CKD
|
Cement kiln dust | |
|
||
Clean Air Act
|
Federal Clean Air Act, as amended | |
|
||
Clean Water Act
|
Federal Water Pollution Control Act | |
|
||
CMS Capital
|
CMS Capital, L.L.C., a wholly owned subsidiary of CMS Energy | |
|
||
CMS Energy
|
CMS Energy Corporation, the parent of Consumers and CMS Enterprises | |
|
||
CMS Energy Common Stock
or common stock
|
Common stock of CMS Energy, par value $0.01 per share | |
|
||
CMS Energy Trust I
|
A VIE and a wholly owned business trust formed for the sole purpose of issuing preferred securities and lending the proceeds to CMS Energy | |
|
||
CMS Enterprises
|
CMS Enterprises Company, a wholly owned subsidiary of CMS Energy | |
|
||
CMS ERM
|
CMS Energy Resource Management Company, formerly CMS MST, a wholly owned subsidiary of CMS Enterprises | |
|
||
CMS Field Services
|
CMS Field Services, Inc., a former wholly owned subsidiary of CMS Gas Transmission | |
|
||
CMS Gas Transmission
|
CMS Gas Transmission Company, a wholly owned subsidiary of CMS Enterprises | |
|
||
CMS Land
|
CMS Land Company, a wholly owned subsidiary of CMS Capital |
3
CMS MST
|
CMS Marketing, Services and Trading Company, a wholly owned subsidiary of CMS Enterprises, whose name was changed to CMS ERM effective January 2004 | |
|
||
CMS Oil and Gas
|
CMS Oil and Gas Company, a former wholly owned subsidiary of CMS Enterprises | |
|
||
CMS Viron
|
CMS Viron Corporation, a wholly owned subsidiary of CMS ERM | |
|
||
Consumers
|
Consumers Energy Company, a wholly owned subsidiary of CMS Energy | |
|
||
Customer Choice Act
|
Customer Choice and Electricity Reliability Act, a Michigan statute | |
|
||
Detroit Edison
|
The Detroit Edison Company, a non-affiliated company | |
|
||
D.C.
|
District of Columbia | |
|
||
DOE
|
U.S. Department of Energy | |
|
||
DOJ
|
U.S. Department of Justice | |
|
||
EnerBank
|
EnerBank USA, a wholly owned subsidiary of CMS Capital | |
|
||
Entergy
|
Entergy Corporation, a non-affiliated company | |
|
||
EPA
|
U.S. Environmental Protection Agency | |
|
||
EPS
|
Earnings per share | |
|
||
Exchange Act
|
Securities Exchange Act of 1934, as amended | |
|
||
FASB
|
Financial Accounting Standards Board | |
|
||
FDIC
|
Federal Deposit Insurance Corporation | |
|
||
FERC
|
The Federal Energy Regulatory Commission | |
|
||
FLI Liquidating Trust
|
Trust formed in Missouri bankruptcy court to accomplish the liquidation of Farmland Industries, Inc., a non-affiliated entity | |
|
||
FMB
|
First mortgage bond | |
|
||
FOV
|
Finding of Violation | |
|
||
GAAP
|
U.S. Generally Accepted Accounting Principles | |
|
||
GCR
|
Gas cost recovery | |
|
||
Genesee
|
Genesee Power Station Limited Partnership, a VIE in which HYDRA-CO has a 50 percent interest | |
|
||
GM
|
General Motors Corporation, a non-affiliated company | |
|
||
Grayling
|
Grayling Generating Station Limited Partnership, a VIE in which HYDRA-CO has a 50 percent interest | |
|
||
GWh
|
Gigawatt-hour (a unit of energy equal to one million kilowatt-hours) | |
|
||
HYDRA-CO
|
HYDRA-CO Enterprises, Inc., a wholly owned subsidiary of CMS Enterprises | |
|
||
IPP
|
Independent power producer or independent power production | |
|
||
IRS
|
Internal Revenue Service | |
|
||
ISFSI
|
Independent spent fuel storage installation | |
|
||
ITC
|
Income tax credit | |
|
||
kWh
|
Kilowatt-hour (a unit of energy equal to one thousand watt-hours) | |
|
||
LIBOR
|
The London Interbank Offered Rate |
4
Ludington
|
Ludington pumped storage plant, jointly owned by Consumers and Detroit Edison | |
|
||
Marathon
|
Marathon Oil Company, Marathon E.G. Holding, Marathon E.G. Alba, Marathon E.G. LPG, Marathon Production LTD, and Alba Associates, LLC, each a non-affiliated company | |
|
||
MBT
|
Michigan Business Tax | |
|
||
MD&A
|
Management’s Discussion and Analysis | |
|
||
MDL
|
A pending multi-district litigation case in Nevada | |
|
||
MDNRE
|
Michigan Department of Natural Resources and Environment, which, effective January 17, 2010, is the successor to the Michigan Department of Environmental Quality and the Michigan Department of Natural Resources | |
|
||
MGP
|
Manufactured gas plant | |
|
||
MISO
|
The Midwest Independent Transmission System Operator, Inc. | |
|
||
MPSC
|
Michigan Public Service Commission | |
|
||
MW
|
Megawatt (a unit of power equal to one million watts) | |
|
||
MWh
|
Megawatt-hour (a unit of energy equal to one million watt-hours) | |
|
||
NAV
|
Net asset value | |
|
||
NOMECO
|
CMS NOMECO Oil & Gas Co., a former wholly owned subsidiary of CMS Enterprises | |
|
||
NOV
|
Notice of Violation | |
|
||
NREPA
|
Part 201 of Michigan Natural Resources and Environmental Protection Act, a statute that covers environmental activities including remediation | |
|
||
NSR
|
New Source Review, a construction-permitting program under the Clean Air Act | |
|
||
NYMEX
|
The New York Mercantile Exchange | |
|
||
OPEB
|
Postretirement benefit plans other than pensions | |
|
||
Palisades
|
Palisades nuclear power plant, formerly owned by Consumers | |
|
||
Panhandle
|
Panhandle Eastern Pipe Line Company, including its wholly owned subsidiaries Trunkline, Pan Gas Storage, Panhandle Storage, and Panhandle Holdings, a former wholly owned subsidiary of CMS Gas Transmission | |
|
||
PCB
|
Polychlorinated biphenyl | |
|
||
Pension Plan
|
Trusteed, non-contributory, defined benefit pension plan of Panhandle, Consumers, and CMS Energy | |
|
||
PFD
|
Proposal for decision | |
|
||
PPA
|
Power purchase agreement | |
|
||
PSCR
|
Power supply cost recovery | |
|
||
PSD
|
Prevention of Significant Deterioration | |
|
||
QSPE
|
Qualifying special-purpose entity | |
|
||
REC
|
Renewable energy credit established under the 2008 Energy Legislation | |
|
||
RMRR
|
Routine maintenance, repair, and replacement | |
|
||
ROA
|
Retail Open Access, which allows electric generation customers to choose alternative electric suppliers pursuant to the Customer Choice Act | |
|
||
SEC
|
U.S. Securities and Exchange Commission |
5
SERP
|
Supplemental Executive Retirement Plan | |
|
||
SFAS
|
Statement of Financial Accounting Standards | |
|
||
Superfund
|
Comprehensive Environmental Response, Compensation and Liability Act | |
|
||
Supplemental Environmental Programs
|
Environmentally beneficial projects which a party agrees to undertake as part of the settlement of an enforcement action, but which the party is not otherwise legally required to perform | |
|
||
T.E.S. Filer City
|
T.E.S. Filer City Station Limited Partnership, a VIE in which HYDRA-CO has a 50 percent interest | |
|
||
Title V
|
A federal program under the Clean Air Act designed to standardize air quality permits and the permitting process for major sources of emissions across the U.S. | |
|
||
Trunkline
|
Trunkline Gas Company, LLC, a former wholly owned subsidiary of CMS Panhandle Holding, LLC | |
|
||
Trust Preferred Securities
|
Securities representing an undivided beneficial interest in the assets of statutory business trusts, the interests of which have a preference with respect to certain trust distributions over the interests of either CMS Energy or Consumers, as applicable, as owner of the common beneficial interests of the trusts | |
|
||
TSU
|
Texas Southern University, a non-affiliated entity | |
|
||
Union
|
Utility Workers Union of America, AFL-CIO | |
|
||
U.S.
|
United States | |
|
||
VIE
|
Variable interest entity |
6
• | the price of CMS Energy Common Stock, capital and financial market conditions, and the effect of these market conditions on CMS Energy’s and Consumers’ postretirement benefit plans, interest costs, and access to the capital markets, including availability of financing (including Consumers’ accounts receivable sales program and CMS Energy’s and Consumers’ revolving credit facilities) to CMS Energy, Consumers, or any of their affiliates, and the energy industry; | ||
• | the impact of the troubled economy, particularly in Michigan, and the risk of future volatility in the financial and credit markets on CMS Energy, Consumers, or any of their affiliates, including their: |
• | revenues; | ||
• | capital expenditure programs and related earnings growth; | ||
• | ability to collect accounts receivable from customers; | ||
• | cost of capital and availability of capital; and | ||
• | Pension Plan and postretirement benefit plans assets and required contributions; |
• | changes in the economic and financial viability of CMS Energy’s and Consumers’ suppliers, customers, and other counterparties and the continued ability of these third parties, including third parties in bankruptcy, to meet their obligations to CMS Energy and Consumers; |
7
• | population decline in the geographic areas where CMS Energy and Consumers conduct business; | ||
• | changes in applicable laws, rules, regulations, principles or practices, or in their interpretation, including those related to taxes, the environment, and accounting matters, that could have an impact on CMS Energy’s and Consumers’ businesses or financial results, including the impact of any future regulations or laws regarding: |
• | carbon dioxide and other greenhouse gas emissions, including potential future legislation to establish a cap and trade system; | ||
• | criteria pollutants, such as nitrogen oxide, sulfur dioxide, and particulate, and hazardous air pollutants; | ||
• | CCBs; | ||
• | PCBs; | ||
• | cooling water discharge from power plants or other industrial equipment; | ||
• | limitations on the use or construction of coal-fueled electric power plants; | ||
• | renewable portfolio standards and energy efficiency mandates; and | ||
• | any other potential legislative changes, including changes to the ten-percent ROA limit; |
• | national, regional, and local economic, competitive, and regulatory policies, conditions, and developments; | ||
• | adverse regulatory or legal interpretations or decisions, including those related to environmental laws and regulations, and potential environmental remediation costs associated with these interpretations or decisions, including but not limited to those that may affect Bay Harbor or Consumers’ RMRR classification under NSR regulations; | ||
• | potentially adverse regulatory treatment or failure to receive timely regulatory orders concerning a number of significant matters affecting Consumers that are presently or potentially before the MPSC, including: |
• | sufficient and timely recovery of: |
• | environmental and safety-related expenditures for coal-fueled plants and other utility properties; | ||
• | power supply and natural gas supply costs; | ||
• | operating and maintenance expenses; | ||
• | additional utility rate-based investments; | ||
• | costs associated with the proposed retirement and decommissioning of facilities; | ||
• | development costs of the proposed coal-fueled plant; | ||
• | MISO energy and transmission costs; and | ||
• | costs associated with energy efficiency investments and state or federally mandated renewable resource standards; |
• | actions of regulators with respect to expenditures subject to tracking mechanisms; | ||
• | actions of regulators to prevent or curtail shutoffs for non-paying customers; | ||
• | actions of regulators with respect to the implementation of the “pilot” decoupling mechanism and an uncollectible expense tracking mechanism described in the November 2009 MPSC electric rate case order and the “pilot” decoupling mechanism described in the May 2010 MPSC gas rate case order; | ||
• | regulatory orders preventing or curtailing rights to self-implement rate requests; | ||
• | regulatory orders potentially requiring a refund of previously self-implemented rates; and | ||
• | implementation of new energy legislation or revisions of existing regulations; |
8
