CMS Energy (CMS) 10-K risk factor changes: FY2017 vs FY2016

Consumers’ capital requirements are expected to be substantial over the next several years as it [added: decommissions older facilities and] invests in [removed: the Smart Energy program,] [added: electric grid modernization technology,] construction or acquisition of power generation, environmental controls, [removed: decommissioning of older facilities,] conversions and expansions, and other electric and gas infrastructure to upgrade delivery systems.

[added: These measures could include,] but are not limited to, deferring capital expenditures, changing CMS Energy’s and Consumers’ commodity purchasing strategy to avoid collateral-posting requirements, and reducing or eliminating future share repurchases, dividend payments, or other discretionary uses of cash.

Consumers’ planned investments include the [removed: Smart Energy program,] construction or acquisition of power generation, [removed: gas and] electric [added: and gas] infrastructure, conversions and expansions, environmental controls, [removed: decommissioning of older facilities,] [added: electric grid modernization technology,] and other electric and gas investments to upgrade delivery [removed: systems.][added: systems, as well as decommissioning of older facilities.]

Lower natural gas prices due to a large supply of natural gas on the market, coupled with low capacity prices in the electric [removed: supply market, are placing increasing competitive pressure on the cost of Consumers’ electric supply.]

[removed: In addition, if] [added: If] rate regulators fail to provide [removed: timely] [added: adequate] rate relief, it could have a material adverse effect on Consumers or Consumers’ plans for making significant capital [removed: investments could be materially adversely affected.][added: investments.]

In addition, because there are statutory requirements mandating that regulators allow Consumers to recover from customers certain costs, such as resource additions to meet Michigan’s renewable resource standard, energy [removed: optimization,] [added: waste reduction,] and environmental compliance, regulators could be more inclined to oppose rate increases for other requested items and investments.

In addition to its potential effects on Consumers’ investment program, any limitation of cost recovery through rates [added: or any acceleration of customer refunds] could have a material adverse effect on Consumers’ liquidity, financial condition, and results of operations.

Orders of the MPSC could limit recovery of costs of providing service including, but not limited to, environmental and safety related expenditures for coal-fueled plants and other utility properties, regulatory assets, power supply and natural gas supply costs, operating and maintenance expenses, additional utility-based investments, sunk investment in mothballed or retired generating plants, costs associated with the proposed retirement and decommissioning of facilities, depreciation expense, MISO energy and transmission costs, costs associated with energy waste reduction investments and state or federally mandated renewable resource standards, [removed: Smart Energy program costs,] or expenditures subject to tracking mechanisms.

For example, MPSC orders could prevent or curtail Consumers from shutting off non-paying customers, could prevent or curtail [removed: Consumers from self-implementing rate changes, could prevent or curtail] the implementation of a gas revenue mechanism, or could require Consumers to refund previously self-implemented rates.

Failure of these subsidiaries to maintain this FERC authority could have a material adverse effect on CMS Energy’s [added: and Consumers’ liquidity, financial condition, and results of operations.]

Utility regulation could be impacted by various matters, such as electric industry restructuring, hydro relicensing, asset reclassification, gas pipeline capacity and gas storage, new generation facilities or investments, [added: transmission charges,] environmental controls, climate change, air emissions, renewable energy, energy policy and ROA, regulation or deregulation, energy capacity standards or markets, reliability, and safety.

FERC, through NERC, oversees reliability of certain portions of the electric [removed: facilities owned by CMS Energy and Consumers.][added: grid.]

Present and reasonably anticipated state and federal environmental statutes and regulations, including but not limited to the Clean Air Act, the Clean Water Act, RCRA, [removed: and] CERCLA, [added: and NREPA,] will continue to have a material effect on CMS Energy and Consumers.

In [removed: October] 2015, the EPA published [added: final] rules pursuant to Section 111(d) of the Clean Air Act to limit carbon dioxide emissions from existing electric generating units, calling the rules the “Clean Power Plan.” The rules, which are being challenged in court, [removed: require] [added: required] a [added: 32-percent nationwide reduction in carbon emissions from existing power plants by 2030 (based on 2005 levels).]

Business—CMS Energy and Consumers Environmental [removed: Compliance] [added: Strategy] and Item [removed: 8.][added: 7.]

[added: Management’s Discussion and Analysis of] Financial [removed: Statements] [added: Condition] and [removed: Supplementary Data—MD&A—Outlook—Consumers] [added: Results of Operations—Outlook—Consumers] Electric Utility Outlook and Uncertainties.

[removed: Allegations] [added: Remaining allegations] include price-fixing conspiracies, restraint of trade, and artificial inflation of natural gas retail prices in [removed: Kansas, Missouri,] [added: Kansas] and Wisconsin.

CMS Energy cannot predict the outcome of [removed: the] [added: these] lawsuits or the amount of damages for which CMS Energy may be liable.

It is possible that the outcome [removed: in one or more] of the lawsuits could have a material adverse effect on CMS Energy’s liquidity, financial condition, and results of operations.

[removed: CMS Energy is contesting] [added: to contest] the claim, but cannot predict the financial impact or outcome of the matter.

[added: Mild] temperatures during the summer cooling season and winter heating season as well as the impact of extreme weather events on Consumers’ system could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.

Despite implementation of security measures, technology [removed: systems] [added: systems, including disaster recovery and backup systems,] are vulnerable to [removed: being disabled, failures,] [added: failure,] cyber crime, [removed: and] unauthorized [removed: access.][added: access, and being disabled.]

If technology [removed: systems] [added: systems, including disaster recovery and backup systems,] were to fail or be breached, CMS Energy and Consumers might not be able to fulfill critical business functions, and sensitive confidential and proprietary data could be compromised, which could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.

[removed: In addition, because CMS Energy’s and Consumers’ generation, transmission, and] distribution systems are part of an interconnected system, a disruption caused by a cyber incident at another utility, electric generator, system operator, or commodity supplier could also adversely affect CMS Energy’s or Consumers’ businesses, financial condition, and results of operations.

The failure of these technologies, [added: including backup systems,] or the inability of CMS Energy and Consumers to have these technologies supported, updated, expanded, or integrated into other technologies, could hinder their business operations and materially adversely affect their liquidity, financial condition, and results of operations.

Consumers’ electric and gas delivery systems, power plants, gas infrastructure including storage facilities, wind energy or solar equipment, energy products, and the independent power plants owned in whole or in [added: part by CMS Energy could be involved in incidents, failures, or accidents that result in injury, loss of life, or property loss to customers, employees, or the public.]

_Distributed electricity generation:_ Technology [removed: advances and] [added: advances,] government incentives and [removed: subsidies] [added: subsidies, and recent regulatory decisions] could increase the cost effectiveness of customer-owned methods of producing electricity, such as fuel cells, microturbines, wind turbines, and solar photovoltaics, resulting in reduced load, cross subsidization, and increased costs.

If, for natural gas delivery to its customers, Consumers were unable to obtain its natural gas supply requirements under existing or future natural gas supply and transportation contracts, it could be required to purchase natural gas at higher prices from other sources or implement its natural gas curtailment [added: program filed with the MPSC.]

The performance of the capital markets affects the [removed: values] [added: value] of assets that are held in trust to satisfy future obligations under CMS Energy’s and Consumers’ pension and postretirement benefit plans.

Changes in [removed: taxation, including potential federal tax reform,] [added: taxation] as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact CMS Energy and Consumers.

[removed: Effective July 2011, all] [added: All] companies that directly or indirectly control an FDIC-insured bank are required to serve as a source of financial strength for that institution.

EnerBank has exceeded these requirements historically and exceeds them as of February [removed: 2017.][added: 2018.]

supply market, are placing increasing competitive pressure on the cost of Consumers’ electric supply.

Additionally, future orders of the MPSC related to Consumers’ remeasurement of its deferred income taxes as a result of the TCJA could require accelerated customer refunds.

Government-mandated power purchases from renewable energy projects may have an adverse effect on CMS Energy’s and Consumers’ businesses.

PURPA requires Consumers to purchase power from qualifying cogeneration and small power production facilities at a price approved by the MPSC that is meant to represent Consumers’ “avoided cost” of generating power or purchasing power from another source.

In November 2017, the MPSC issued an order establishing a new avoided-cost formula to determine the price that Consumers must pay to purchase power under PURPA.

Among other things, the MPSC’s order changes the basis of Consumers’ avoided cost from the cost of coal-fueled generating units to that of natural gas-fueled generating units.

The MPSC order also assigns more capacity value to qualifying facilities that are consistently able to generate electricity during peak times.

The MPSC order could result in mandated purchases of generation, potentially at above-market prices, and reduce Consumers’ need for new owned generation.

This in turn could have a material adverse effect on Consumers’ capital investment plan, the affordability of future customer rates, and CMS Energy’s and Consumers’ liquidity, financial condition, investment plans, and results of operations.