• | potentially adverse regulatory treatment resulting from pressure on regulators to oppose annual rate increases or to lessen rate impacts upon customers, particularly in difficult economic times; | ||
• | loss of customer load to alternative energy suppliers; | ||
• | potentially adverse regulatory treatment concerning significant matters affecting CMS Energy or Consumers that are presently before the MDNRE, including Bay Harbor; | ||
• | the ability of Consumers to recover its regulatory assets in full and in a timely manner; | ||
• | the effectiveness of the electric and gas decoupling mechanisms in moderating the impact of sales variability on net revenues; | ||
• | the ability of Consumers to recover nuclear fuel storage costs incurred as a result of the DOE’s failure to accept spent nuclear fuel on schedule, and the outcome of pending litigation with the DOE; | ||
• | the impact of expanded enforcement powers and investigation activities at FERC; | ||
• | federal regulation of electric sales and transmission of electricity, including periodic re-examination by federal regulators of CMS Energy’s and Consumers’ market-based sales authorizations in wholesale power markets without price restrictions; | ||
• | effects of weather conditions, such as unseasonably warm weather during the winter, on sales; | ||
• | the market perception of the energy industry or of CMS Energy, Consumers, or any of their affiliates; | ||
• | the credit ratings of CMS Energy or Consumers; | ||
• | the impact of credit markets, economic conditions, and any new banking regulations on EnerBank; | ||
• | potential effects of financial reform legislation on regulation of energy derivatives and financial institutions such as EnerBank; | ||
• | disruptions in the normal commercial insurance and surety bond markets that may increase costs or reduce traditional insurance coverage, particularly terrorism and sabotage insurance, performance bonds, and tax-exempt debt insurance, and stability of insurance providers, and the ability of Consumers to recover the costs of any such insurance from customers; | ||
• | energy markets, including availability of capacity and the timing and extent of changes in commodity prices for oil, coal, natural gas, natural gas liquids, electricity, and certain related products due to lower or higher demand, shortages, transportation problems, or other developments, and their impact on CMS Energy’s and Consumers’ cash flows and working capital; | ||
• | the effectiveness of CMS Energy’s and Consumers’ strategies to hedge risk related to future prices of electricity, natural gas, and other energy-related commodities; | ||
• | changes in construction material prices and the availability of qualified construction personnel to implement Consumers’ construction program; |
9
• | factors affecting development of generation projects and distribution infrastructure replacement and expansion projects, including those related to project site identification, construction, permitting, and government approvals; | ||
• | costs and availability of personnel, equipment, and materials for operating and maintaining existing facilities; | ||
• | factors affecting operations, such as unusual weather conditions, catastrophic weather-related damage, unscheduled generation outages, maintenance or repairs, environmental incidents, or electric transmission or gas pipeline system constraints; | ||
• | potential disruption or interruption of facilities or operations due to accidents, war, or terrorism, and the ability to obtain or maintain insurance coverage for these events; | ||
• | technological developments in energy production, delivery, usage, and storage; | ||
• | achievement of capital expenditure and operating expense goals, including the 2010 capital expenditures forecast; | ||
• | the impact of CMS Energy’s and Consumers’ integrated business software system on their operations, including utility customer billing and collections; | ||
• | potential effects of new federal health care legislation on current or future health care costs; | ||
• | the effectiveness of CMS Energy’s and Consumers’ risk management policies and procedures; | ||
• | CMS Energy’s and Consumers’ ability to achieve generation planning goals and the occurrence and duration of planned or unplanned generation outages; | ||
• | adverse outcomes regarding tax positions; | ||
• | adverse consequences resulting from any past or future assertion of indemnity or warranty claims associated with assets and businesses previously owned by CMS Energy or Consumers, including the F.T. Barr matter and claims resulting from attempts by foreign or domestic governments to assess taxes on past operations or transactions; | ||
• | the outcome, cost, and other effects of legal or administrative proceedings, settlements, investigations, or claims; | ||
• | earnings volatility resulting from the application of fair value accounting to certain energy commodity contracts, such as electricity sales agreements and interest rate and foreign currency contracts; | ||
• | changes in financial or regulatory accounting principles or policies, including possible changes to rules involving fair value accounting; | ||
• | new or revised interpretations of GAAP by regulators, which could affect how accounting principles are applied, and could impact future periods’ financial statements or previously filed financial statements; |
10
• | a possible future requirement to comply with International Financial Reporting Standards, which differ from GAAP in various ways, including the present lack of special accounting treatment for regulated activities; and | ||
• | other business or investment matters that may be disclosed from time to time in CMS Energy’s and Consumers’ SEC filings, or in other publicly issued documents. |
11
• | regulation and regulatory matters; | ||
• | economic conditions; | ||
• | weather; | ||
• | energy commodity prices; | ||
• | interest rates; and | ||
• | CMS Energy’s and Consumers’ securities credit ratings. |
12
13
• | investing in Consumers’ utility system; | ||
• | growing earnings and operating cash flow while controlling operating and fuel costs; and | ||
• | maintaining principles of safe, efficient operations, customer value, fair and timely regulation, and consistent financial performance. |
14
In Millions (except for per share amounts) | ||||||||||||
Three months ended June 30 | 2010 | 2009 | Change | |||||||||
Net Income Available to
Common Stockholders
|
$ | 80 | $ | 75 | $ | 5 | ||||||
Basic Earnings Per Share
|
$ | 0.35 | $ | 0.33 | $ | 0.02 | ||||||
Diluted Earnings Per Share
|
$ | 0.32 | $ | 0.32 | $ | — | ||||||
In Millions | ||||||||||||
Three months ended June 30 | 2010 | 2009 | Change | |||||||||
Electric Utility
|
$ | 86 | $ | 67 | $ | 19 | ||||||
Gas Utility
|
1 | 5 | (4 | ) | ||||||||
Enterprises
|
33 | (13 | ) | 46 | ||||||||
Corporate Interest and Other
|
(24 | ) | (9 | ) | (15 | ) | ||||||
Discontinued Operations
|
(16 | ) | 25 | (41 | ) | |||||||
Net Income Available to Common
Stockholders
|
$ | 80 | $ | 75 | $ | 5 | ||||||
2010 over/(under) 2009 | ||||||||
(In Millions) | ||||||||
• |
insurance settlement related to a previously sold investment
|
$ | 30 | |||||
• |
absence of an increase in the provision for Bay Harbor environmental
remediation costs recorded in 2009
|
22 | ||||||
• |
increase in electric and gas revenues at Consumers due to rate orders,
including the impacts of the decoupling mechanisms
|
18 | ||||||
• |
other net increases at Consumers due to lower service restoration
costs, outage costs, and other operating expenses
|
15 | ||||||
• |
increase in electric revenues due to weather
|
11 | ||||||
• |
absence of a benefit recorded in 2009 related to the expiration of an
indemnity obligation
|
(31 | ) | |||||
• |
absence of a
gain on the retirement of debt recorded in 2009
|
(18 | ) | |||||
• |
other net decreases, primarily from tax adjustments and impairments
related to discontinued operations
|
(13 | ) | |||||
• |
decrease in gas revenue due to weather
|
(10 | ) | |||||
• |
decrease in electric and gas revenues due to unfavorable sales mix
and economic conditions
|
(10 | ) | |||||
• |
other net decreases at Consumers, primarily higher depreciation
expense and sales and use tax
|
(9 | ) | |||||
Total change | $ | 5 | ||||||
15
In Millions (except for per share amounts) | ||||||||||||
Six months ended June 30 | 2010 | 2009 | Change | |||||||||
Net Income Available to
Common Stockholders
|
$ | 165 | $ | 145 | $ | 20 | ||||||
Basic Earnings Per Share
|
$ | 0.72 | $ | 0.64 | $ | 0.08 | ||||||
Diluted Earnings Per Share
|
$ | 0.67 | $ | 0.62 | $ | 0.05 | ||||||
In Millions | ||||||||||||
Six months ended June 30 | 2010 | 2009 | Change | |||||||||
Electric Utility
|
$ | 127 | $ | 106 | $ | 21 | ||||||
Gas Utility
|
67 | 64 | 3 | |||||||||
Enterprises
|
42 | (12 | ) | 54 | ||||||||
Corporate Interest and Other
|
(54 | ) | (37 | ) | (17 | ) | ||||||
Discontinued Operations
|
(17 | ) | 24 | (41 | ) | |||||||
Net Income Available to
Common Stockholders
|
$ | 165 | $ | 145 | $ | 20 | ||||||
2010 over/(under) 2009 | ||||||||
(In Millions) | ||||||||
• |
increase in electric and gas revenues at Consumers due to rate orders,
including the impacts of the decoupling mechanisms
|
$ | 55 | |||||
• |
insurance settlement related to a previously sold investment
|
30 | ||||||
• |
absence of an increase in the provision for Bay Harbor environmental
remediation costs recorded in 2009
|
22 | ||||||
• |
other net increase at Consumers due to lower service restoration
costs, outage costs, and other operating expenses
|
21 | ||||||
• |
other net increases, primarily higher mark-to-market gains and
increased power demand at the enterprises segment
|
8 | ||||||
• |
increase in electric revenues due to weather
|
7 | ||||||
• |
absence of a benefit recorded in 2009 related to the expiration of an
indemnity obligation
|
(31 | ) | |||||
• |
decrease in electric and gas revenue due to unfavorable sales mix and
economic conditions
|
(23 | ) | |||||
• |
decrease in gas revenue due to weather
|
(22 | ) | |||||
• |
absence of a
gain on the retirement of debt recorded in 2009
|
(18 | ) | |||||
• |
other net decreases, primarily from tax adjustments and impairments related to discontinued operations
|
(15 | ) | |||||
• |
decrease at Consumers due to costs associated with the voluntary
separation plan
|
(7 | ) | |||||
• |
other net decreases at Consumers, primarily higher depreciation
expense and sales and use tax
|
(7 | ) | |||||
Total change | $ | 20 | ||||||
16
In Millions | ||||||||||||
June 30 | 2010 | 2009 | Change | |||||||||
Net Income Available to Common Stockholders:
|
||||||||||||
Three months ended
|
$ | 86 | $ | 67 | $ | 19 | ||||||
Six months ended
|
$ | 127 | $ | 106 | $ | 21 | ||||||
Three Months Ended | Six Months Ended | |||||||
Reasons for the change: | June 30, 2010 vs. 2009 | June 30, 2010 vs. 2009 | ||||||
Electric deliveries and rate increase
|
$ | 75 | $ | 101 | ||||
Power supply costs and related revenue
|
(1 | ) | (11 | ) | ||||
Other income, net of expenses
|
(5 | ) | (8 | ) | ||||
Maintenance and other operating expenses
|
(28 | ) | (34 | ) | ||||
Depreciation and amortization
|
(11 | ) | (12 | ) | ||||
General taxes
|
2 | — | ||||||
Interest charges
|
(4 | ) | (6 | ) | ||||
Income taxes
|
(9 | ) | (9 | ) | ||||
Total change
|
$ | 19 | $ | 21 | ||||
17
18
In Millions | ||||||||||||
June 30 | 2010 | 2009 | Change | |||||||||
Net Income Available to Common Stockholders:
|
||||||||||||
Three months ended
|
$ | 1 | $ | 5 | $ | (4 | ) | |||||
Six months ended
|
$ | 67 | $ | 64 | $ | 3 | ||||||
Three Months Ended | Six Months Ended | |||||||
Reasons for the change: | June 30, 2010 vs. 2009 | June 30, 2010 vs. 2009 | ||||||
Gas deliveries and rate increase
|
$ | (2 | ) | $ | 19 | |||
Other income, net of expenses
|
2 | 4 | ||||||
Maintenance and other operating expenses
|
(3 | ) | (9 | ) | ||||
Depreciation and amortization
|
— | (1 | ) | |||||
General taxes
|
3 | 2 | ||||||
Interest charges
|
(5 | ) | (7 | ) | ||||
Income taxes
|
1 | (5 | ) | |||||
Total change
|
$ | (4 | ) | $ | 3 | |||
19
20
In Millions | ||||||||||||
June 30 | 2010 | 2009 | Change | |||||||||
Net Income Available to
Common Stockholders:
|
||||||||||||
Three months ended
|
$ | 33 | $ | (13 | ) | $ | 46 | |||||
Six months ended
|
$ | 42 | $ | (12 | ) | $ | 54 | |||||
In Millions | ||||||||||||
June 30 | 2010 | 2009 | Change | |||||||||
Net Loss Available to Common Stockholders:
|
||||||||||||
Three months ended
|
$ | (24 | ) | $ | (9 | ) | $ | (15 | ) | |||
Six months ended
|
$ | (54 | ) | $ | (37 | ) | $ | (17 | ) | |||
21
• | In January 2010, CMS Energy issued $300 million of 6.25 percent senior notes due 2020; | ||
• | In April 2010, Consumers executed a bond purchase agreement whereby Consumers will issue, in a September 2010 private placement, $250 million of 5.30 percent FMBs due September 2022 and $50 million of 6.17 percent FMBs due September 2040; and | ||
• | In June 2010, CMS Energy’s $239 million of 4.50 percent preferred stock and $139 million of 3.375 percent senior notes became convertible at the holders’ option for the third quarter of 2010. |
• | In February 2010, Consumers renewed its accounts receivable sales program through February 2011; | ||
• | Consumers’ tax-exempt pollution control revenue bond maturities were $58 million in June 2010; | ||
• | Consumers’ $150 million revolving credit facility is planned for renewal in August 2010; | ||
• | Consumers’ $30 million Letter of Credit Reimbursement Agreement is planned for renewal in November 2010; | ||
• | Consumers’ FMBs maturities were $250 million in May 2010 and are $300 million in 2012; | ||
• | Consumers’ $500 million revolving credit facility is planned for renewal prior to its expiration in 2012; | ||
• | CMS Energy’s senior notes maturities are $67 million in August 2010, $214 million in 2011, and $150 million in 2012; and | ||
• | CMS Energy’s $550 million revolving credit facility is planned for renewal prior to its expiration in 2012. |
22
In Millions | ||||||||||||
Six months ended June 30 | 2010 | 2009 | Change | |||||||||
CMS Energy, including Consumers
|
||||||||||||
•
Net income
|
$ | 172 | $ | 154 | $ | 18 | ||||||
•
Non-cash transactions (a)
|
539 | 436 | 103 | |||||||||
|
$ | 711 | $ | 590 | $ | 121 | ||||||
•
Sale of gas purchased in the prior year
|
474 | 576 | (102 | ) | ||||||||
•
Purchase of gas in the current year
|
(274 | ) | (293 | ) | 19 | |||||||
•
Accounts receivable sales, net
|
(50 | ) | (170 | ) | 120 | |||||||
•
Change in other core working capital (b)
|
299 | 243 | 56 | |||||||||
•
Other changes in assets and liabilities, net
|
(112 | ) | (146 | ) | 34 | |||||||
Net cash provided by operating activities
|
$ | 1,048 | $ | 800 | $ | 248 | ||||||
Consumers
|
||||||||||||
•
Net income
|
$ | 195 | $ | 171 | $ | 24 | ||||||
•
Non-cash transactions (a)
|
398 | 447 | (49 | ) | ||||||||
|
$ | 593 | $ | 618 | $ | (25 | ) | |||||
•
Sale of gas purchased in the prior year
|
474 | 576 | (102 | ) | ||||||||
•
Purchase of gas in the current year
|
(274 | ) | (293 | ) | 19 | |||||||
•
Accounts receivable sales, net
|
(50 | ) | (170 | ) | 120 | |||||||
•
Change in other core working capital (b)
|
300 | 247 | 53 | |||||||||
•
Other changes in assets and liabilities, net
|
(60 | ) | (125 | ) | 65 | |||||||
Net cash provided by operating activities
|
$ | 983 | $ | 853 | $ | 130 | ||||||
(a) | Non-cash transactions comprise depreciation and amortization, changes in deferred income taxes, postretirement benefits expense, and other non-cash items. | |
(b) | Other core working capital comprises other changes in accounts receivable and accrued revenues, inventories, and accounts payable. |
23
In Millions | ||||||||||||
Six months ended June 30 | 2010 | 2009 | Change | |||||||||
CMS Energy, including Consumers
|
||||||||||||
•
Capital expenditures
|
$ | (424 | ) | $ | (409 | ) | $ | (15 | ) | |||
•
Cash effect of deconsolidation of partnerships
|
(10 | ) | — | (10 | ) | |||||||
•
Costs to retire property and other
|
(56 | ) | (24 | ) | (32 | ) | ||||||
Net cash used in investing activities
|
$ | (490 | ) | $ | (433 | ) | $ | (57 | ) | |||
Consumers
|
||||||||||||
•
Capital expenditures
|
$ | (423 | ) | $ | (404 | ) | $ | (19 | ) | |||
•
Costs to retire property and other
|
(21 | ) | (16 | ) | (5 | ) | ||||||
Net cash used in investing activities
|
$ | (444 | ) | $ | (420 | ) | $ | (24 | ) | |||
In Millions | ||||||||||||
Six months ended June 30 | 2010 | 2009 | Change | |||||||||
CMS Energy, including Consumers | ||||||||||||
•
Issuance of FMBs, convertible senior notes, senior notes, and other debt
|
$ | 421 | $ | 1,062 | $ | (641 | ) | |||||
•
Retirement of debt and other debt maturity payments
|
(407 | ) | (528 | ) | 121 | |||||||
•
Payments of common and preferred stock dividends
|
(74 | ) | (63 | ) | (11 | ) | ||||||
•
Other financing activities
|
(51 | ) | (26 | ) | (25 | ) | ||||||
Net cash (used in) provided by financing activities
|
$ | (111 | ) | $ | 445 | $ | (556 | ) | ||||
Consumers
|
||||||||||||
•
Issuance of FMBs
|
$ | — | $ | 500 | $ | (500 | ) | |||||
•
Retirement of debt and other debt maturity payments
|
(327 | ) | (218 | ) | (109 | ) | ||||||
•
Stockholder’s contribution
|
250 | 100 | 150 | |||||||||
•
Payments of common and preferred stock dividends
|
(169 | ) | (131 | ) | (38 | ) | ||||||
•
Other financing activities
|
(12 | ) | (16 | ) | 4 | |||||||
Net cash (used in) provided by financing activities
|
$ | (258 | ) | $ | 235 | $ | (493 | ) | ||||
24
In Millions | ||||||||||||||||
Pension Cost | OPEB Cost | Pension Contribution | OPEB Contribution | |||||||||||||
CMS Energy, including Consumers
|
||||||||||||||||
2010
|
$ | 107 | $ | 61 | $ | 100 | $ | 71 | ||||||||
2011
|
114 | 51 | 89 | 61 | ||||||||||||
2012
|
110 | 48 | 142 | 51 | ||||||||||||
Consumers
|
||||||||||||||||
2010
|
$ | 104 | $ | 63 | $ | 97 | $ | 70 | ||||||||
2011
|
111 | 53 | 86 | 60 | ||||||||||||
2012
|
107 | 50 | 137 | 50 | ||||||||||||
25
• | energy efficiency; | ||
• | demand management; | ||
• | expanded use of renewable energy; | ||
• | development of new power plants and pursuit of additional PPAs to complement existing generating sources; and | ||
• | potential retirement or mothballing of older generating units. |
26
• | energy conservation measures and results of energy efficiency programs; | ||
• | fluctuations in weather; and | ||
• | changes in economic conditions, including utilization and expansion or contraction of manufacturing facilities, population trends, and housing activity. |
27
28
• | fluctuations in weather; | ||
• | use by IPPs; | ||
• | availability and development of renewable energy sources; | ||
• | changes in gas prices; | ||
• | Michigan economic conditions including population trends and housing activity; |
29
• | the price of competing energy sources or fuels; and | ||
• | energy efficiency and conservation. |
• | indemnity and environmental remediation obligations at Bay Harbor; | ||
• | the outcome of certain legal proceedings; | ||
• | impacts of declines in electricity prices on the profitability of the enterprises segment’s generating units; | ||
• | representations, warranties, and indemnities provided by CMS Energy or its subsidiaries in connection with previous sales of assets; | ||
• | changes in commodity prices and interest rates on certain derivative contracts that do not qualify for hedge accounting and must be marked to market through earnings; | ||
• | changes in various environmental laws, regulations, principles, practices, or in their interpretation; and | ||
• | economic conditions in Michigan, including population trends and housing activity. |
30
31
In Millions | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Operating Revenue
|
$ | 1,340 | $ | 1,225 | $ | 3,307 | $ | 3,329 | ||||||||
|
||||||||||||||||
Operating Expenses
|
||||||||||||||||
Fuel for electric generation
|
151 | 118 | 289 | 253 | ||||||||||||
Purchased and interchange power
|
314 | 282 | 592 | 571 | ||||||||||||
Purchased power — related parties
|
21 | — | 42 | — | ||||||||||||
Cost of gas sold
|
178 | 208 | 956 | 1,171 | ||||||||||||
Maintenance and other operating expenses
|
296 | 306 | 571 | 575 | ||||||||||||
Depreciation and amortization
|
131 | 121 | 303 | 294 | ||||||||||||
General taxes
|
41 | 48 | 107 | 113 | ||||||||||||
Insurance settlement
|
(50 | ) | — | (50 | ) | — | ||||||||||
Gain on asset sales, net
|
(4 | ) | (8 | ) | (4 | ) | (8 | ) | ||||||||
Total operating expenses
|
1,078 | 1,075 | 2,806 | 2,969 | ||||||||||||
|
||||||||||||||||
Operating Income
|
262 | 150 | 501 | 360 | ||||||||||||
|
||||||||||||||||
Other Income (Expense)
|
||||||||||||||||
Interest and dividends
|
4 | 4 | 9 | 8 | ||||||||||||
Allowance for equity funds used during construction
|
2 | 2 | 3 | 3 | ||||||||||||
Income (loss) from equity method investees
|
2 | — | 5 | (1 | ) | |||||||||||
Other income
|
9 | 39 | 18 | 51 | ||||||||||||
Other expense
|
(3 | ) | (3 | ) | (5 | ) | (5 | ) | ||||||||
Total other income (expense)
|
14 | 42 | 30 | 56 | ||||||||||||
|
||||||||||||||||
Interest Charges
|
||||||||||||||||
Interest on long-term debt
|
98 | 98 | 196 | 190 | ||||||||||||
Other interest
|
20 | 8 | 28 | 16 | ||||||||||||
Allowance for borrowed funds used during construction
|
(1 | ) | (1 | ) | (2 | ) | (2 | ) | ||||||||
Total interest charges
|
117 | 105 | 222 | 204 | ||||||||||||
|
||||||||||||||||
Income Before Income Taxes
|
159 | 87 | 309 | 212 | ||||||||||||
Income Tax Expense
|
59 | 32 | 120 | 82 | ||||||||||||
|
||||||||||||||||
Income From Continuing Operations
|
100 | 55 | 189 | 130 | ||||||||||||
Income (Loss) From Discontinued Operations, Net of Tax
Expense of $6, $17, $5 and $16
|
(16 | ) | 25 | (17 | ) | 24 | ||||||||||
|
||||||||||||||||
Net Income
|
84 | 80 | 172 | 154 | ||||||||||||
Income Attributable to Noncontrolling Interests
|
2 | 2 | 2 | 3 | ||||||||||||
|
||||||||||||||||
Net Income Attributable to CMS Energy
|
82 | 78 | 170 | 151 | ||||||||||||
Preferred Stock Dividends
|
2 | 3 | 5 | 6 | ||||||||||||
|
||||||||||||||||
Net Income Available to Common Stockholders
|
$ | 80 | $ | 75 | $ | 165 | $ | 145 | ||||||||
32
In Millions, Except Per Share Amounts | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Net Income Attributable to Common Stockholders
|
||||||||||||||||
Amounts Attributable to Continuing Operations
|
$ | 96 | $ | 50 | $ | 182 | $ | 121 | ||||||||
Amounts Attributable to Discontinued Operations
|
(16 | ) | 25 | (17 | ) | 24 | ||||||||||
Net Income Available to Common Stockholders
|
$ | 80 | $ | 75 | $ | 165 | $ | 145 | ||||||||
|
||||||||||||||||
Income Attributable to Noncontrolling Interests
|
||||||||||||||||
Amounts Attributable to Continuing Operations
|
$ | 2 | $ | 2 | $ | 2 | $ | 3 | ||||||||
Amounts Attributable to Discontinued Operations
|
— | — | — | — | ||||||||||||
Income Attributable to Noncontrolling Interests
|
$ | 2 | $ | 2 | $ | 2 | $ | 3 | ||||||||
|
||||||||||||||||
Basic Earnings Per Average Common Share
|
||||||||||||||||
Basic Earnings from Continuing Operations
|
$ | 0.42 | $ | 0.22 | $ | 0.80 | $ | 0.53 | ||||||||
Basic Earnings (Loss) from Discontinued Operations
|
(0.07 | ) | 0.11 | (0.08 | ) | 0.11 | ||||||||||
Basic Earnings Attributable to Common Stock
|
$ | 0.35 | $ | 0.33 | $ | 0.72 | $ | 0.64 | ||||||||
|
||||||||||||||||
Diluted Earnings Per Average Common Share
|
||||||||||||||||
Diluted Earnings from Continuing Operations
|