In October 2017, the EPA published a proposal to repeal the Clean Power Plan.

The EPA has also announced that it intends to begin the rulemaking process for a replacement that conforms to the new legal interpretation set forth in the published proposed repeal of the Clean Power Plan.

It is expected that the EPA will propose a replacement rule in 2018.

In 2015, the matter was proceeding to formal arbitration; however, since then the government of Equatorial Guinea has stopped communicating.

CMS Energy will continue

In addition, because CMS Energy’s and Consumers’ generation, transmission, and

A breach or failure of technology, including disaster recovery or backup systems, could also have a negative impact on CMS Energy’s banking subsidiary, EnerBank.

Unions represent 40 percent of Consumers’ employees.

Consumers’ union agreements expire in 2020.

In December 2017, President Trump signed the TCJA, which changed existing federal tax law and included numerous provisions that affect businesses.

CMS Energy and Consumers have made reasonable estimates in measuring and accounting for the effects of the TCJA, which have been reflected in the December 31, 2017 financial statements.

Given expected changes to U.S. Treasury regulations, interpretations of the TCJA by the U.S. Treasury, interpretations of the application of ASC 740, and the companies’ analysis of their historical records, the final transition impacts of the TCJA may differ from the estimates provided elsewhere in this report.

These measures could include,

Consumers is presently permitted to self-implement rate changes six months after a rate filing with the MPSC, although the MPSC may delay, deny, or limit self-implementation upon a showing of good cause.

If Consumers self-implements rates that result in higher revenues than would have resulted from rates that the MPSC authorizes in its final order, Consumers must refund the difference, with interest.

The 2016 Energy Law, which will become effective in April 2017, removes the right to self-implementation for rate cases filed after the effective date and sets a ten-month schedule for a final decision in a general rate case.

and Consumers’ liquidity, financial condition, and results of operations.

32 percent nationwide reduction in carbon emissions from existing power plants by 2030 (based on 2005 levels).

The Trump administration has also indicated that it intends to re-examine the Clean Power Plan.

The matter is proceeding to formal arbitration.

Mild

part by CMS Energy could be involved in incidents, failures, or accidents that result in injury, loss of life, or property loss to customers, employees, or the public.

program filed with the MPSC.

Over 40 percent of Consumers’ employees are represented by unions.

In 2015, both of Consumers’ unions, representing all union employees, ratified three separate five-year agreements, expiring in 2020.

[added: This] Management’s [removed: discussion] [added: Discussion] and [removed: analysis] [added: Analysis] of [removed: financial condition] [added: Financial Condition] and [removed: results] [added: Results] of [removed: operations for] [added: Operations is a combined report of] CMS Energy and [removed: Consumers is contained in Item 8.][added: Consumers.]

EXECUTIVE OVERVIEW

CMS Energy is an energy company operating primarily in Michigan.

It is the parent holding company of several subsidiaries, including Consumers, an electric and gas utility, and CMS Enterprises, primarily a domestic independent power producer.

Consumers’ electric utility operations include the generation, purchase, transmission, distribution, and sale of electricity, and Consumers’ gas utility operations include the purchase, transmission, storage, distribution, and sale of natural gas.

Consumers’ customer base consists of a mix of residential, commercial, and diversified industrial customers.

CMS Enterprises, through its subsidiaries and equity investments, is engaged in domestic independent power production, the marketing of independent power production, and the development of renewable generation.

CMS Energy and Consumers manage their businesses by the nature of services each provides.

CMS Energy operates principally in three business segments: electric utility; gas utility; and enterprises, its non-utility operations and investments.

Consumers operates principally in two business segments: electric utility and gas utility.

CMS Energy’s and Consumers’ businesses are affected primarily by:

· regulation and regulatory matters

· state and federal legislation

· economic conditions

· weather

· energy commodity prices

· interest rates

· their securities’ credit ratings

The Triple Bottom Line

CMS Energy’s and Consumers’ purpose is to achieve world class performance while delivering hometown service.

In support of this purpose, the companies employ the “Consumers Energy Way,” a lean operating model designed to improve safety, quality, cost, delivery, and employee morale.

CMS Energy and Consumers measure their progress toward the purpose by considering their impact on the “triple bottom line” of people, planet, and profit, which is underpinned by performance; this consideration takes into account not only the economic value that the companies create for customers and investors, but also their responsibility to social and environmental goals.

The triple bottom line balances the interests of the companies’ employees, customers, suppliers, regulators, creditors, Michigan’s residents, the investment community, and other stakeholders, and it reflects the broader societal impacts of the companies’ activities.


Consumers’ 2017 Sustainability Report, which is available to the public, describes the company’s commitment to world class performance and to the triple bottom line and discusses its progress in the areas of safety, environmental stewardship, social responsibility, and economic development.

People: The people element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to their employees, their customers, the residents of local communities in which the companies do business, and other stakeholders.

The safety of employees, customers, and the general public is a priority of CMS Energy and Consumers.

Accordingly, CMS Energy and Consumers have worked to integrate a set of safety principles into their business operations and culture.

These principles include complying with applicable safety, health, and security regulations and implementing programs and processes aimed at continually improving safety and security conditions.

The number of recordable safety incidents in 2017 was 65, compared with 73 in 2016 and 106 in 2015.

The number of recordable safety incidents in 2017 was the lowest in Consumers’ history, and Consumers is on track to have the best safety results of its EEI peer group, as it did in 2016.

CMS Energy and Consumers also place a high priority on customer value and on providing a hometown customer experience.

Consumers’ customer-driven investment program is aimed at improving safety and increasing electric and gas reliability, which has resulted in measureable improvements in customer satisfaction.

Central to Consumers’ commitment to its customers are the initiatives it has undertaken to keep electricity and natural gas affordable.

These initiatives include the adoption of its lean operating model that is focused on completing work safely and correctly the first time, thus minimizing rework and waste, while delivering services on time.

Other cost-saving initiatives undertaken by Consumers include:

· replacement of coal-fueled generation with cleaner and more efficient gas-fueled generation, renewable energy, and energy waste reduction and demand response programs

· targeted infrastructure investment, including the installation of smart meters

· information and control system efficiencies

· employee and retiree health care cost sharing

· workforce productivity enhancements

Financial Statements and Supplementary Data—MD&A, which is incorporated by reference herein.

CMS Energy and Consumers are exposed to market risks including, but not limited to, changes in interest rates, commodity prices, and investment security prices.

They may enter into various risk management contracts to mitigate exposure to these risks, including swaps, options, futures, and forward contracts.

CMS Energy and Consumers enter into these contracts using established policies and procedures, under the direction of an executive oversight committee consisting of certain officers and a risk committee consisting of those and other officers and business managers.

The following risk sensitivities illustrate the potential loss in fair value, cash flows, or future earnings from financial instruments, assuming a hypothetical adverse change in market rates or prices of ten percent.

Potential losses could exceed the amounts shown in the sensitivity analyses if changes in market rates or prices were to exceed ten percent.

Interest-Rate Risk: CMS Energy and Consumers are exposed to interest-rate risk resulting from issuing fixed-rate and variable-rate financing instruments.

CMS Energy and Consumers use a combination of these instruments, and may also enter into interest-rate swap agreements, in order to manage this risk and to achieve a reasonable cost of capital.

Presented in the following table is a sensitivity analysis of interest-rate risk (assuming an adverse change in market interest rates of ten percent):

| | | | | | _In Millions_ | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| December 31 | | 2017 | | | 2016 | | |

| _Fixed-rate financing — potential loss in fair value_ | | | | | | | |

| CMS Energy, including Consumers | | $ | 329 | | $ | 291 | |

| Consumers | | 213 | | | 175 | | |

| | | | | | | | |

The fair value losses in the above table could be realized only if CMS Energy and Consumers transferred all of their fixed-rate financing to other creditors.

The annual earnings exposure related to variable-rate financing was immaterial for both CMS Energy and Consumers at December 31, 2017 and 2016, assuming an adverse change in market interest rates of ten percent.

Investment Securities Price Risk: Through investments in equity securities, CMS Energy and Consumers are exposed to equity price fluctuations.

The following table shows the potential effect of adverse changes in equity prices on CMS Energy’s and Consumers’ available-for-sale investments.