$ | 0.39 | $ | 0.21 | $ | 0.74 | $ | 0.52 | ||||||||
Diluted Earnings (Loss) from Discontinued Operations
|
(0.07 | ) | 0.11 | (0.07 | ) | 0.10 | ||||||||||
Diluted Earnings Attributable to Common Stock
|
$ | 0.32 | $ | 0.32 | $ | 0.67 | $ | 0.62 | ||||||||
|
||||||||||||||||
Dividends Declared Per Common Share
|
$ | 0.15 | $ | 0.125 | $ | 0.30 | $ | 0.25 | ||||||||
33
In Millions | ||||||||
Six Months Ended June 30 | 2010 | 2009 | ||||||
Cash Flows from Operating Activities
|
||||||||
Net Income
|
$ | 172 | $ | 154 | ||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
Depreciation and amortization
|
303 | 294 | ||||||
Deferred income taxes and investment tax credit
|
107 | 94 | ||||||
Postretirement benefits expense
|
88 | 91 | ||||||
Allowance for equity funds used during construction
|
(3 | ) | (3 | ) | ||||
Capital lease and other amortization
|
20 | 19 | ||||||
Bad debt expense
|
32 | 34 | ||||||
Gain on expiration of indemnification
|
— | (50 | ) | |||||
Gain on extinguishment of long-term debt, related parties
|
— | (28 | ) | |||||
Other non-cash operating activities
|
(8 | ) | (15 | ) | ||||
Postretirement benefits contributions
|
(153 | ) | (232 | ) | ||||
Changes in other assets and liabilities:
|
||||||||
Decrease in accounts receivable, notes receivable, and accrued revenue
|
178 | 115 | ||||||
Decrease in accrued power supply revenue
|
22 | 5 | ||||||
Decrease in inventories
|
230 | 267 | ||||||
Increase (decrease) in accounts payable
|
41 | (26 | ) | |||||
Decrease in accrued expenses
|
(51 | ) | (5 | ) | ||||
Decrease in other current and non-current assets
|
88 | 104 | ||||||
Decrease in other current and non-current liabilities
|
(18 | ) | (18 | ) | ||||
Net cash provided by operating activities
|
1,048 | 800 | ||||||
|
||||||||
Cash Flows from Investing Activities
|
||||||||
Capital expenditures (excludes assets placed under capital lease)
|
(424 | ) | (409 | ) | ||||
Cost to retire property
|
(20 | ) | (25 | ) | ||||
Proceeds from sale of assets
|
3 | 7 | ||||||
Cash effect of deconsolidation of partnerships
|
(10 | ) | — | |||||
Restricted cash and cash equivalents
|
(1 | ) | 6 | |||||
Other investing activities
|
(38 | ) | (12 | ) | ||||
Net cash used in investing activities
|
(490 | ) | (433 | ) | ||||
|
||||||||
Cash Flows from Financing Activities
|
||||||||
Proceeds from issuance of long-term debt
|
300 | 973 | ||||||
Proceeds from EnerBank notes, net
|
66 | 4 | ||||||
Issuance of common stock
|
5 | 5 | ||||||
Retirement of long-term debt
|
(352 | ) | (443 | ) | ||||
Payment of common stock dividends
|
(69 | ) | (57 | ) | ||||
Payment of preferred stock dividends
|
(5 | ) | (6 | ) | ||||
Payment of capital and finance lease obligations
|
(12 | ) | (12 | ) | ||||
Other financing costs
|
(44 | ) | (19 | ) | ||||
Net cash (used in) provided by financing activities
|
(111 | ) | 445 | |||||
|
||||||||
Net Increase in Cash and Cash Equivalents, Including Assets Held for Sale
|
447 | 812 | ||||||
Decrease (Increase) in Cash and Cash Equivalents Included in Assets Held for Sale
|
(1 | ) | 4 | |||||
|
||||||||
Net Increase in Cash and Cash Equivalents
|
446 | 816 | ||||||
|
||||||||
Cash and Cash Equivalents, Beginning of Period
|
90 | 207 | ||||||
|
||||||||
Cash and Cash Equivalents, End of Period
|
$ | 536 | $ | 1,023 | ||||
34
35
In Millions | ||||||||
June 30 | December 31 | |||||||
2010 | 2009 | |||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 536 | $ | 90 | ||||
Restricted cash and cash equivalents
|
22 | 32 | ||||||
Accounts receivable and accrued revenue,
less allowances of $23 in 2010 and $23 in 2009
|
697 | 948 | ||||||
Notes receivable
|
72 | 81 | ||||||
Accrued power supply revenue
|
26 | 48 | ||||||
Accounts receivable — related parties
|
8 | — | ||||||
Inventories at average cost
|
||||||||
Gas in underground storage
|
842 | 1,043 | ||||||
Materials and supplies
|
104 | 118 | ||||||
Generating plant fuel stock
|
131 | 158 | ||||||
Deferred property taxes
|
127 | 172 | ||||||
Regulatory assets
|
19 | 19 | ||||||
Assets held for sale
|
2 | 2 | ||||||
Prepayments and other current assets
|
35 | 31 | ||||||
Total current assets
|
2,621 | 2,742 | ||||||
|
||||||||
Plant, Property & Equipment (at cost)
|
||||||||
Plant, property & equipment, gross
|
13,727 | 13,716 | ||||||
Less accumulated depreciation, depletion, and amortization
|
4,566 | 4,540 | ||||||
Plant, property & equipment, net
|
9,161 | 9,176 | ||||||
Construction work in progress
|
643 | 506 | ||||||
Total plant, property & equipment
|
9,804 | 9,682 | ||||||
|
||||||||
Non-current Assets
|
||||||||
Regulatory assets
|
2,085 | 2,291 | ||||||
Notes receivable, less allowances of $5 in 2010 and $6 in 2009
|
286 | 269 | ||||||
Investments
|
52 | 9 | ||||||
Assets held for sale
|
6 | 9 | ||||||
Other non-current assets
|
197 | 254 | ||||||
Total non-current assets
|
2,626 | 2,832 | ||||||
|
||||||||
Total Assets
|
$ | 15,051 | $ | 15,256 | ||||
36
In Millions | ||||||||
June 30 | December 31 | |||||||
2010 | 2009 | |||||||
Current Liabilities
|
||||||||
Current portion of long-term debt, capital and finance lease obligations
|
$ | 653 | $ | 694 | ||||
Notes payable
|
— | 40 | ||||||
Accounts payable
|
451 | 509 | ||||||
Accrued rate refunds
|
12 | 21 | ||||||
Accounts payable — related parties
|
9 | — | ||||||
Accrued interest
|
101 | 96 | ||||||
Accrued taxes
|
230 | 283 | ||||||
Deferred income taxes
|
51 | 43 | ||||||
Regulatory liabilities
|
111 | 145 | ||||||
Liabilities held for sale
|
1 | — | ||||||
Other current liabilities
|
117 | 123 | ||||||
Total current liabilities
|
1,736 | 1,954 | ||||||
|
||||||||
Non-current Liabilities
|
||||||||
Long-term debt
|
5,883 | 5,895 | ||||||
Non-current portion of capital and finance lease obligations
|
196 | 197 | ||||||
Regulatory liabilities
|
1,943 | 1,991 | ||||||
Postretirement benefits
|
1,276 | 1,460 | ||||||
Asset
retirement obligations
|
235 | 229 | ||||||
Deferred investment tax credit
|
49 | 51 | ||||||
Deferred income taxes
|
444 | 231 | ||||||
Other non-current liabilities
|
296 | 310 | ||||||
Total non-current liabilities
|
10,322 | 10,364 | ||||||
|
||||||||
Commitments and Contingencies
(Notes 3, 4, 5, 7 and 8)
|
||||||||
|
||||||||
Equity
|
||||||||
Common stockholders’ equity
|
||||||||
Common stock, authorized 350.0 shares; outstanding 228.3 shares in 2010 and 227.9 shares in 2009
|
2 | 2 | ||||||
Other paid-in capital
|
4,569 | 4,560 | ||||||
Accumulated other comprehensive loss
|
(31 | ) | (33 | ) | ||||
Accumulated deficit
|
(1,831 | ) | (1,927 | ) | ||||
Total common stockholders’ equity
|
2,709 | 2,602 | ||||||
Preferred stock
|
239 | 239 | ||||||
Noncontrolling interests
|
45 | 97 | ||||||
Total equity
|
2,993 | 2,938 | ||||||
Total Liabilities and Equity
|
$ | 15,051 | $ | 15,256 | ||||
37
In Millions | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Common Stock
|
||||||||||||||||
At beginning and end of period
|
$ | 2 | $ | 2 | $ | 2 | $ | 2 | ||||||||
|
||||||||||||||||
Other Paid-in Capital
|
||||||||||||||||
At beginning of period
|
4,564 | 4,538 | 4,560 | 4,533 | ||||||||||||
Common stock issued
|
6 | 3 | 10 | 8 | ||||||||||||
Common stock repurchased
|
(1 | ) | — | (1 | ) | — | ||||||||||
Conversion option on convertible debt
|
— | 11 | — | 11 | ||||||||||||
At end of period
|
4,569 | 4,552 | 4,569 | 4,552 | ||||||||||||
|
||||||||||||||||
Accumulated Other Comprehensive Loss
|
||||||||||||||||
Retirement benefits liability
|
||||||||||||||||
At beginning of period
|
(31 | ) | (27 | ) | (32 | ) | (27 | ) | ||||||||
Retirement benefits liability adjustments (a)
|
1 | — | 2 | — | ||||||||||||
At end of period
|
(30 | ) | (27 | ) | (30 | ) | (27 | ) | ||||||||
Investments
|
||||||||||||||||
At beginning of period
|
— | (4 | ) | — | — | |||||||||||
Unrealized gain on investments (a)
|
— | 5 | — | 1 | ||||||||||||
At end of period
|
— | 1 | — | 1 | ||||||||||||
Derivative instruments
|
||||||||||||||||
At beginning and end of period
|
(1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
At end of period
|
(31 | ) | (27 | ) | (31 | ) | (27 | ) | ||||||||
|
||||||||||||||||
Accumulated Deficit
|
||||||||||||||||
At beginning of period
|
(1,876 | ) | (1,990 | ) | (1,927 | ) | (2,031 | ) | ||||||||
Net income attributable to CMS Energy (a)
|
82 | 78 | 170 | 151 | ||||||||||||
Common stock dividends declared
|
(35 | ) | (28 | ) | (69 | ) | (57 | ) | ||||||||
Preferred stock dividends declared
|
(2 | ) | (3 | ) | (5 | ) | (6 | ) | ||||||||
At end of period
|
(1,831 | ) | (1,943 | ) | (1,831 | ) | (1,943 | ) | ||||||||
|
||||||||||||||||
Preferred Stock
|
||||||||||||||||
At beginning and end of period
|
239 | 243 | 239 | 243 | ||||||||||||
|
||||||||||||||||
Noncontrolling Interests
|
||||||||||||||||
At beginning of period
|
44 | 96 | 97 | 96 | ||||||||||||
Income attributable to noncontrolling interests (a)
|
2 | 2 | 2 | 3 | ||||||||||||
Distributions and other changes in noncontrolling interests
|
(1 | ) | (3 | ) | (54 | ) | (4 | ) | ||||||||
At end of period
|
45 | 95 | 45 | 95 | ||||||||||||
Total Equity
|
$ | 2,993 | $ | 2,922 | $ | 2,993 | $ | 2,922 | ||||||||
38
In Millions | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
(a) Disclosure of Comprehensive Income:
|
||||||||||||||||
Net income
|
$ | 84 | $ | 80 | $ | 172 | $ | 154 | ||||||||
Income attributable to noncontrolling interests
|
2 | 2 | 2 | 3 | ||||||||||||
Net income attributable to CMS Energy
|
$ | 82 | $ | 78 | $ | 170 | $ | 151 | ||||||||
|
||||||||||||||||
Retirement benefits liability:
|
||||||||||||||||
Retirement benefits liability adjustments, net of tax of $2,
$-, $1, and $-, respectively
|
1 | — | 2 | — | ||||||||||||
|
||||||||||||||||
Investments:
|
||||||||||||||||
Unrealized gain on investments, net of tax of $-, $-, $-,
and $-, respectively
|
— | 5 | — | 1 | ||||||||||||
|
||||||||||||||||
Total Comprehensive Income
|
$ | 83 | $ | 83 | $ | 172 | $ | 152 | ||||||||
39
In Millions | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Operating Revenue
|
$ | 1,276 | $ | 1,182 | $ | 3,166 | $ | 3,216 | ||||||||
|
||||||||||||||||
Operating Expenses
|
||||||||||||||||
Fuel for electric generation
|
125 | 105 | 250 | 216 | ||||||||||||
Purchased and interchange power
|
310 | 280 | 587 | 564 | ||||||||||||
Purchased power — related parties
|
20 | 17 | 41 | 35 | ||||||||||||
Cost of gas sold
|
163 | 195 | 909 | 1,131 | ||||||||||||
Maintenance and other operating expenses
|
281 | 250 | 543 | 501 | ||||||||||||
Depreciation and amortization
|
130 | 118 | 301 | 288 | ||||||||||||
General taxes
|
40 | 46 | 104 | 107 | ||||||||||||
Gain on asset sales, net
|
— | (3 | ) | — | (3 | ) | ||||||||||
Total operating expenses
|
1,069 | 1,008 | 2,735 | 2,839 | ||||||||||||
|
||||||||||||||||
Operating Income
|
207 | 174 | 431 | 377 | ||||||||||||
|
||||||||||||||||
Other Income (Expense)
|
||||||||||||||||
Interest and dividends
|
4 | 3 | 9 | 7 | ||||||||||||
Allowance for equity funds used during construction
|
2 | 2 | 3 | 3 | ||||||||||||
Other income
|
9 | 9 | 18 | 21 | ||||||||||||
Other expense
|
(3 | ) | (2 | ) | (5 | ) | (4 | ) | ||||||||
Total other income (expense)
|
12 | 12 | 25 | 27 | ||||||||||||
|
||||||||||||||||
Interest Charges
|
||||||||||||||||
Interest on long-term debt
|
60 | 65 | 123 | 124 | ||||||||||||
Other interest
|
19 | 5 | 25 | 10 | ||||||||||||
Allowance for borrowed funds used during construction
|
(1 | ) | (1 | ) | (2 | ) | (2 | ) | ||||||||
Total interest charges
|
78 | 69 | 146 | 132 | ||||||||||||
|
||||||||||||||||
Income Before Income Taxes
|
141 | 117 | 310 | 272 | ||||||||||||
|
||||||||||||||||
Income Tax Expense
|
53 | 45 | 115 | 101 | ||||||||||||
|
||||||||||||||||
Net Income
|
88 | 72 | 195 | 171 | ||||||||||||
|
||||||||||||||||
Preferred Stock Dividends
|
1 | — | 1 | 1 | ||||||||||||
|
||||||||||||||||
Net Income Available to Common Stockholder
|
$ | 87 | $ | 72 | $ | 194 | $ | 170 | ||||||||
40
In Millions | ||||||||
Six Months ended June 30 | 2010 | 2009 | ||||||
Cash Flows from Operating Activities
|
||||||||
Net Income
|
$ | 195 | $ | 171 | ||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
Depreciation and amortization
|
301 | 288 | ||||||
Deferred income taxes and investment tax credit
|
(22 | ) | 46 | |||||
Postretirement benefits expense
|
87 | 89 | ||||||
Allowance for equity funds used during construction
|
(3 | ) | (3 | ) | ||||
Capital lease and other amortization
|
13 | 13 | ||||||
Bad debt expense
|
29 | 30 | ||||||
Other non-cash operating activities
|
(7 | ) | (16 | ) | ||||
Postretirement benefits contributions
|
(143 | ) | (225 | ) | ||||
Changes in other assets and liabilities:
|
||||||||
Decrease in accounts receivable, notes receivable, and accrued revenue
|
186 | 114 | ||||||
Decrease in accrued power supply revenue
|
22 | 5 | ||||||
Decrease in inventories
|
229 | 266 | ||||||
Increase (decrease) in accounts payable
|
35 | (20 | ) | |||||
Increase (decrease) in accrued expenses
|
(13 | ) | 4 | |||||
Decrease in other current and non-current assets
|
92 | 106 | ||||||
Decrease in other current and non-current liabilities
|
(18 | ) | (15 | ) | ||||
Net cash provided by operating activities
|
983 | 853 | ||||||
|
||||||||
Cash Flows from Investing Activities
|
||||||||
Capital expenditures (excludes assets placed under capital lease)
|
(423 | ) | (404 | ) | ||||
Cost to retire property
|
(21 | ) | (25 | ) | ||||
Proceeds from sale of assets
|
— | 7 | ||||||
Restricted cash and cash equivalents
|
— | 2 | ||||||
Net cash used in investing activities
|
(444 | ) | (420 | ) | ||||
|
||||||||
Cash Flows from Financing Activities
|
||||||||
Proceeds from issuance of long-term debt
|
— | 500 | ||||||
Retirement of long-term debt
|
(327 | ) | (218 | ) | ||||
Payment of common stock dividends
|
(168 | ) | (130 | ) | ||||
Payment of preferred stock dividends
|
(1 | ) | (1 | ) | ||||
Stockholder’s contribution
|
250 | 100 | ||||||
Payment of capital and finance lease obligations
|
(12 | ) | (12 | ) | ||||
Other financing costs
|
— | (4 | ) | |||||
Net cash (used in) provided by financing activities
|
(258 | ) | 235 | |||||
|
||||||||
Net Increase in Cash and Cash Equivalents
|
281 | 668 | ||||||
|
||||||||
Cash and Cash Equivalents, Beginning of Period
|
39 | 69 | ||||||
|
||||||||
Cash and Cash Equivalents, End of Period
|
$ | 320 | $ | 737 | ||||
41
In Millions | ||||||||
June 30 | December 31 | |||||||
2010 | 2009 | |||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 320 | $ | 39 | ||||
Restricted cash and cash equivalents
|
22 | 22 | ||||||
Accounts receivable and accrued revenue,
less allowances of $20 in 2010 and $21 in 2009
|
679 | 935 | ||||||
Notes receivable
|
62 | 79 | ||||||
Accrued power supply revenue
|
26 | 48 | ||||||
Accounts
receivable — related parties
|
1 | 2 | ||||||
Inventories at average cost
|
||||||||
Gas in underground storage
|
838 | 1,038 | ||||||
Materials and supplies
|
100 | 111 | ||||||
Generating plant fuel stock
|
130 | 148 | ||||||
Deferred property taxes
|
127 | 172 | ||||||
Regulatory assets
|
19 | 19 | ||||||
Prepayments and other current assets
|
26 | 23 | ||||||
Total current assets
|
2,350 | 2,636 | ||||||
|
||||||||
Plant, Property & Equipment (at cost)
|
||||||||
Plant, property & equipment, gross
|
13,607 | 13,352 | ||||||
Less accumulated depreciation, depletion, and amortization
|
4,516 | 4,386 | ||||||
Plant, property & equipment, net
|
9,091 | 8,966 | ||||||
Construction work in progress
|
643 | 505 | ||||||
Total plant, property & equipment
|
9,734 | 9,471 | ||||||
|
||||||||
Non-current Assets
|
||||||||
Regulatory assets
|
2,085 | 2,291 | ||||||
Investments
|
27 | 29 | ||||||
Other non-current assets
|
130 | 195 | ||||||
Total non-current assets
|
2,242 | 2,515 | ||||||
|
||||||||
Total Assets
|
$ | 14,326 | $ | 14,622 | ||||
42
In Millions | ||||||||
June 30 | December 31 | |||||||
2010 | 2009 | |||||||
Current Liabilities
|
||||||||
Current portion of long-term debt, capital and finance lease obligations
|
$ | 61 | $ | 365 | ||||
Accounts payable
|
432 | 490 | ||||||
Accrued rate refunds
|
12 | 21 | ||||||
Accounts
payable — related parties
|
12 | 11 | ||||||
Accrued interest
|
68 | 70 | ||||||
Accrued taxes
|
273 | 277 | ||||||
Deferred income taxes
|
165 | 206 | ||||||
Regulatory liabilities
|
111 | 145 | ||||||
Other current liabilities
|
86 | 86 | ||||||
Total current liabilities
|
1,220 | 1,671 | ||||||
|
||||||||
Non-current Liabilities
|
||||||||
Long-term debt
|
4,043 | 4,063 | ||||||
Non-current portion of capital and finance lease obligations
|
196 | 197 | ||||||
Regulatory liabilities
|
1,943 | 1,991 | ||||||
Postretirement benefits
|
1,218 | 1,396 | ||||||
Asset retirement obligations
|
234 | 228 | ||||||
Deferred investment tax credit
|
49 | 51 | ||||||
Deferred income taxes
|
1,058 | 926 | ||||||
Other non-current liabilities
|
233 | 241 | ||||||
Total non-current liabilities
|
8,974 | 9,093 | ||||||
|
||||||||
Commitments and Contingencies
(Notes 3, 4, 5, 7 and 8)
|
||||||||
|
||||||||
Equity
|
||||||||
Common stockholder’s equity
|
||||||||
Common stock, authorized 125.0 shares; outstanding
84.1 shares for both periods
|
841 | 841 | ||||||
Other paid-in capital
|
2,832 | 2,582 | ||||||
Accumulated other comprehensive income
|
— | 2 | ||||||
Retained earnings
|
415 | 389 | ||||||
Total common stockholder’s equity
|
4,088 | 3,814 | ||||||
Preferred stock
|
44 | 44 | ||||||
Total equity
|
4,132 | 3,858 | ||||||
|
||||||||
Total Liabilities and Equity
|
$ | 14,326 | $ | 14,622 | ||||
43
In Millions | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Common Stock
|
||||||||||||||||
At beginning and end of period (a)
|
$ | 841 | $ | 841 | $ | 841 | $ | 841 | ||||||||
|
||||||||||||||||
Other Paid-in Capital
|
||||||||||||||||
At beginning of period
|
2,782 | 2,482 | 2,582 | 2,482 | ||||||||||||
Stockholder’s contribution
|
50 | 100 | 250 | 100 | ||||||||||||
At end of period
|
2,832 | 2,582 | 2,832 | 2,582 | ||||||||||||
|
||||||||||||||||
Accumulated Other Comprehensive Income
|
||||||||||||||||
Retirement benefits liability
|
||||||||||||||||
At beginning and end of period
|
(11 | ) | (7 | ) | (11 | ) | (7 | ) | ||||||||
|
||||||||||||||||
Investments
|
||||||||||||||||
At beginning of period
|
12 | 7 | 13 | 6 | ||||||||||||
Unrealized (loss) gain on investments (b)
|
(1 | ) | 3 | (2 | ) | 4 | ||||||||||
At end of period
|
11 | 10 | 11 | 10 | ||||||||||||
|
||||||||||||||||
At end of period
|
— | 3 | — | 3 | ||||||||||||
|
||||||||||||||||
Retained Earnings
|
||||||||||||||||
At beginning of period
|
382 | 409 | 389 | 383 | ||||||||||||
Net income (b)
|
88 | 72 | 195 | 171 | ||||||||||||
Common stock dividends declared
|
(54 | ) | (58 | ) | (168 | ) | (130 | ) | ||||||||
Preferred stock dividends declared
|
(1 | ) | — | (1 | ) | (1 | ) | |||||||||
At end of period
|
415 | 423 | 415 | 423 | ||||||||||||
|
||||||||||||||||
Preferred Stock
|
||||||||||||||||
At beginning and end of period
|
44 | 44 | 44 | 44 | ||||||||||||
|
||||||||||||||||
Total Equity
|
$ | 4,132 | $ | 3,893 | $ | 4,132 | $ | 3,893 | ||||||||
44
In Millions | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
(a) Number of shares of common
stock outstanding was 84,108,789
for all periods presented.
|
||||||||||||||||
|
||||||||||||||||
(b) Disclosure of Comprehensive Income:
|
||||||||||||||||
|
||||||||||||||||
Net income
|
$ | 88 | $ | 72 | $ | 195 | $ | 171 | ||||||||
|
||||||||||||||||
Investments
|
||||||||||||||||
Unrealized (loss) gain on
investments, net of tax
of $-, $-, $-, and $-, respectively
|
(1 | ) | 3 | (2 | ) | 4 | ||||||||||
|
||||||||||||||||
Total Comprehensive Income
|
$ | 87 | $ | 75 | $ | 193 | $ | 175 | ||||||||
45
46
47
• | Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. | ||
• | Level 2 inputs are observable, market-based inputs, other than Level 1 prices. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, interest rates and yield curves observable at commonly quoted intervals, credit risks, default rates, and inputs derived from or corroborated by observable market data. | ||
• | Level 3 inputs are unobservable inputs that reflect CMS Energy’s or Consumers’ own assumptions about how market participants would value their assets and liabilities. |
48
In Millions | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
CMS Energy, including Consumers
|
||||||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents
|
$ | 465 | $ | 465 | $ | — | $ | — | ||||||||
Restricted cash equivalents
|
5 | 5 | — | — | ||||||||||||
Nonqualified deferred compensation plan assets
|
5 | 5 | — | — | ||||||||||||
SERP:
|
||||||||||||||||
Cash equivalents
|
2 | 2 | — | — | ||||||||||||
Mutual fund
|
62 | 62 | — | — | ||||||||||||
State and municipal bonds
|
28 | — | 28 | — | ||||||||||||
Derivative instruments:
|
||||||||||||||||
Commodity contracts (a)
|
5 | 2 | 3 | — | ||||||||||||
Total
|
$ | 572 | $ | 541 | $ | 31 | $ | — | ||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Nonqualified deferred compensation plan liabilities
|
$ | 5 | $ | 5 | $ | — | $ | — | ||||||||
Derivative instruments:
|
||||||||||||||||
Commodity contracts (b)
|
8 | 2 | 1 | 5 | ||||||||||||
Total (c)
|
$ | 13 | $ | 7 | $ | 1 | $ | 5 | ||||||||
Consumers
|
||||||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents
|
$ | 260 | $ | 260 | $ | — | $ | — | ||||||||
Restricted cash equivalents
|
5 | 5 | — | — | ||||||||||||
CMS Energy Common Stock
|
27 | 27 | — | — | ||||||||||||
Nonqualified deferred compensation plan assets
|
4 | 4 | — | — | ||||||||||||
SERP:
|
||||||||||||||||
Cash equivalents
|
1 | 1 | — | — | ||||||||||||
Mutual fund
|
39 | 39 | — | — | ||||||||||||
State and municipal bonds
|
17 | — | 17 | — | ||||||||||||
Total
|
$ | 353 | $ | 336 | $ | 17 | $ | — | ||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Nonqualified deferred compensation plan liabilities
|
$ | 4 | $ | 4 | $ | — | $ | — | ||||||||
Total
|
$ | 4 | $ | 4 | $ | — | $ | — | ||||||||
(a) | This amount is gross and excludes the $1 million impact of offsetting derivative assets and liabilities under master netting arrangements and the $2 million impact of offsetting cash margin deposits paid to CMS ERM by other parties. | |
(b) | This amount is gross and excludes the $1 million impact of offsetting derivative assets and liabilities under master netting arrangements. | |
(c) | At June 30, 2010, CMS Energy’s liabilities classified as Level 3 represented 38 percent of CMS Energy’s total liabilities measured at fair value. The Level 3 liabilities are comprised primarily of an electricity sales agreement held by CMS ERM. |
49
In Millions | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
CMS Energy, including Consumers
|
||||||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents
|
$ | 57 | $ | 57 | $ | — | $ | — | ||||||||
Restricted cash equivalents
|
12 | 12 | — | — | ||||||||||||
Nonqualified deferred compensation plan assets
|
5 | 5 | — | — | ||||||||||||
SERP:
|
||||||||||||||||
Cash equivalents
|
49 | 49 | — | — | ||||||||||||
State and municipal bonds
|
27 | — | 27 | — | ||||||||||||
Derivative instruments:
|
||||||||||||||||
Commodity contracts (a)
|
1 | — | 1 | — | ||||||||||||
Total
|
$ | 151 | $ | 123 | $ | 28 | $ | — | ||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Nonqualified deferred compensation plan liabilities
|
$ | 5 | $ | 5 | $ | — | $ | — | ||||||||
Derivative instruments:
|
||||||||||||||||
Commodity contracts (b)
|
9 | 1 | 1 | 7 | ||||||||||||
Interest rate contracts
|
1 | — | — | 1 | ||||||||||||
Total (c)
|
$ | 15 | $ | 6 | $ | 1 | $ | 8 | ||||||||
Consumers
|