Presented in the following table is a sensitivity analysis of investment securities price risk (assuming an adverse change in market prices of ten percent):

| | | | | | _In Millions_ | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| December 31 | | 2017 | | | 2016 | | |

| CMS Energy, including Consumers | | | | | | | |

| _Potential reduction in fair value of available-for-sale securities_ | | | | | | | |

| _DB SERP_ | | | | | | | |

| Debt securities | | $ | 14 | | $ | \- | |

| Mutual funds | | \- | | | 14 | | |

| Consumers | | | | | | | |

| _Potential reduction in fair value of available-for-sale securities_ | | | | | | | |

| _DB SERP_ | | | | | | | |

| Debt securities | | $ | 10 | | $ | \- | |

| Mutual funds | | \- | | | 10 | | |

| CMS Energy common stock | | 2 | | | 3 | | |

Notes Receivable Risk: CMS Energy is exposed to interest-rate risk resulting from EnerBank’s fixed-rate installment loans.

EnerBank provides these loans to homeowners to finance home improvements.

Presented in the following table is a sensitivity analysis of notes receivable (assuming an adverse change in market interest rates of ten percent):

| | | | | | _In Millions_ | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| December 31 | | 2017 | | | 2016 | | |

Quantitative and qualitative disclosures about market risk for CMS Energy and Consumers are contained in Item 8.

Financial Statements and Supplementary Data—MD&A—Critical Accounting Policies and Estimates—Market Risk Information, which is incorporated by reference herein.

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CMS Enterprises, through its subsidiaries and equity investments, is engaged [removed: primarily] in [added: domestic] independent power [removed: production and owns] [added: production, the marketing of independent] power [removed: generation facilities fueled mostly by natural gas] [added: production,] and [added: the development of] renewable [removed: sources.][added: generation.]

CMS Energy’s consolidated operating revenue was [removed: $6.4] [added: $6.6] billion in [removed: 2016, $6.5] [added: 2017, $6.4] billion in [removed: 2015,] [added: 2016,] and [removed: $7.2] [added: $6.5] billion in [removed: 2014.][added: 2015.]

For further information about operating revenue, income, and assets and liabilities attributable to all of CMS Energy’s business segments and operations, see Item [removed: 8.][added: 6.]

Financial Statements and Supplementary Data—CMS Energy [removed: Selected Financial Information, CMS Energy] Consolidated Financial [removed: Statements,] [added: Statements] and Notes to the Consolidated Financial Statements.

Consumers’ rates and certain other aspects of its business are subject to the jurisdiction of the MPSC and FERC, as well as to NERC reliability standards, as described in [removed: “CMS Energy and Consumers Regulation” in this] Item 1.

Consumers’ consolidated operating revenue was [removed: $6.1] [added: $6.2] billion in [removed: 2016, $6.2] [added: 2017, $6.1] billion in [removed: 2015,] [added: 2016,] and [removed: $6.8] [added: $6.2] billion in [removed: 2014.][added: 2015.]

For further information about operating revenue, income, and assets and liabilities attributable to Consumers’ electric and gas utility operations, see Item [removed: 8.][added: 6.]

Financial Statements and Supplementary Data—Consumers [removed: Selected Financial Information, Consumers] Consolidated Financial [removed: Statements,] [added: Statements] and Notes to the Consolidated Financial Statements.

In [removed: 2016,] [added: 2017,] Consumers served 1.8 million electric customers and 1.8 million gas customers in Michigan’s Lower Peninsula.

| [removed: ] [added: ] | | |

| [removed: ] [added: ] | Electric Service Territory | |

| [removed: ] [added: ] | Gas Service Territory | |

| [removed: ] [added: ] | Combination Electric and Gas Service Territory | |

Electric Utility Operations: Consumers’ electric utility operations, which include the generation, purchase, transmission, distribution, and sale of electricity, generated operating revenue of $4.4 billion in [removed: 2016, $4.2] [added: 2017, $4.4] billion in [removed: 2015,] [added: 2016,] and [removed: $4.4] [added: $4.2] billion in [removed: 2014.][added: 2015.]

Presented in the following illustration is Consumers’ [removed: 2016] [added: 2017] electric utility operating revenue of $4.4 billion by customer class:

[removed: |  | | |][added: ]

| [removed: ] [added: ] | Residential [removed: (45%)] [added: (43%)] | |

| [removed: ] [added: ] | Commercial [removed: (31%)] [added: (34%)] | |

| [removed: ] [added: ] | Industrial [removed: (18%)] [added: (4%)] | |

| [removed: ] [added: ] | Other (6%) | |

In [removed: 2015,] [added: 2017,] Consumers’ electric deliveries were 37 billion kWh, which included ROA deliveries of [removed: four] [added: three] billion kWh, resulting in net bundled sales of [removed: 33] [added: 34] billion kWh.

Presented in the following illustration are Consumers’ monthly weather-adjusted electric deliveries (deliveries adjusted to reflect normal weather conditions) to its customers, including ROA deliveries, during [removed: 2016] [added: 2017] and [removed: 2015:][added: 2016:]

[removed: ][added: |  | | |]

Consumers’ [removed: 2016] [added: 2017] summer peak demand was [removed: 8,227] [added: 7,634] MW, which included ROA demand of [removed: 592] [added: 577] MW.

For the [removed: 2015-2016] [added: 2016-2017] winter season, Consumers’ peak demand was [removed: 5,750] [added: 5,924] MW, which included ROA demand of [removed: 480] [added: 475] MW.

As required by MISO reserve margin requirements, Consumers owns or controls, through long-term PPAs and short-term capacity purchases, [removed: essentially] all of the capacity required to supply its projected firm peak load and necessary reserve margin for summer [removed: 2017.][added: 2018.]

[removed: Electric Utility Properties:] Consumers’ transmission and distribution systems consist of:

· [removed: four] [added: 4] miles of high-voltage distribution underground lines operating at 138 kilovolts

· [removed: 4,430] [added: 4,431] miles of high-voltage distribution overhead lines operating at 46 kilovolts and 69 kilovolts

· [removed: 56,067] [added: 56,098] miles of electric distribution overhead lines

· [removed: 10,532] [added: 10,665] miles of underground distribution lines

[added: Electric Utility Generation and Supply Mix:] Presented in the following table are details about Consumers’ [added: 2017] electric [removed: generating system at December 31, 2016:][added: generation and supply mix:]

| | | Number of Units and | | [removed: 2016] [added: 2017] Generation Capacity | 1 | [removed: 2016] [added: 2017] Electric Supply | |

| _Coal [added: steam] generation_ | | | | | | | |

| J.H. Campbell 1 & 2 – West Olive | | 2 Units, 1962-1967 | | [removed: 610] [added: 607] | | [removed: 2,828] [added: 2,162] | |

| J.H. Campbell 3 – West Olive2 | | 1 Unit, 1980 | | [removed: 755] [added: 780] | | [removed: 3,353] [added: 5,400] | |

| D.E. Karn 1 & 2 – Essexville | | 2 Units, 1959-1961 | | [removed: 494] [added: 515] | | [removed: 2,164] [added: 2,536] | |

| Jackson – Jackson | | 1 Unit, 2002 | | 542 | | [removed: 2,118] [added: 1,890] | |

| D.E. Karn 3 & 4 – Essexville | | 2 Units, 1975-1977 | | 1,208 | | [removed: 81] [added: 96] | |

| Zeeland [removed: (combined cycle)] – Zeeland | | 3 Units, 2002 | | 527 | | [removed: 3,692] [added: 3,051] | |

Selected Financial Data and Item 8.

Business—CMS Energy and Consumers Regulation.

Selected Financial Data and Item 8.

CMS Energy and Consumers — The Triple Bottom Line

CMS Energy is an energy company operating primarily in Michigan.

It is the parent holding company of several subsidiaries, including Consumers, an electric and gas utility, and CMS Enterprises, primarily a domestic independent power producer.

Consumers’ electric utility operations include the generation, purchase, transmission, distribution, and sale of electricity, and Consumers’ gas utility operations include the purchase, transmission, storage, distribution, and sale of natural gas.

Consumers’ customer base consists of a mix of residential, commercial, and diversified industrial customers.

CMS Enterprises, through its subsidiaries and equity investments, is engaged in domestic independent power production, the marketing of independent power production, and the development of renewable generation.

CMS Energy and Consumers manage their businesses by the nature of services each provides.

CMS Energy operates principally in three business segments: electric utility; gas utility; and enterprises, its non-utility operations and investments.

Consumers operates principally in two business segments: electric utility and gas utility.

CMS Energy’s and Consumers’ businesses are affected primarily by:

· regulation and regulatory matters

· state and federal legislation

· economic conditions

· weather

· energy commodity prices

· interest rates

· their securities’ credit ratings

The Triple Bottom Line

CMS Energy’s and Consumers’ purpose is to achieve world class performance while delivering hometown service.

In support of this purpose, the companies employ the “Consumers Energy Way,” a lean operating model designed to improve safety, quality, cost, delivery, and employee morale.

CMS Energy and Consumers measure their progress toward the purpose by considering their impact on the “triple bottom line” of people, planet, and profit, which is underpinned by performance; this consideration takes into account not only the economic value that the companies create for customers and investors, but also their responsibility to social and environmental goals.