||||||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents
|
$ | 31 | $ | 31 | $ | — | $ | — | ||||||||
Restricted cash equivalents
|
5 | 5 | — | — | ||||||||||||
CMS Energy Common Stock
|
29 | 29 | — | — | ||||||||||||
Nonqualified deferred compensation plan assets
|
4 | 4 | — | — | ||||||||||||
SERP:
|
||||||||||||||||
Cash equivalents
|
30 | 30 | — | — | ||||||||||||
State and municipal bonds
|
16 | — | 16 | — | ||||||||||||
Total
|
$ | 115 | $ | 99 | $ | 16 | $ | — | ||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Nonqualified deferred compensation plan liabilities
|
$ | 4 | $ | 4 | $ | — | $ | — | ||||||||
Total
|
$ | 4 | $ | 4 | $ | — | $ | — | ||||||||
(a) | This amount is gross and excludes the $1 million impact of offsetting derivative assets and liabilities under master netting arrangements. | |
(b) | This amount is gross and excludes the $1 million impact of offsetting derivative assets and liabilities under master netting arrangements and the $1 million impact of offsetting cash margin deposits paid by CMS ERM to other parties. | |
(c) | At December 31, 2009, CMS Energy’s liabilities classified as Level 3 represented 53 percent of CMS Energy’s total liabilities measured at fair value. The Level 3 liabilities are comprised primarily of an electricity sales agreement held by CMS ERM. |
50
51
In Millions | ||||||||
Three months ended June 30 | 2010 | 2009 | ||||||
Balance at April 1
|
$ | (3 | ) | $ | (10 | ) | ||
Total losses included in earnings (a)
|
(1 | ) | — | |||||
Purchases, sales, issuances, and settlements (net)
|
(1 | ) | (1 | ) | ||||
Balance at June 30
|
$ | (5 | ) | $ | (11 | ) | ||
Unrealized losses included in earnings for the three
months ended June 30 relating to assets and
liabilities still held at June 30 (a)
|
$ | (2 | ) | $ | (1 | ) | ||
In Millions | ||||||||
Six months ended June 30 | 2010 | 2009 | ||||||
Balance at January 1
|
$ | (8 | ) | $ | (16 | ) | ||
Total gains included in earnings (a)
|
3 | 6 | ||||||
Purchases, sales, issuances, and settlements (net)
|
— | (1 | ) | |||||
Balance at June 30
|
$ | (5 | ) | $ | (11 | ) | ||
Unrealized gains included in earnings for the six
months ended June 30 relating to assets and
liabilities still held at June 30 (a)
|
$ | 2 | $ | 4 | ||||
(a) | CMS Energy records realized and unrealized gains and losses for Level 3 recurring fair values in earnings as a component of Operating Revenue or Maintenance and other operating expenses on its Consolidated Statements of Income. |
In Millions | ||||||||||||||||
Gains | ||||||||||||||||
Level 1 | Level 2 | Level 3 | (Losses) | |||||||||||||
CMS Energy, including Consumers
|
||||||||||||||||
Assets held for sale
|
$ | — | $ | — | $ | 7 | $ | (4 | ) | |||||||
52
• | In 2005, CMS MST was served with a summons and complaint that named CMS Energy, CMS MST, and CMS Field Services as defendants in a putative class action filed in Kansas state court, Learjet, Inc., et al. v. Oneok, Inc., et al. The complaint alleges that during the putative class period, January 1, 2000 through October 31, 2002, the defendants engaged in a scheme to violate the Kansas Restraint of Trade Act. The plaintiffs, who allege they purchased natural gas from the defendants and others for their facilities, are seeking statutory full consideration damages consisting of the full consideration paid by plaintiffs for natural gas. | ||
• | In 2007, a class action complaint, Heartland Regional Medical Center, et al. v. Oneok, Inc. et al., was filed in Missouri state court alleging violations of Missouri antitrust laws. Defendants, including CMS Energy, CMS Field Services, and CMS MST, are alleged to have violated the Missouri antitrust law in connection with their natural gas price reporting activities. | ||
• | Breckenridge Brewery of Colorado, LLC and BBD Acquisition Co. v. Oneok, Inc., et al., a class action complaint brought on behalf of retail direct purchasers of natural gas in Colorado, was filed in Colorado state court in May 2006. Defendants, including CMS Energy, CMS Field Services, and CMS MST, are alleged to have violated the Colorado Antitrust Act of 1992 in connection with their natural gas price reporting activities. Plaintiffs are seeking full refund damages. |
53
• | A class action complaint, Arandell Corp., et al. v. XCEL Energy Inc., et al., was filed in 2006 in Wisconsin state court on behalf of Wisconsin commercial entities that purchased natural gas between January 1, 2000 and October 31, 2002. The defendants, including CMS Energy, CMS ERM, and Cantera Gas Company, are alleged to have violated Wisconsin’s antitrust statute. The plaintiffs are seeking full consideration damages, plus exemplary damages, and attorneys’ fees. After dismissal on jurisdictional grounds in 2009, plaintiffs filed a new Arandell case in Michigan. The CMS Energy defendants filed a motion to dismiss the new Michigan case on statute-of-limitations grounds and that motion remains pending. | ||
• | Another class action complaint, Newpage Wisconsin System v. CMS ERM, CMS Energy, and Cantera Gas Company, was filed in 2009 in circuit court in Wood County, Wisconsin, against CMS Energy defendants and 19 other non-CMS Energy companies. The plaintiff is seeking full consideration damages, treble damages, costs, interest, and attorneys’ fees. | ||
• | In 2005, J.P. Morgan Trust Company, in its capacity as Trustee of the FLI Liquidating Trust, filed an action in Kansas state court against a number of energy companies, including CMS Energy, CMS MST, and CMS Field Services. The complaint alleges various claims under the Kansas Restraint of Trade Act. The plaintiff is seeking statutory full consideration damages for its purchases of natural gas between January 1, 2000 and December 31, 2001. This case is part of the MDL proceeding, but is not a class action. |
• | In 2005, Samuel D. Leggett, et al. v. Duke Energy Corporation, et al., a class action complaint brought on behalf of retail and business purchasers of natural gas in Tennessee, was filed in the Chancery Court of Fayette County, Tennessee. The defendants included CMS Energy, CMS MST, and CMS Field Services. In April 2010, the Tennessee Supreme Court dismissed all claims against all defendants. | ||
• | In 2006, CMS Energy and CMS MST were each served with a summons and complaint which named CMS Energy, CMS MST, and CMS Field Services as defendants in an action filed in Missouri state court, titled Missouri Public Service Commission v. Oneok, Inc., alleging violation of the Missouri antitrust law, fraud, and unjust enrichment. In 2009, all defendants were dismissed for lack of standing. The Missouri Court of Appeals affirmed the dismissals in late 2009. In February 2010, the plaintiff filed an application for leave to appeal with the Missouri Supreme Court, seeking to overturn the Missouri Court of Appeals decision. In April 2010, the Missouri Supreme Court granted review to hear the case. Oral argument on the appeal is scheduled for September 2010 in the Missouri Supreme Court. |
54
• | the disposal of leachate; | ||
• | the capping and excavation of CKD; | ||
• | the location and design of collection lines and upstream diversion of water; | ||
• | potential flow of leachate below the collection system; | ||
• | applicable criteria for various substances such as mercury; and | ||
• | other matters that are likely to affect the scope of remedial work that CMS Land and CMS Capital may be obligated to undertake. |
55
• | inability to secure a suitable long-term water disposal option at a reasonable cost; | ||
• | further increases in water disposal costs under existing options; | ||
• | delays in developing a long-term water disposal option; | ||
• | an increase in the number of contamination areas; | ||
• | different remediation techniques; | ||
• | the nature and extent of contamination; | ||
• | continued inability to reach agreement with the MDNRE or the EPA over required remedial actions; | ||
• | delays in the receipt of requested permits; | ||
• | delays following the receipt of any requested permits due to legal appeals of third parties; | ||
• | additional or new legal or regulatory requirements; or | ||
• | new or different landowner claims. |
56
57
58
In Millions | ||||||||
Issue | Expiration | Maximum | Carrying | |||||
Guarantee Description | Date | Date | Obligation | Amount | ||||
Indemnity obligations from asset sales and other agreements
|
Various | Various through | $845 (a) | $12 | ||||
|
June 2022 | |||||||
|
||||||||
Guarantees and put options (b)
|
Various | Various through | 36 | 1 | ||||
|
December 2011 | |||||||
(a) | The majority of this amount arises from stock and asset sales agreements under which CMS Energy or a subsidiary of CMS Energy, other than Consumers, indemnified the purchaser for losses resulting from various matters, including claims related to tax disputes, claims related to PPAs, and defects in title to the assets or stock sold to the purchaser by CMS Energy subsidiaries. Except for items described elsewhere in this Note, CMS Energy believes the likelihood of material loss to be remote for the indemnity obligations not recorded as liabilities. | |
(b) | At June 30, 2010, the carrying amount of CMS Land’s put option agreements with certain Bay Harbor property owners was $1 million. If CMS Land is required to purchase a Bay Harbor property under a put option agreement, it may sell the property to recover the amount paid under the put option agreement. |
59
Events That Would Require | ||||
Guarantee Description | How Guarantee Arose | Performance | ||
Indemnity obligations
from asset sales and
other agreements
|
Stock and asset sales agreements | Findings of misrepresentation, breach of warranties, tax claims, and other specific events or circumstances | ||
|
||||
Surety bonds and other
indemnity obligations
|
Normal operating activity, permits and licenses | Nonperformance | ||
|
||||
Guarantees and put options
|
Normal operating activity | Nonperformance or non-payment by a subsidiary under a related contract | ||
|
||||
|
Bay Harbor remediation efforts | Owners exercising put options requiring CMS Land to purchase property | ||
60
PSCR Cost of | ||||||
PSCR Year | Date Filed | Net Underrecovery | Power Sold | |||
2009
|
March 2010 | $39 million (a) | $1.6 billion | |||
(a) | In 2005, the MPSC approved an economic development discount for a large industrial customer to promote long-term investments in the industrial infrastructure of Michigan. It was determined in the November 2009 electric rate case order that recovery of this discount should be provided through the electric general rates that Consumers self-implemented in May 2009. That order, however, did not address the recovery of the power-supply component of the discount provided from January 2009 through self-implementation, which totaled $4 million. Consumers has requested recovery of this amount through its 2009 PSCR reconciliation. |
61
In Millions | ||||||||||||
Increase | ||||||||||||
Consumers’ | Recommended | |||||||||||
Self-Implemented | by the | |||||||||||
Components of the increase in revenue | Increase | MPSC Staff | Difference | |||||||||
Investment in rate base
|
$ | 106 | $ | 80 | $ | (26 | ) | |||||
Recovery of operating and maintenance costs
|
21 | 25 | 4 | |||||||||
Return on equity
|
18 | (19 | ) | (37 | ) | |||||||
Impact of sales declines
|
5 | 4 | (1 | ) | ||||||||
Total
|
$ | 150 | $ | 90 | $ | (60 | ) | |||||
62
63
GCR Cost of | ||||||
GCR Year | Date Filed | Net (Under)/Overrecovery | Gas Sold | |||
2008-2009
|
June 2009 | $(15) million | $1.8 billion | |||
2009-2010
|
June 2010 | $1 million | $1.3 billion | |||
In Millions | ||||||||||||
Consumers’ | Increase | |||||||||||
Self-Implemented | Authorized by | |||||||||||