The triple bottom line balances the interests of the companies’ employees, customers, suppliers, regulators, creditors, Michigan’s residents, the investment community, and other stakeholders, and it reflects the broader societal impacts of the companies’ activities.

Consumers’ 2017 Sustainability Report, which is available to the public, describes the company’s commitment to world class performance and to the triple bottom line and discusses its progress in the areas of safety, environmental stewardship, social responsibility, and economic development.

People: The people element of the triple bottom line represents CMS Energy’s and Consumers’ commitment to their employees, their customers, the residents of local communities in which the companies do business, and other stakeholders.

The safety of employees, customers, and the general public is a priority of CMS Energy and Consumers.

Accordingly, CMS Energy and Consumers have worked to integrate a set of safety principles into their business operations and culture.

These principles include complying with applicable safety, health, and security regulations and implementing programs and processes aimed at continually improving safety and security conditions.

The number of recordable safety incidents in 2017 was 65, compared with 73 in 2016 and 106 in 2015.

The number of recordable safety incidents in 2017 was the lowest in Consumers’ history, and Consumers is on track to have the best safety results of its EEI peer group, as it did in 2016.

CMS Energy and Consumers also place a high priority on customer value and on providing a hometown customer experience.

Consumers’ customer-driven investment program is aimed at improving safety and increasing electric and gas reliability, which has resulted in measureable improvements in customer satisfaction.

Central to Consumers’ commitment to its customers are the initiatives it has undertaken to keep electricity and natural gas affordable.

These initiatives include the adoption of its lean operating model that is focused on completing work safely and correctly the first time, thus minimizing rework and waste, while delivering services on time.

Other cost-saving initiatives undertaken by Consumers include:

· replacement of coal-fueled generation with cleaner and more efficient gas-fueled generation, renewable energy, and energy waste reduction and demand response programs

· targeted infrastructure investment, including the installation of smart meters

· information and control system efficiencies

| B.C. Cobb 4 & 5 – Muskegon3 | | 2 Units, 1956-1957 | | \- | | 556 | |

| J.C. Weadock 7 & 8 – Essexville3 | | 2 Units, 1955-1958 | | \- | | 418 | |

| J.R. Whiting 1-3 – Erie3 | | 3 Units, 1952-1953 | | \- | | 420 | |

| Total coal generation | | | | 1,859 | | 9,739 | |

| Total oil/gas steam generation | | | | 2,277 | | 5,891 | |

| Total hydroelectric | | | | 1,110 | | 136 | |

| Total gas/oil combustion turbine | | | | 362 | | 311 | |

| Total wind generation | | | | 34 | | 627 | |

| _Solar Gardens_ | | | | | | | |

| Grand Valley State University – Allendale | | 11,200 Panels, 2016 | | 1 | | 4 | |

| Western Michigan University – Kalamazoo | | 3,900 Panels, 2016 | | \- | | \- | |

| Total solar generation | | | | 1 | | 4 | |

1 Represents each plant’s electric generation capacity during the summer months, except for Solar Gardens Western Michigan University — Kalamazoo, which began operations in August 2016.

3 Consumers retired these seven smaller coal-fueled generating units in April 2016.

8 Includes 1,240 MW of purchased generation capacity and 4,924 GWh of purchased electricity from the MCV Facility and 751 MW of purchased generation capacity and 6,927 GWh of purchased electricity from Palisades.

In December 2016, Consumers and Entergy reached an agreement to terminate the Palisades PPA in May 2018, subject to timely receipt of certain MPSC approvals.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Total owned generation | | 16,708 | | 20,304 | | 18,144 | | 17,703 | | 17,174 | |

| Purchased renewable energy2 | | 2,229 | | 2,163 | | 2,366 | | 2,250 | | 1,435 | |

| Purchased generation — other2 | | 13,578 | | 11,720 | | 10,073 | | 10,871 | | 13,104 | |

| Total purchased and interchange power | | 19,495 | | 15,210 | | 17,232 | | 16,777 | | 18,690 | |

| Total supply | | 36,203 | | 35,514 | | 35,376 | | 34,480 | | 35,864 | |

This percentage includes seven smaller coal-fueled generating units that Consumers retired in April 2016 and that represented four percent of the energy provided to customers in 2016.

At

Presented in the following table is the cost per million Btu of all fuels consumed, which fluctuates with the mix of fuel used.

| _Cost Per Million Btu_ | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Years Ended December 31 | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | | |

| Coal | | $ | 2.40 | | $ | 2.49 | | $ | 2.72 | | $ | 2.90 | | $ | 2.98 | |

| Gas | | 2.93 | | | 3.06 | | | 7.19 | | | 4.68 | | | 3.16 | | |

| Oil | | 9.98 | | | 12.28 | | | 20.16 | | | 19.47 | | | 19.08 | | |

| Weighted-average fuel cost | | $ | 2.60 | | $ | 2.59 | | $ | 3.17 | | $ | 3.07 | | $ | 3.05 | |

The 2016 Energy Law, which will become effective in April 2017, retains the ten-percent cap on ROA, with certain exceptions.

Independent Power Production: At December 31, 2016, CMS Energy had ownership interests in independent power plants totaling 1,177 MW or 1,077 net MW.

(Net MW reflects that portion of the capacity relating to CMS Energy’s ownership interests.) Presented in the following table are CMS Energy’s interests in independent power plants at December 31, 2016:

| Flint, Michigan | | 50 | | Biomass | | 40 | | 110 | |

| Grayling, Michigan | | 50 | | Biomass | | 38 | | 130 | |

| Total | | | | | | 1,177 | | 5,954 | |

· eliminates utilities’ self-implementation of rates under general rate cases

Consumers’ estimate may increase or decrease depending on future legislation or rulemaking, including regulations regarding greenhouse gases, that could become either more or less stringent.

For the fiscal year ended December 31, [removed: 2016][added: 2017]

| Registrant | | Title of Class | | on Which [removed: Registered___] [added: Registered] |

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or a] smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [added: company,” and “emerging growth] company” in Rule 12b-2 of the Exchange Act.

The aggregate market value of CMS Energy voting and non-voting common equity held by non-affiliates was [removed: $12.721] [added: $12.948] billion for the [removed: 277,390,749] [added: 279,964,146] CMS Energy Common Stock shares outstanding on June 30, [removed: 2016] [added: 2017] based on the closing sale price of [removed: $45.86] [added: $46.25] for CMS Energy Common Stock, as reported by the New York Stock Exchange on such date.

There were no shares of Consumers common equity held by non-affiliates as of June 30, [removed: 2016.][added: 2017.]

There were [removed: 280,014,896] [added: 282,420,406] shares of CMS Energy Common Stock outstanding on January [removed: 10, 2017,] [added: 31, 2018,] including [removed: 443,148] [added: 20,316] shares owned by Consumers Energy Company.

On January [removed: 10, 2017,] [added: 31, 2018,] CMS Energy held all 84,108,789 outstanding shares of common equity of Consumers.

Documents incorporated by reference in Part III: CMS Energy’s [removed: proxy statement] and Consumers’ [removed: information] [added: proxy] statement relating to [removed: the 2017] [added: their 2018] Annual [removed: Meeting] [added: Meetings] of Shareholders to be held May [removed: 5, 2017.][added: 4, 2018.]

Annual Reports on Form 10-K to the Securities and Exchange Commission for the Year Ended December 31, [removed: 2016][added: 2017]

| [removed: [Glossary](#GLOSSARY_053643] [added: [Glossary](#GLOSSARY_033009] "Click to goto ") | | [removed: 3] [added: 2] |

| [Filing [removed: Format](#FILINGFORMAT_054337] [added: Format](#FILINGFORMAT_011535] "Click to goto ") | | 10 |

| [Forward-Looking Statements and [removed: Information](#FORWARDLOOKINGSTATEMENTSANDINFOR_054455] [added: Information](#FORWARDLOOKINGSTATEMENTSANDINFOR_011538] "Click to goto ") | | 10 |

| [Part [removed: I](#PartI_084439] [added: I](#PartI_011546] "Click to goto ") | | 14 |

| [Item [removed: 1.](#Item1_Business_084440)] [added: 1.](#Item1_Business_011547)] | [removed: [Business](#Item1_Business_084440)] [added: [Business](#Item1_Business_011547)] | 14 |

| [Item [removed: 1A.](#Item1A_RiskFactors_092023)] [added: 1A.](#Item1A_RiskFactors_011703)] | [Risk [removed: Factors](#Item1A_RiskFactors_092023)] [added: Factors](#Item1A_RiskFactors_011703)] | [removed: 31] [added: 35] |

| [Item [removed: 1B.](#Item1B_UnresolvedStaffComments_091944)] [added: 1B.](#Item1B_UnresolvedStaffComments_122445)] | [Unresolved Staff [removed: Comments](#Item1B_UnresolvedStaffComments_091944)] [added: Comments](#Item1B_UnresolvedStaffComments_122445)] | [removed: 43] [added: 47] |

| [Item [removed: 2.](#Item2_Properties_091945)] [added: 2.](#Item2_Properties_122446)] | [removed: [Properties](#Item2_Properties_091945)] [added: [Properties](#Item2_Properties_122446)] | [removed: 43] [added: 47] |

| [Item [removed: 3.](#Item3_LegalProceedings_091947)] [added: 3.](#Item3_LegalProceedings_122507)] | [Legal [removed: Proceedings](#Item3_LegalProceedings_091947)] [added: Proceedings](#Item3_LegalProceedings_122507)] | [removed: 43] [added: 48] |

| [Item [removed: 4.](#Item4_MineSafetyDisclosures_091949)] [added: 4.](#Item4_MineSafetyDisclosures_122509)] | [Mine Safety [removed: Disclosures](#Item4_MineSafetyDisclosures_091949)] [added: Disclosures](#Item4_MineSafetyDisclosures_122509)] | [removed: 43] [added: 48] |

| [Part [removed: II](#PartII_091950] [added: II](#PartII_122510] "Click to goto ") | | [removed: 44] [added: 48] |

| [Item [removed: 5.](#Item5_MarketForRegistrantsCommon_091952)] [added: 5.](#Item5_MarketForRegistrantsCommon_122514)] | [Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#Item5_MarketForRegistrantsCommon_091952)] [added: Securities](#Item5_MarketForRegistrantsCommon_122514)] | [removed: 44] [added: 48] |

| [Item [removed: 6.](#Item6_SelectedFinancialData_091956)] [added: 6.](#Item6_SelectedFinancialData_125601)] | [Selected Financial [removed: Data](#Item6_SelectedFinancialData_091956)] [added: Data](#Item6_SelectedFinancialData_125601)] | [removed: 45] [added: 52] |

| [Item [removed: 7.](#Item7_ManagementsDiscussionandAn_091959)] [added: 7.](#Item7_ManagementsDiscussionandAn_013027)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#Item7_ManagementsDiscussionandAn_091959)] [added: Operations](#Item7_ManagementsDiscussionandAn_013027)] | [removed: 45] [added: 54] |

| [Item [removed: 7A.](#Item7A_QuantitativeandQualitativ_092000)] [added: 7A.](#Item7A_QuantitativeandQualitativ_015912)] | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#Item7A_QuantitativeandQualitativ_092000)] [added: Risk](#Item7A_QuantitativeandQualitativ_015912)] | [removed: 45] [added: 85] |

| [Item [removed: 8.](#Item8_FinancialStatementsandSupp_111331)] [added: 8.](#Item8_FinancialStatementsandSupp_022335)] | [Financial Statements and Supplementary [removed: Data](#Item8_FinancialStatementsandSupp_111331)] [added: Data](#Item8_FinancialStatementsandSupp_022335)] | [removed: 47] [added: 87] |

| [Item [removed: 9.](#Item9_ChangesinandDisagreementsw_060755)] [added: 9.](#Item9_ChangesinandDisagreementsw_055635)] | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#Item9_ChangesinandDisagreementsw_060755)] [added: Disclosure](#Item9_ChangesinandDisagreementsw_055635)] | [removed: 159] [added: 169] |

| [Item [removed: 9A.](#Item9A_ControlsandProcedures_060756)] [added: 9A.](#Item9A_ControlsandProcedures_055636)] | [Controls and [removed: Procedures](#Item9A_ControlsandProcedures_060756)] [added: Procedures](#Item9A_ControlsandProcedures_055636)] | [removed: 159] [added: 169] |

| [Item [removed: 9B.](#Item9B_OtherInformation_060824)] [added: 9B.](#Item9B_OtherInformation_055814)] | [Other [removed: Information](#Item9B_OtherInformation_060824)] [added: Information](#Item9B_OtherInformation_055814)] | [removed: 161] [added: 171] |

| [Part [removed: III](#PartIII_060830] [added: III](#PartIII_055813] "Click to goto ") | | [removed: 161] [added: 171] |

| [Item [removed: 10.](#Item10_DirectorsExecutiveOfficer_060831)] [added: 10.](#Item10_DirectorsExecutiveOfficer_055815)] | [Directors, Executive Officers and Corporate [removed: Governance](#Item10_DirectorsExecutiveOfficer_060831)] [added: Governance](#Item10_DirectorsExecutiveOfficer_055815)] | [removed: 161] [added: 171] |

| [Item [removed: 11.](#Item11_ExecutiveCompensation_060950)] [added: 11.](#Item11_ExecutiveCompensation_055900)] | [Executive [removed: Compensation](#Item11_ExecutiveCompensation_060950)] [added: Compensation](#Item11_ExecutiveCompensation_055900)] | [removed: 162] [added: 172] |

| [Item [removed: 12.](#Item12_SecurityOwnershipofCertai_060951)] [added: 12.](#Item12_SecurityOwnershipofCertai_055902)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#Item12_SecurityOwnershipofCertai_060951)] [added: Matters](#Item12_SecurityOwnershipofCertai_055902)] | [removed: 162] [added: 172] |

| [Item [removed: 13.](#Item13_CertainRelationshipsandRe_061013)] [added: 13.](#Item13_CertainRelationshipsandRe_060206)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#Item13_CertainRelationshipsandRe_061013)] [added: Independence](#Item13_CertainRelationshipsandRe_060206)] | [removed: 162] [added: 172] |

| [Item [removed: 14.](#Item14_PrincipalAccountantFeesan_061012)] [added: 14.](#Item14_PrincipalAccountantFeesan_060215)] | [Principal Accountant Fees and [removed: Services](#Item14_PrincipalAccountantFeesan_061012)] [added: Services](#Item14_PrincipalAccountantFeesan_060215)] | [removed: 162] [added: 172] |

| [Part [removed: IV](#PartIV_081149] [added: IV](#PartIV_060233] "Click to goto ") | | [removed: 163] [added: 173] |

| [Item [removed: 15.](#Item15_ExhibitsandFinancialState_081152)] [added: 15.](#Item15_ExhibitsandFinancialState_060237)] | [Exhibits and Financial Statement [removed: Schedules](#Item15_ExhibitsandFinancialState_081152)] [added: Schedules](#Item15_ExhibitsandFinancialState_060237)] | [removed: 163] [added: 173] |

| [Item [removed: 16.](#Item16_Form10KSummary_081153)] [added: 16.](#Item16_Form10KSummary_024439)] | [Form 10-K [removed: Summary](#Item16_Form10KSummary_081153)] [added: Summary](#Item16_Form10KSummary_024439)] | [removed: 163] [added: 185] |

| [removed: [Signatures](#SIGNATURES_072602] [added: [Signatures](#SIGNATURES_102942] "Click to goto ") | | [removed: 170] [added: 186] |

[removed: Cash Balance] [added: DB] Pension Plan [added: A]

10-K 1 a18-1030_110k.htm 10-K

| Emerging growth company o | |

| Emerging growth company o | |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| CMS Energy Corporation: o | Consumers Energy Company: o |

| --- | --- |

ASC 715

Financial Accounting Standards Board Accounting Standards Codification Topic 715, Retirement Benefits

ASC 740

Financial Accounting Standards Board Accounting Standards Codification Topic 740, Income Taxes

Defined benefit pension plan of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries, amended as of December 31, 2017 to include only retired and former employees who were covered under the defined benefit pension plan that closed in 2005

DB Pension Plans

EEI

Edison Electric Institute, an association representing all U.S. investor-owned electric companies

Forsite

Forsite Development, Inc. and its subsidiaries, each a non-affiliated company

PHMSA

The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration

PURPA

The Public Utility Regulatory Policies Act of 1978

TCJA

P.L. 115-97, commonly referred to as the Tax Cuts and Jobs Act

· potential disruption to, interruption or failure of, or other impacts on information technology backup or disaster recovery systems

10-K 1 a17-1055_110k.htm 10-K

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Btu

British thermal unit

MD&A

NAV

Net asset value

Sherman Act

Sherman Antitrust Act of 1890

Financial Statements and Supplementary Data—MD&A—Outlook; and Item 8.

CMS Energy’s common stock is traded on the New York Stock [removed: Exchange.][added: Exchange under the symbol CMS.]

Market prices for CMS Energy’s common stock and related security holder matters are contained in Item [removed: 8.][added: 6.]

Financial Statements and Supplementary [removed: Data—MD&A and Notes] [added: Data—Notes] to the Consolidated Financial Statements—Note 21, Quarterly Financial and Common Stock Information (Unaudited), which are incorporated by reference herein.