Components of the increase in revenue | Increase | the MPSC | Difference | |||||||||
Impact of sales declines
|
$ | 41 | $ | 28 | $ | (13 | ) | |||||
Investment in rate base
|
23 | 27 | 4 | |||||||||
Recovery of operating and
maintenance costs
|
17 | 13 | (4 | ) | ||||||||
Return on equity
|
8 | (2 | ) | (10 | ) | |||||||
Total
|
$ | 89 | $ | 66 | $ | (23 | ) | |||||
64
Principal | Interest | |||||||||||||||
(in millions) | Rate | Issue/Retirement Date | Maturity Date | |||||||||||||
Debt Issuances:
|
||||||||||||||||
CMS Energy
|
||||||||||||||||
Senior notes
|
$ | 300 | 6.25 | % | January 2010 | February 2020 | ||||||||||
Debt Retirements:
|
||||||||||||||||
Consumers
|
||||||||||||||||
FMBs
|
$ | 250 | 4.00 | % | May 2010 | May 2010 | ||||||||||
Tax-exempt pollution
control revenue bonds
|
58 | Various | June 2010 | June 2010 | ||||||||||||
In Millions | ||||||||||||||||||||
Letters of | ||||||||||||||||||||
Amount of | Amount | Credit | Amount | |||||||||||||||||
Company | Expiration Date | Facility | Borrowed | Outstanding | Available | |||||||||||||||
CMS Energy (a)
|
April 2, 2012 | $ | 550 | $ | — | $ | 3 | $ | 547 | |||||||||||
Consumers
|
March 30, 2012 | 500 | — | 335 | 165 | |||||||||||||||
Consumers (b)
|
November 30, 2010 | 30 | — | 30 | — | |||||||||||||||
Consumers
|
August 17, 2010 | 150 | — | — | 150 | |||||||||||||||
(a) | CMS Energy’s average borrowings during the six months ended June 30, 2010, totaled $2 million, with a weighted-average annual interest rate of 1.0 percent, at LIBOR plus 0.75 percent. | |
(b) | Secured revolving letter of credit facility. |
65
Outstanding | Adjusted | Adjusted | ||||||||||||||
Security | Maturity | (In Millions) | Conversion Price | Trigger Price | ||||||||||||
4.50% preferred stock (a)
|
— | $ | 239 | $ | 8.96 | $ | 10.75 | |||||||||
3.375% senior notes (a)
|
2023 | 139 | 9.67 | 11.60 | ||||||||||||
2.875% senior notes
|
2024 | 288 | 13.36 | 16.03 | ||||||||||||
5.50% senior notes
|
2029 | 173 | 14.46 | 18.80 | ||||||||||||
(a) | During 20 of the last 30 trading days ended June 30, 2010, the adjusted trigger prices were met for these securities and, as a result, the securities are convertible at the option of the security holders for the three months ending September 30, 2010. |
66
In Millions, Except Per Share Amounts | ||||||||
Three months ended June 30 | 2010 | 2009 | ||||||
Income Available to Common Stockholders
|
||||||||
Income from Continuing Operations
|
$ | 100 | $ | 55 | ||||
Less Income Attributable to Noncontrolling Interests
|
(2 | ) | (2 | ) | ||||
Less Preferred Dividends
|
(2 | ) | (3 | ) | ||||
Income from Continuing Operations Available
to Common Stockholders — Basic and Diluted
|
$ | 96 | $ | 50 | ||||
Average Common Shares Outstanding
|
||||||||
Weighted
Average Shares — Basic
|
228.2 | 226.9 | ||||||
Add dilutive impact of Contingently Convertible
Securities
|
19.3 | 7.6 | ||||||
Add dilutive Options and Warrants
|
0.1 | 0.1 | ||||||
Weighted
Average Shares — Diluted
|
247.6 | 234.6 | ||||||
Income from Continuing Operations Per Average
Common Share Available to Common Stockholders
|
||||||||
Basic
|
$ | 0.42 | $ | 0.22 | ||||
Diluted
|
$ | 0.39 | $ | 0.21 | ||||
In Millions, Except Per Share Amounts | ||||||||
Six months ended June 30 | 2010 | 2009 | ||||||
Income Available to Common Stockholders
|
||||||||
Income from Continuing Operations
|
$ | 189 | $ | 130 | ||||
Less Income Attributable to Noncontrolling Interests
|
(2 | ) | (3 | ) | ||||
Less Preferred Dividends
|
(5 | ) | (6 | ) | ||||
Income from Continuing Operations Available
to Common Stockholders — Basic and Diluted
|
$ | 182 | $ | 121 | ||||
Average Common Shares Outstanding
|
||||||||
Weighted
Average Shares — Basic
|
228.1 | 226.8 | ||||||
Add dilutive impact of Contingently Convertible
Securities
|
19.5 | 7.2 | ||||||
Add dilutive Options and Warrants
|
0.1 | 0.1 | ||||||
Weighted
Average Shares — Diluted
|
247.7 | 234.1 | ||||||
Income from Continuing Operations Per Average
Common Share Available to Common Stockholders
|
||||||||
Basic
|
$ | 0.80 | $ | 0.53 | ||||
Diluted
|
$ | 0.74 | $ | 0.52 | ||||
67
• | increased the numerator of diluted EPS by less than $1 million for the three months ended June 30, 2010, and by $2 million for the three months ended June 30, 2009, from an assumed reduction of interest expense, net of tax; | ||
• | increased the denominator of diluted EPS by 0.7 million shares for the three months ended June 30, 2010, and by 3.6 million shares for the three months ended June 30, 2009; | ||
• | increased the numerator of diluted EPS by $1 million for the six months ended June 30, 2010, and by $4 million for the six months ended June 30, 2009, from an assumed reduction of interest expense, net of tax; and | ||
• | increased the denominator of diluted EPS by 0.7 million shares for the six months ended June 30, 2010, and by 3.9 million shares for the six months ended June 30, 2009. |
In Millions | ||||||||||||||||
June 30, 2010 | December 31, 2009 | |||||||||||||||
Cost or | Cost or | |||||||||||||||
Carrying | Carrying | |||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
CMS Energy, including Consumers
|
||||||||||||||||
Securities held to maturity
|
$ | 4 | $ | 5 | $ | 4 | $ | 4 | ||||||||
Securities available for sale
|
89 | 90 | 26 | 27 | ||||||||||||
Notes receivable, net
|
296 | 320 | 269 | 279 | ||||||||||||
Long-term debt (a)
|
6,511 | 7,178 | 6,567 | 7,013 | ||||||||||||
Consumers
|
||||||||||||||||
Securities available for sale
|
$ | 64 | $ | 83 | $ | 24 | $ | 45 | ||||||||
Long-term debt (b)
|
4,079 | 4,487 | 4,406 | 4,635 | ||||||||||||
(a) | Includes current portion of long-term debt of $628 million at June 30, 2010 and $672 million at December 31, 2009. | |
(b) | Includes current portion of long-term debt of $36 million at June 30, 2010 and $343 million at December 31, 2009. |
68
In Millions | ||||||||||||||||||||||||||||||||
June 30, 2010 | December 31, 2009 | |||||||||||||||||||||||||||||||
Unrealized | Unrealized | Fair | Unrealized | Unrealized | Fair | |||||||||||||||||||||||||||
Cost | Gains | Losses | Value | Cost | Gains | Losses | Value | |||||||||||||||||||||||||
CMS Energy,
including
Consumers
|
||||||||||||||||||||||||||||||||
Available for sale:
|
||||||||||||||||||||||||||||||||
SERP:
|
||||||||||||||||||||||||||||||||
Mutual fund
|
$ | 62 | $ | — | $ | — | $ | 62 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
State and
municipal bonds
|
27 | 1 | — | 28 | 26 | 1 | — | 27 | ||||||||||||||||||||||||
Held to maturity:
|
||||||||||||||||||||||||||||||||
Debt securities
|
4 | 1 | — | 5 | 4 | — | — | 4 | ||||||||||||||||||||||||
Consumers
|
||||||||||||||||||||||||||||||||
Available for sale:
|
||||||||||||||||||||||||||||||||
SERP:
|
||||||||||||||||||||||||||||||||
Mutual fund
|
$ | 39 | $ | — | $ | — | $ | 39 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
State and
municipal bonds
|
17 | — | — | 17 | 16 | — | — | 16 | ||||||||||||||||||||||||
CMS Energy Common
Stock
|
8 | 19 | — | 27 | 8 | 21 | — | 29 | ||||||||||||||||||||||||
In Millions | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Proceeds from sales of investment securities:
|
||||||||||||||||
CMS Energy, including Consumers
|
$ | 1 | $ | 1 | $ | 2 | $ | 3 | ||||||||
Consumers
|
1 | 1 | 1 | 2 | ||||||||||||
69
In Millions | ||||||||
CMS Energy, | ||||||||
including | ||||||||
Consumers | Consumers | |||||||
Due one year or less
|
$ | — | $ | — | ||||
Due after one year through five years
|
10 | 6 | ||||||
Due after five years through ten years
|
11 | 7 | ||||||
Due after ten years
|
7 | 4 | ||||||
|
||||||||
Total
|
$ | 28 | $ | 17 | ||||
• | they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas); | ||
• | they qualify for the normal purchases and sales exception; or | ||
• | there is not an active market for the commodity. |
70
In Millions | ||||||||||||||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||
Balance | Balance | |||||||||||||||||||||||
Sheet | June 30, | December 31, | Sheet | June 30, | December 31, | |||||||||||||||||||
Location | 2010 | 2009 | Location | 2010 | 2009 | |||||||||||||||||||
CMS Energy,
including Consumers
|
||||||||||||||||||||||||
Derivatives not designated
as hedging instruments:
|
||||||||||||||||||||||||
Commodity contracts (a)
|
Other
assets (b) |
$ | 5 | $ | 1 |
Other
liabilities (c) |
$ | 8 | $ | 9 | ||||||||||||||
|
||||||||||||||||||||||||
Interest rate contracts (d)
|
Other
assets |
— | — |
Other
liabilities |
— | 1 | ||||||||||||||||||
Total CMS Energy Derivatives
|
$ | 5 | $ | 1 | $ | 8 | $ | 10 | ||||||||||||||||
(a) | Assets and liabilities are presented gross and exclude the impact of offsetting derivative assets and liabilities under master netting agreements, which was $1 million at June 30, 2010 and December 31, 2009. | |
(b) | Assets exclude the impact of offsetting cash margin deposits paid by other parties to CMS ERM, which was $2 million at June 30, 2010. CMS Energy presents these assets net of these impacts on its Consolidated Balance Sheets. | |
(c) | Liabilities exclude the impact of offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at June 30, 2010 and $1 million at December 31, 2009. CMS Energy presents these liabilities net of these impacts on its Consolidated Balance Sheets. | |
(d) | At December 31, 2009, CMS Energy’s derivatives included an interest rate collar held by Grayling as an economic hedge of the variable interest rate charged on its outstanding revenue bonds. Effective January 1, 2010, CMS Energy deconsolidated Grayling. CMS Energy reflected its share of the loss on the interest rate collar, which was less than $1 million at June 30, 2010, in Income (loss) from equity method investees in its Consolidated Statements of Income. For additional details about the deconsolidation of Grayling, see Note 11, Variable Interest Entities. |
71
In Millions | ||||||||||||
Location of Gain (Loss) | Amount of Gain (Loss) | |||||||||||
on Derivatives | on Derivatives | |||||||||||
Recognized in Income | Recognized in Income | |||||||||||
Three months ended June 30 | 2010 | 2009 | ||||||||||
CMS Energy, including
Consumers
|
||||||||||||
Derivatives not designated
as hedging instruments:
|
||||||||||||
Commodity contracts
|
Operating Revenue | $ | (2 | ) | $ | (2 | ) | |||||
|
Other income | 1 | 1 | |||||||||
Total CMS Energy
|
$ | (1 | ) | $ | (1 | ) | ||||||
Consumers
|
||||||||||||
Derivatives not designated
as hedging instruments:
|
||||||||||||
Commodity contracts
|
Other income | $ | 1 | $ | 1 | |||||||
In Millions | ||||||||||||
Location of Gain (Loss) | Amount of Gain (Loss) | |||||||||||
on Derivatives | on Derivatives | |||||||||||
Recognized in Income | Recognized in Income | |||||||||||
Six months ended June 30 | 2010 | 2009 | ||||||||||
CMS Energy, including
Consumers
|
||||||||||||
Derivatives not designated
as hedging instruments:
|
||||||||||||
Commodity contracts
|
Operating Revenue | $ | 3 | $ | 5 | |||||||
|
Fuel for electric generation | 2 | (2 | ) | ||||||||
|
Cost of gas sold | — | (3 | ) | ||||||||
|
Cost of power purchased | 1 | — | |||||||||
|
Other income | 1 | 1 | |||||||||
Foreign exchange
contracts (a)
|
Other expense | — | (1 | ) | ||||||||
Total CMS Energy
|
$ | 7 | $ | — | ||||||||
Consumers
|
||||||||||||
Derivatives not designated
as hedging instruments:
|
||||||||||||
Commodity contracts
|
Other income | $ | 1 | $ | 1 | |||||||
(a) | This derivative loss relates to a foreign-exchange forward contract that CMS Energy settled in January 2009. |
72
In Millions | ||||||||||||||||||||
Net Exposure | Net Exposure | |||||||||||||||||||
Exposure | from | from | ||||||||||||||||||
Before | Investment | Investment | ||||||||||||||||||
Collateral | Grade | Grade | ||||||||||||||||||