At January [removed: 10, 2017,] [added: 31, 2018,] the number of registered holders of CMS Energy’s common stock totaled [removed: 32,056,] [added: 30,736,] based on the number of record holders.

| 2016 | | [removed: $ |] 155 | | [removed: $] | 58 | | [removed: $] | 148 | | [removed: $] | 138 | | [added: |]

Presented in the following table are CMS Energy’s repurchases of equity securities for the three months ended December 31, [removed: 2016:][added: 2017:]

Selected Financial Data and Item 8.

| 2017 | | $ | 0.3325 | | $ | 0.3325 | | $ | 0.3325 | | $ | 0.3325 | |

| 2016 | | 0.3100 | | | 0.3100 | | | 0.3100 | | | 0.3100 | | |

Comparison of Five-Year Cumulative Total Return


| | | Five-Year Cumulative Total Return | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Company/Index | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | |

| CMS Energy | | $ | 100 | | $ | 114 | | $ | 153 | | $ | 165 | | $ | 196 | | $ | 229 | |

| S&P 500 Index | | 100 | | | 132 | | | 150 | | | 153 | | | 171 | | | 208 | | |

| Dow Jones Utility Index | | 100 | | | 113 | | | 147 | | | 143 | | | 169 | | | 191 | | |

| S&P 400 Utilities Index | | 100 | | | 127 | | | 151 | | | 142 | | | 181 | | | 201 | | |

| | | | | | | | | | | | | | | | | | | | |

These cumulative total returns assume reinvestments of dividends.

| 2017 | | $ | 148 | | $ | 88 | | $ | 111 | | $ | 175 | |

| October 1, 2017 to | | | | | | | | | | |

| October 31, 2017 | | 2,176 | | $ | 47.26 | | \- | | \- | |

| November 1, 2017 to | | | | | | | | | | |

| November 30, 2017 | | 6,148 | | 48.11 | | | \- | | \- | |

| December 1, 2017 to | | | | | | | | | | |

| December 31, 2017 | | 2,646 | | 49.74 | | | \- | | \- | |

| Total | | 10,970 | | $ | 48.33 | | \- | | \- | |

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| 2016 | | $ | 0.31 | | $ | 0.31 | | $ | 0.31 | | $ | 0.31 | |

| 2015 | | 0.29 | | | 0.29 | | | 0.29 | | | 0.29 | | |

| 2015 | | 122 | | | 132 | | | 105 | | | 115 | | |

| October 1, 2016 to | | | | | | | | | | |

| October 31, 2016 | | 395 | | $ | 42.01 | | \- | | \- | |

| November 1, 2016 to | | | | | | | | | | |

| November 30, 2016 | | \- | | \- | | | \- | | \- | |

| December 1, 2016 to | | | | | | | | | | |

| December 31, 2016 | | \- | | \- | | | \- | | \- | |

| Total | | 395 | | $ | 42.01 | | \- | | \- | |

CMS Energy Corporation

| | | | | | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | |

| Operating revenue (in millions) | | | | ($) | | 6,583 | | 6,399 | | 6,456 | | 7,179 | | 6,566 | |

| | | | | | | | | | | | | | | | |

| Income from equity method investees (in millions) | | | | ($) | | 15 | | 13 | | 14 | | 15 | | 13 | |

| | | | | | | | | | | | | | | | |

| Net income (in millions)1 | | | | ($) | | 462 | | 553 | | 525 | | 479 | | 454 | |

| | | | | | | | | | | | | | | | |

| Net income available to common stockholders (in millions) | | | | ($) | | 460 | | 551 | | 523 | | 477 | | 452 | |

| | | | | | | | | | | | | | | | |

| Average common shares outstanding (in thousands) | | | | | | 280,025 | | 277,851 | | 275,600 | | 270,580 | | 264,511 | |

| | | | | | | | | | | | | | | | |

| Earnings per average common share | | | | | | | | | | | | | | | |

| CMS Energy | – | Basic | | ($) | | 1.64 | | 1.99 | | 1.90 | | 1.76 | | 1.71 | |

| | – | Diluted | | ($) | | 1.64 | | 1.98 | | 1.89 | | 1.74 | | 1.66 | |

| | | | | | | | | | | | | | | | |

| Cash provided by operations (in millions) | | | | ($) | | 1,705 | | 1,629 | | 1,640 | | 1,481 | | 1,448 | |

| | | | | | | | | | | | | | | | |

| Capital expenditures, excluding assets placed under capital lease (in millions) | | | | ($) | | 1,665 | | 1,672 | | 1,564 | | 1,577 | | 1,325 | |

| | | | | | | | | | | | | | | | |

| Total assets (in millions) | | | | ($) | | 23,050 | | 21,622 | | 20,299 | | 19,143 | | 17,249 | |

| | | | | | | | | | | | | | | | |

| Long-term debt, excluding current portion (in millions) | | | | ($) | | 9,123 | | 8,640 | | 8,400 | | 7,974 | | 7,060 | |

| | | | | | | | | | | | | | | | |

| Non-current portion of capital leases and financing obligation (in millions) | | | | ($) | | 91 | | 110 | | 118 | | 123 | | 138 | |

| | | | | | | | | | | | | | | | |

| Cash dividends declared per common share | | | | ($) | | 1.33 | | 1.24 | | 1.16 | | 1.08 | | 1.02 | |

| | | | | | | | | | | | | | | | |

| Market price of common stock at year-end | | | | ($) | | 47.30 | | 41.62 | | 36.08 | | 34.75 | | 26.77 | |

| | | | | | | | | | | | | | | | |

| Book value per common share at year-end | | | | ($) | | 15.77 | | 15.23 | | 14.21 | | 13.33 | | 12.98 | |

| | | | | | | | | | | | | | | | |

| Total employees at year-end | | | | | | 7,952 | | 7,800 | | 7,804 | | 7,747 | | 7,781 | |

| | | | | | | | | | | | | | | | |

| Electric Utility Statistics | | | | | | | | | | | | | | | |

| Sales (billions of kWh) | | | | | | 37 | | 38 | | 37 | | 38 | | 37 | |

| Customers (in thousands) | | | | | | 1,826 | | 1,805 | | 1,803 | | 1,793 | | 1,793 | |

| Average sales rate per kWh | | | | (¢) | | 11.98 | | 11.63 | | 11.39 | | 12.04 | | 11.52 | |

Selected financial information for CMS Energy and Consumers is contained in Item 8.

Financial Statements and Supplementary Data—Selected Financial Information, which is incorporated by reference herein.

| [CMS [removed: Energy](#CMSEnergyCorporation_053858] [added: Energy](#TotheBoardofDirectorsandStockhol_103006] "Click to goto ") | | [removed: 48] [added: 165] |

| CMS Energy Consolidated Financial Statements | | [removed: 78] [added: 88] |

| [Consolidated Statements of [removed: Income](#ConsolidatedStatementsofIncome_083443] [added: Income](#ConsolidatedStatementsofIncome_095454] "Click to goto ") | | [removed: 78] [added: 88] |

| [Consolidated Statements of Comprehensive [removed: Income](#ConsolidatedStatementsofComprehe_083504] [added: Income](#ConsolidatedStatementsofComprehe_095457] "Click to goto ") | | [removed: 79] [added: 89] |

| [Consolidated Statements of Cash [removed: Flows](#ConsolidatedStatementsofCashFlow_083510] [added: Flows](#ConsolidatedStatementsofCashFlow_095500] "Click to goto ") | | [removed: 80] [added: 90] |

| [Consolidated Balance [removed: Sheets](#ConsolidatedBalanceSheets_015127] [added: Sheets](#ConsolidatedBalanceSheets_095523] "Click to goto ") | | [removed: 82] [added: 92] |

| [Consolidated Statements of Changes in [removed: Equity](#ConsolidatedStatementsofChangesi_015412] [added: Equity](#ConsolidatedStatementsofChangesi_095533] "Click to goto ") | | [removed: 84] [added: 94] |

| Consumers Consolidated Financial Statements | | [removed: 86] [added: 96] |

| [Consolidated Statements of [removed: Income](#ConsolidatedStatementsofIncome_015415] [added: Income](#ConsolidatedStatementsofIncome_095541] "Click to goto ") | | [removed: 86] [added: 96] |

| [Consolidated Statements of Comprehensive [removed: Income](#ConsolidatedStatementsofComprehe_024149] [added: Income](#ConsolidatedStatementsofComprehe_095707] "Click to goto ") | | [removed: 87] [added: 97] |

| [Consolidated Statements of Cash [removed: Flows](#ConsolidatedStatementsofCashFlow_024150] [added: Flows](#ConsolidatedStatementsofCashFlow_095708] "Click to goto ") | | [removed: 88] [added: 98] |

| [Consolidated Balance [removed: Sheets](#ConsolidatedBalanceSheets_024153] [added: Sheets](#ConsolidatedBalanceSheets_095711] "Click to goto ") | | [removed: 90] [added: 100] |

| [Consolidated Statements of Changes in [removed: Equity](#ConsolidatedStatementsofChangesi_025013] [added: Equity](#ConsolidatedStatementsofChangesi_095741] "Click to goto ") | | [removed: 92] [added: 102] |

| [Notes to the Consolidated Financial [removed: Statements](#NotestotheConsolidatedFinancialS_025016] [added: Statements](#NotestotheConsolidatedFinancialS_100036] "Click to goto ") | | [removed: 93] [added: 103] |

| [removed: [1:](#a1SIGNIFICANTACCOUNTINGPOLICIES_025031)] [added: [1:](#a1SIGNIFICANTACCOUNTINGPOLICIES_100037)] | [Significant Accounting [removed: Policies](#a1SIGNIFICANTACCOUNTINGPOLICIES_025031)] [added: Policies](#a1SIGNIFICANTACCOUNTINGPOLICIES_100037)] | [removed: 93] [added: 103] |

| [removed: [2:](#a2NEWACCOUNTINGSTANDARDS_025036)] [added: [2:](#a2NEWACCOUNTINGSTANDARDS_100046)] | [New Accounting [removed: Standards](#a2NEWACCOUNTINGSTANDARDS_025036)] [added: Standards](#a2NEWACCOUNTINGSTANDARDS_100046)] | [removed: 96] [added: 106] |

| [removed: [3:](#a3REGULATORYMATTERS_091119)] [added: [3:](#a3REGULATORYMATTERS_100053)] | [Regulatory [removed: Matters](#a3REGULATORYMATTERS_091119)] [added: Matters](#a3REGULATORYMATTERS_100053)] | [removed: 99] [added: 108] |

| [removed: [4:](#a4CONTINGENCIESANDCOMMITMENTS_091148)] [added: [4:](#a4CONTINGENCIESANDCOMMITMENTS_100124)] | [Contingencies and [removed: Commitments](#a4CONTINGENCIESANDCOMMITMENTS_091148)] [added: Commitments](#a4CONTINGENCIESANDCOMMITMENTS_100124)] | [removed: 104] [added: 114] |

| [removed: [5:](#a5FINANCINGSANDCAPITALIZATION_091227)] [added: [5:](#a5FINANCINGSANDCAPITALIZATION_100253)] | [Financings and [removed: Capitalization](#a5FINANCINGSANDCAPITALIZATION_091227)] [added: Capitalization](#a5FINANCINGSANDCAPITALIZATION_100253)] | [removed: 111] [added: 120] |

| [removed: [6:](#a6FAIRVALUEMEASUREMENTS_091348)] [added: [6:](#a6FAIRVALUEMEASUREMENTS_100326)] | [Fair Value [removed: Measurements](#a6FAIRVALUEMEASUREMENTS_091348)] [added: Measurements](#a6FAIRVALUEMEASUREMENTS_100326)] | [removed: 115] [added: 124] |

| [removed: [7:](#a7FINANCIALINSTRUMENTS_091354)] [added: [7:](#a7FINANCIALINSTRUMENTS_100329)] | [Financial [removed: Instruments](#a7FINANCIALINSTRUMENTS_091354)] [added: Instruments](#a7FINANCIALINSTRUMENTS_100329)] | [removed: 118] [added: 126] |

| [removed: [8:](#a8NOTESRECEIVABLE_091711)] [added: [8:](#a8NOTESRECEIVABLE_100446)] | [Notes [removed: Receivable](#a8NOTESRECEIVABLE_091711)] [added: Receivable](#a8NOTESRECEIVABLE_100446)] | [removed: 120] [added: 129] |

| [removed: [9:](#a9PLANTPROPERTYANDEQUIPMENT_091737)] [added: [9:](#a9PLANTPROPERTYANDEQUIPMENT_100448)] | [Plant, Property, and [removed: Equipment](#a9PLANTPROPERTYANDEQUIPMENT_091737)] [added: Equipment](#a9PLANTPROPERTYANDEQUIPMENT_100448)] | [removed: 122] [added: 130] |

| [removed: [10:](#a10LEASESANDPALISADESFINANCING_044109)] [added: [10:](#a10LEASESANDPALISADESFINANCING_100453)] | [Leases and Palisades [removed: Financing](#a10LEASESANDPALISADESFINANCING_044109)] [added: Financing](#a10LEASESANDPALISADESFINANCING_100453)] | [removed: 126] [added: 133] |

| [removed: [11:](#a11ASSETRETIREMENTOBLIGATIONS_044139)] [added: [11:](#a11ASSETRETIREMENTOBLIGATIONS_100715)] | [Asset Retirement [removed: Obligations](#a11ASSETRETIREMENTOBLIGATIONS_044139)] [added: Obligations](#a11ASSETRETIREMENTOBLIGATIONS_100715)] | [removed: 128] [added: 135] |

| [removed: [12:](#a12RETIREMENTBENEFITS_060343)] [added: [12:](#a12RETIREMENTBENEFITS_100718)] | [Retirement [removed: Benefits](#a12RETIREMENTBENEFITS_060343)] [added: Benefits](#a12RETIREMENTBENEFITS_100718)] | [removed: 130] [added: 137] |

| [removed: [13:](#a13STOCKBASEDCOMPENSATION_092400)] [added: [13:](#a13STOCKBASEDCOMPENSATION_101400)] | [Stock-Based [removed: Compensation](#a13STOCKBASEDCOMPENSATION_092400)] [added: Compensation](#a13STOCKBASEDCOMPENSATION_101400)] | [removed: 140] [added: 147] |

| [removed: [14:](#a14INCOMETAXES_092419)] [added: [14:](#a14INCOMETAXES_101554)] | [Income [removed: Taxes](#a14INCOMETAXES_092419)] [added: Taxes](#a14INCOMETAXES_101554)] | [removed: 143] [added: 150] |

| [removed: [15:](#a15EARNINGSPERSHARECMSENERGY_060035)] [added: [15:](#a15EARNINGSPERSHARECMSENERGY_102112)] | [Earnings Per Share—CMS [removed: Energy](#a15EARNINGSPERSHARECMSENERGY_060035)] [added: Energy](#a15EARNINGSPERSHARECMSENERGY_102112)] | [removed: 147] [added: 155] |

| [removed: [16:](#a16OTHERINCOMEANDOTHEREXPENSE_060043)] [added: [16:](#a16OTHERINCOMEANDOTHEREXPENSE_102114)] | [Other Income and Other [removed: Expense](#a16OTHERINCOMEANDOTHEREXPENSE_060043)] [added: Expense](#a16OTHERINCOMEANDOTHEREXPENSE_102114)] | [removed: 148] [added: 156] |

| [removed: [17:](#a17CASHANDCASHEQUIVALENTS_060045)] [added: [17:](#a17CASHANDCASHEQUIVALENTS_102116)] | [Cash and Cash [removed: Equivalents](#a17CASHANDCASHEQUIVALENTS_060045)] [added: Equivalents](#a17CASHANDCASHEQUIVALENTS_102116)] | [removed: 149] [added: 157] |

| [removed: [18:](#a18REPORTABLESEGMENTS_060116)] [added: [18:](#a18REPORTABLESEGMENTS_102118)] | [Reportable [removed: Segments](#a18REPORTABLESEGMENTS_060116)] [added: Segments](#a18REPORTABLESEGMENTS_102118)] | [removed: 150] [added: 158] |

| [removed: [19:](#a19RELATEDPARTYTRANSACTIONSCONSU_060130)] [added: [19:](#a19RELATEDPARTYTRANSACTIONSCONSU_102216)] | [Related-Party [removed: Transactions—Consumers](#a19RELATEDPARTYTRANSACTIONSCONSU_060130)] [added: Transactions—Consumers](#a19RELATEDPARTYTRANSACTIONSCONSU_102216)] | [removed: 154] [added: 162] |

| [removed: [20:](#a20VARIABLEINTERESTENTITIES_060133)] [added: [20:](#a20VARIABLEINTERESTENTITIES_102218)] | [Variable Interest [removed: Entities](#a20VARIABLEINTERESTENTITIES_060133)] [added: Entities](#a20VARIABLEINTERESTENTITIES_102218)] | [removed: 155] [added: 163] |

| [removed: [21:](#a21QUARTERLYFINANCIALANDCOMMONST_060655)] [added: [21:](#a21QUARTERLYFINANCIALANDCOMMONST_102901)] | [Quarterly Financial and Common Stock Information [removed: (Unaudited)](#a21QUARTERLYFINANCIALANDCOMMONST_060655)] [added: (Unaudited)](#a21QUARTERLYFINANCIALANDCOMMONST_102901)] | [removed: 156] [added: 164] |

| [Reports of Independent Registered Public Accounting [removed: Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_060651] [added: Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_102906] "Click to goto ") | | [removed: 157] [added: 165] |

| [removed: [Consumers](#TotheBoardofDirectorsandStockhol_052641] [added: [Consumers](#TotheBoardofDirectorsandStockhol_103009] "Click to goto ") | | [removed: 158] [added: 167] |