(a) | Collateral Held | Net Exposure | Companies | Companies (%) | ||||||||||||||||
CMS Energy
|
$ | 3 | $ | 2 | $ | 1 | $ | — | — | |||||||||||
(a) | Exposure is reflected net of payables or derivative liabilities if netting arrangements exist. |
73
In Millions | ||||||||||||||||
Pension | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
CMS Energy, including Consumers
|
||||||||||||||||
Service cost
|
$ | 11 | $ | 10 | $ | 22 | $ | 20 | ||||||||
Interest expense
|
25 | 24 | 49 | 48 | ||||||||||||
Expected return on plan assets
|
(23 | ) | (22 | ) | (46 | ) | (43 | ) | ||||||||
Amortization of:
|
||||||||||||||||
Net loss
|
13 | 11 | 26 | 21 | ||||||||||||
Prior service cost
|
1 | 1 | 3 | 3 | ||||||||||||
Net periodic cost
|
$ | 27 | $ | 24 | $ | 54 | $ | 49 | ||||||||
Regulatory adjustment
|
21 | — | 23 | — | ||||||||||||
Net periodic cost after regulatory adjustment
|
$ | 48 | $ | 24 | $ | 77 | $ | 49 | ||||||||
Consumers
|
||||||||||||||||
Service cost
|
$ | 10 | $ | 10 | $ | 21 | $ | 20 | ||||||||
Interest expense
|
24 | 23 | 48 | 46 | ||||||||||||
Expected return on plan assets
|
(22 | ) | (22 | ) | (45 | ) | (42 | ) | ||||||||
Amortization of:
|
||||||||||||||||
Net loss
|
13 | 10 | 25 | 20 | ||||||||||||
Prior service cost
|
1 | 2 | 3 | 3 | ||||||||||||
Net periodic cost
|
$ | 26 | $ | 23 | $ | 52 | $ | 47 | ||||||||
Regulatory adjustments (a)
|
21 | — | 23 | — | ||||||||||||
Net periodic cost after regulatory adjustment
|
$ | 47 | $ | 23 | $ | 75 | $ | 47 | ||||||||
(a) | Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. |
74
In Millions | ||||||||||||||||
OPEB | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
CMS Energy, including Consumers
|
||||||||||||||||
Service cost
|
$ | 6 | $ | 7 | $ | 13 | $ | 13 | ||||||||
Interest expense
|
20 | 20 | 41 | 40 | ||||||||||||
Expected return on plan assets
|
(14 | ) | (13 | ) | (29 | ) | (26 | ) | ||||||||
Amortization of:
|
||||||||||||||||
Net loss
|
8 | 9 | 16 | 17 | ||||||||||||
Prior service credit
|
(5 | ) | (3 | ) | (7 | ) | (5 | ) | ||||||||
Net periodic cost
|
$ | 15 | $ | 20 | $ | 34 | $ | 39 | ||||||||
Regulatory adjustment
|
6 | — | 7 | — | ||||||||||||
Net periodic cost after regulatory adjustment
|
$ | 21 | $ | 20 | $ | 41 | $ | 39 | ||||||||
Consumers
|
||||||||||||||||
Service cost
|
$ | 6 | $ | 6 | $ | 13 | $ | 12 | ||||||||
Interest expense
|
20 | 19 | 40 | 39 | ||||||||||||
Expected return on plan assets
|
(14 | ) | (12 | ) | (28 | ) | (24 | ) | ||||||||
Amortization of:
|
||||||||||||||||
Net loss
|
8 | 9 | 16 | 17 | ||||||||||||
Prior service credit
|
(4 | ) | (3 | ) | (6 | ) | (5 | ) | ||||||||
Net periodic cost
|
$ | 16 | $ | 19 | $ | 35 | $ | 39 | ||||||||
Regulatory adjustments (a)
|
6 | — | 7 | — | ||||||||||||
Net periodic cost after regulatory adjustment
|
$ | 22 | $ | 19 | $ | 42 | $ | 39 | ||||||||
(a) | Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. |
75
In Millions | ||||||||
Six months ended June 30 | 2010 | 2009 | ||||||
CMS Energy, including Consumers
|
||||||||
Income from continuing operations before income taxes
|
$ | 307 | $ | 209 | ||||
|
||||||||
Income tax expense at statutory 35% federal rate
|
108 | 73 | ||||||
Increase (decrease) in income taxes from:
|
||||||||
Change in tax law, Medicare Part D subsidy
|
3 | — | ||||||
ITC amortization
|
(2 | ) | (2 | ) | ||||
Medicare Part D exempt income
|
(3 | ) | (3 | ) | ||||
State and local income taxes, net of federal benefit
|
12 | 13 | ||||||
Other, net
|
2 | 1 | ||||||
Income tax expense
|
$ | 120 | $ | 82 | ||||
Effective tax rate
|
39.1 | % | 39.2 | % | ||||
Consumers
|
||||||||
Income from continuing operations before income taxes
|
$ | 310 | $ | 272 | ||||
|
||||||||
Income tax expense at statutory 35% federal rate
|
108 | 95 | ||||||
Increase (decrease) in taxes from:
|
||||||||
ITC amortization
|
(2 | ) | (2 | ) | ||||
Medicare Part D exempt income
|
(3 | ) | (3 | ) | ||||
State and local income taxes, net of federal benefit
|
11 | 8 | ||||||
Other, net
|
1 | 3 | ||||||
Income tax expense
|
$ | 115 | $ | 101 | ||||
Effective tax rate
|
37.1 | % | 37.1 | % | ||||
76
77
Nature of | ||||
Name (Ownership Interest) | the Entity | Financing of Partnership | ||
T.E.S. Filer City (50%)
|
Coal-fueled power
generator |
Non-recourse long-term debt that matured in December 2007. | ||
|
||||
Grayling (50%)
|
Wood waste- fueled
power generator |
Sale of revenue bonds that mature in November 2012 and bear interest at variable rates. The debt is recourse to the partnership, but not the individual partners, and secured by a letter of credit equal to the outstanding balance. | ||
|
||||
Genesee (50%)
|
Wood waste- fueled
power generator |
Sale of revenue bonds that mature in 2021 and bear interest at fixed rates. The debt is non-recourse to the partnership and secured by a CMS Energy guarantee capped at $3 million annually. | ||
• | electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan; | ||
• | gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan; | ||
• | enterprises, consisting of various subsidiaries engaging primarily in domestic independent power production; and | ||
• | other, including corporate interest and other expenses and discontinued operations. |
78
• | electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan; | ||
• | gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan; and | ||
• | other, including a consolidated special-purpose entity for the sale of accounts receivable. |
In Millions | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Operating Revenue
|
||||||||||||||||
CMS Energy, including Consumers
|
||||||||||||||||
Electric utility
|
$ | 975 | $ | 848 | $ | 1,813 | $ | 1,660 | ||||||||
Gas utility
|
301 | 334 | 1,353 | 1,556 | ||||||||||||
Enterprises
|
55 | 37 | 123 | 101 | ||||||||||||
Other
|
9 | 6 | 18 | 12 | ||||||||||||
Total Operating Revenue — CMS Energy
|
$ | 1,340 | $ | 1,225 | $ | 3,307 | $ | 3,329 | ||||||||
Consumers
|
||||||||||||||||
Electric utility
|
$ | 975 | $ | 848 | $ | 1,813 | $ | 1,660 | ||||||||
Gas utility
|
301 | 334 | 1,353 | 1,556 | ||||||||||||
Total Operating Revenue — Consumers
|
$ | 1,276 | $ | 1,182 | $ | 3,166 | $ | 3,216 | ||||||||
|
||||||||||||||||
Net Income Available to Common
Stockholders
|
||||||||||||||||
CMS Energy, including Consumers
|
||||||||||||||||
Electric utility
|
$ | 86 | $ | 67 | $ | 127 | $ | 106 | ||||||||
Gas utility
|
1 | 5 | 67 | 64 | ||||||||||||
Enterprises
|
33 | (13 | ) | 42 | (12 | ) | ||||||||||
Discontinued Operations
|
(16 | ) | 25 | (17 | ) | 24 | ||||||||||
Other
|
(24 | ) | (9 | ) | (54 | ) | (37 | ) | ||||||||
Total Net Income Available to Common
Stockholders — CMS Energy
|
$ | 80 | $ | 75 | $ | 165 | $ | 145 | ||||||||
Consumers
|
||||||||||||||||
Electric utility
|
$ | 86 | $ | 67 | $ | 127 | $ | 106 | ||||||||
Gas utility
|
1 | 5 | 67 | 64 | ||||||||||||
Total Net Income Available to Common
Stockholder — Consumers
|
$ | 87 | $ | 72 | $ | 194 | $ | 170 | ||||||||
79
In Millions | ||||||||
June 30, 2010 | December 31, 2009 | |||||||
Plant, Property, and Equipment, Gross
|
||||||||
CMS Energy, including Consumers
|
||||||||
Electric utility
|
$ | 9,717 | $ | 9,525 | ||||
Gas utility
|
3,875 | 3,812 | ||||||
Enterprises
|
101 | 345 | ||||||
Other
|
34 | 34 | ||||||
Total Plant, Property, and Equipment —
CMS Energy
|
$ | 13,727 | $ | 13,716 | ||||
Consumers
|
||||||||
Electric utility
|
$ | 9,717 | $ | 9,525 | ||||
Gas utility
|
3,875 | 3,812 | ||||||
Other
|
15 | 15 | ||||||
Total Plant, Property, and Equipment —
Consumers
|
$ | 13,607 | $ | 13,352 | ||||
|
||||||||
Assets
|
||||||||
CMS Energy, including Consumers
|
||||||||
Electric utility (a)
|
$ | 9,268 | $ | 9,157 | ||||
Gas utility (a)
|
4,407 | 4,594 | ||||||
Enterprises
|
192 | 303 | ||||||
Other
|
1,184 | 1,202 | ||||||
Total Assets — CMS Energy
|
$ | 15,051 | $ | 15,256 | ||||
Consumers
|
||||||||
Electric utility (a)
|
$ | 9,268 | $ | 9,157 | ||||
Gas utility (a)
|
4,407 | 4,594 | ||||||
Other
|
651 | 871 | ||||||
Total Assets — Consumers
|
$ | 14,326 | $ | 14,622 | ||||
(a) | Amounts include a portion of Consumers’ other common assets attributable to both the electric and the gas utility businesses. |
80
81
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
82
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Total Number of | Maximum Number of | |||||||||||||||
Total | Average | Shares Purchased as | Shares that May Yet | |||||||||||||
Number of | Price | Part of Publicly | Be Purchased Under | |||||||||||||
Shares | Paid per | Announced Plans or | Publicly Announced | |||||||||||||
Period | Purchased* | Share | Programs | Plans or Programs | ||||||||||||
April 1, 2010 to
April 30, 2010
|
1,695 | $ | 16.38 | — | — | |||||||||||
|
||||||||||||||||
May 1, 2010 to May
31, 2010
|
— | — | — | — | ||||||||||||
|
||||||||||||||||
June 1, 2010 to
June 30, 2010
|
61,496 | 14.32 | — | — | ||||||||||||
Total
|
63,191 | $ | 14.38 | — | — | |||||||||||
* | CMS Energy repurchases certain restricted shares upon vesting under the performance incentive stock plan from participants in the performance incentive stock plan, equal to its minimum statutory income tax withholding obligation. Shares repurchased have a value based on the market price on the vesting date. |
Item 3. | Defaults Upon Senior Securities |
Item 5. | Other Information |
83
Item 6. | Exhibits |
3.1
|
CMS Energy Bylaws, amended and restated as of May 21, 2010 (Exhibit 3.1 to Form 8-K filed May 26, 2010 and incorporated herein by reference) | |
|
||
3.2
|
Consumers Bylaws, amended and restated as of May 21, 2010 (Exhibit 3.2 to Form 8-K filed May 26, 2010 and incorporated herein by reference) | |
|
||
10.1
|
CMS Energy’s Performance Incentive Stock Plan, effective February 3, 1988, amended and restated, effective August 1, 2010 | |
|
||
12.1
|
Statement regarding computation of CMS Energy’s Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends | |
|
||
12.2
|
Statement regarding computation of Consumers’ Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends | |
|
||
31.1
|
CMS Energy’s certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
|
||
31.2
|
CMS Energy’s certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
|
||
31.3
|
Consumers’ certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
|
||
31.4
|
Consumers’ certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
|
||
32.1
|
CMS Energy’s certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
|
||
32.2
|
Consumers’ certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
84
101.INS*
|
XBRL Instance Document | |
|
||
101.SCH*
|
XBRL Taxonomy Extension Schema | |
|
||
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase | |
|
||
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase | |
|
||
101.LAB*
|
XBRL Taxonomy Extension Labels Linkbase | |
|
||
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase |
* | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed to be “furnished” and not “filed”. The financial information contained in the XBRL-related information is “unaudited” and “unreviewed.” |
85
CMS ENERGY CORPORATION
(Registrant) |
||||
Dated: July 28, 2010 | By: | /s/ Thomas J. Webb | ||
Thomas J. Webb | ||||
Executive Vice President and Chief Financial Officer | ||||
CONSUMERS ENERGY COMPANY
(Registrant) |
||||
Dated: July 28, 2010 | By: | /s/ Thomas J. Webb | ||
Thomas J. Webb | ||||
Executive Vice President and Chief Financial Officer | ||||
86
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|
No information found
Customers
Customer name | Ticker |
---|---|
American Axle & Manufacturing Holdings, Inc. | AXL |
First Trust New Opportunities MLP & Energy Fund | FPL |
The Southern Company | SO |
Xcel Energy Inc. | XEL |
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|