[added: | Total] CMS Energy [removed: Corporation][added: | | $ | 1,410 | | | | | | | |]

| [removed: Operating revenue (in millions)] [added: Operating Revenue] | | [added: $] | [added: 6,583] | [removed: ($)] | [added: $] | 6,399 | | [removed: 6,456 | | 7,179 | | 6,566 |] [added: $] | [removed: 6,253] [added: 6,456] | |

| Income from equity method investees [removed: (in millions)] | | [removed: |] [added: 15] | [removed: ($)] | | 13 | | [removed: 14] | [removed: | 15 | | 13 |] [added: 14] | [removed: 17] | |

| Total operating expenses | | 5,245 | | | 5,143 | | | 5,278 | | |

| Operating Income | | 1,338 | | | 1,256 | | | 1,178 | | |

| Nonoperating retirement benefits, net | | 24 | | | 41 | | | (15 | | ) |

| Prior service credit adjustment, net of tax of $3, $-, and $- | | 4 | | | \- | | | \- | | |

| Prior service credit adjustment | | | | | | | | 4 | | | \- | | | \- | | |

(This page intentionally left blank)

| Total operating expenses | | 4,970 | | | 4,867 | | | 5,026 | | |

| Operating Income | | 1,252 | | | 1,197 | | | 1,139 | | |

| Allowance for equity funds used during construction | | 5 | | | 12 | | | 10 | | |

| Nonoperating retirement benefits, net | | 21 | | | 37 | | | (17 | | ) |

| Allowance for borrowed funds used during construction | | (2 | | ) | (5 | | ) | (4 | | ) |

| Depreciation and amortization | | 872 | | | 803 | | | 744 | | |

| Note receivable recorded for future refund of use taxes paid and capitalized | | \- | | | 29 | | | \- | | |

| Gas in underground storage | | 458 | | | 446 | | |

| Deferred property taxes | | 257 | | | 250 | | |

| Regulatory assets | | 1,764 | | | 2,091 | | |

| Notes payable | | 170 | | | 398 | | |

| Regulatory liabilities | | 80 | | | 95 | | |

| Regulatory liabilities | | 3,715 | | | 2,041 | | |

| Commitments and Contingencies (Notes 3 and 4) | | | | | | | |

| Stockholder contribution | | 450 | | | 275 | | | 150 | | |

Consumers filed an electric rate case in March 2017, prior to the effective date of that law, and as result was allowed to self-implement new energy rates in October 2017, subject to refund with interest and potential penalties.

Unearned income

derivatives.

_ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost:_ This standard was issued to improve the reporting of net benefit cost by employers that offer defined benefit pension plans and other postretirement benefit plans.

The standard requires employers to report the service cost component of net benefit cost in the same line item on the income statement as other employee compensation costs, while presenting the other cost components separately outside of operating income.

This change is to be applied retrospectively to all

prior periods presented.

Accordingly, for the years ended December 31, 2017, 2016, and 2015, CMS Energy and Consumers have presented the service cost component of their retirement benefits plans in maintenance and other operating expenses on the consolidated statements of income, while presenting the other components in nonoperating retirement benefits, net, under other income (expense).

Prior to this standard, CMS Energy and Consumers had presented all of the cost components in maintenance and other operating expenses.

Under a practical expedient permitted by the standard, CMS Energy and Consumers used benefit cost amounts disclosed for prior periods as the basis for retrospective application.

In addition, under this standard, only the service cost component is eligible for capitalization as part of the cost of an asset.

This change is to be applied prospectively upon adoption.

Accordingly, for the year ended December 31, 2017, CMS Energy and Consumers capitalized a portion of the service cost component of their retirement benefits plans to plant, property, and equipment, while recognizing the other components in net income.

In prior periods, a portion of all cost components was capitalized.

_SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act:_ The SEC staff issued this guidance to address situations where a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the TCJA in the period in which the TCJA was enacted.

Under the guidance, registrants can report the effects of the TCJA as provisional amounts based on reasonable estimates in those areas in which the accounting is incomplete.

The provisional amounts are subject to adjustment during a measurement period that can extend no longer than one year from the enactment date.

For further details on how CMS Energy and Consumers applied this guidance to their consolidated financial statements, see Note 14, Income Taxes.

CMS Energy and Consumers will apply the standard retrospectively only to contracts existing on the effective date, with the cumulative effect of the standard recorded as an adjustment to beginning retained earnings.

| [Selected Financial Information](#SelectedFinancialInformation_111359 "Click to goto ") | | 48 |

| --- | --- | --- |

| [Consumers](#ConsumersEnergyCompany_053901 "Click to goto ") | | 49 |

| [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#ManagementsDiscussionandAnalysis_111414 "Click to goto ") | | 50 |

| [CMS Energy](#TotheBoardofDirectorsandStockhol_052636 "Click to goto ") | | 157 |

Selected Financial Information

| | | | | | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | |

| Income from continuing operations (in millions)1 | | | | ($) | | 553 | | 525 | | 479 | | 454 | | 377 | |

| Income from discontinued operations (in millions) | | | | ($) | | \- | | \- | | \- | | \- | | 7 | |

| Average common shares outstanding (in thousands) | | | | | | 277,851 | | 275,600 | | 270,580 | | 264,511 | | 260,678 | |

| CMS Energy | – | Basic | | ($) | | 1.99 | | 1.90 | | 1.76 | | 1.71 | | 1.43 | |

| CMS Energy | – | Basic | | ($) | | 1.99 | | 1.90 | | 1.76 | | 1.71 | | 1.46 | |

| | – | Diluted | | ($) | | 1.98 | | 1.89 | | 1.74 | | 1.66 | | 1.42 | |

| Cash provided by operations (in millions)2 | | | | ($) | | 1,629 | | 1,640 | | 1,481 | | 1,448 | | 1,257 | |

| Total assets (in millions)2 | | | | ($) | | 21,622 | | 20,299 | | 19,143 | | 17,249 | | 17,092 | |

| Long-term debt, excluding current portion (in millions)2 | | | | ($) | | 8,640 | | 8,400 | | 7,974 | | 7,060 | | 6,671 | |

| Market price of common stock at year-end | | | | ($) | | 41.62 | | 36.08 | | 34.75 | | 26.77 | | 24.38 | |

| Book value per common share at year-end | | | | ($) | | 15.23 | | 14.21 | | 13.33 | | 12.98 | | 12.09 | |

| Total employees at year-end | | | | | | 7,800 | | 7,804 | | 7,747 | | 7,781 | | 7,541 | |

| Electric Utility Statistics | | | | | | | | | | | | | | | |

| Sales (billions of kWh) | | | | | | 38 | | 37 | | 38 | | 37 | | 38 | |

| Customers (in thousands) | | | | | | 1,805 | | 1,803 | | 1,793 | | 1,793 | | 1,786 | |

| Average sales rate per kWh | | | | (¢) | | 11.63 | | 11.39 | | 12.04 | | 11.52 | | 10.94 | |

| Sales and transportation deliveries (bcf) | | | | | | 358 | | 356 | | 373 | | 352 | | 329 | |

| Customers (in thousands)3 | | | | | | 1,772 | | 1,741 | | 1,733 | | 1,724 | | 1,715 | |

| Average sales rate per mcf | | | | ($) | | 7.31 | | 7.89 | | 8.83 | | 8.51 | | 9.55 | |

3 Excludes off-system transportation customers.

Consumers Energy Company

| | | | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |

| | | | | | | | | | | | | | |

| Cash provided by operations (in millions)1 | | ($) | | 1,681 | | 1,794 | | 1,354 | | 1,375 | | 1,369 | |

| Long-term debt, excluding current portion (in millions)1 | | ($) | | 5,253 | | 5,183 | | 5,131 | | 4,557 | | 4,279 | |

| Number of preferred stockholders at year-end | | | | 1,095 | | 1,156 | | 1,191 | | 1,248 | | 1,378 | |

| Total employees at year-end | | | | 7,366 | | 7,394 | | 7,388 | | 7,435 | | 7,221 | |

| Electric Utility Statistics | | | | | | | | | | | | | |

| Sales (billions of kWh) | | | | 38 | | 37 | | 38 | | 37 | | 38 | |

| Customers (in thousands) | | | | 1,805 | | 1,803 | | 1,793 | | 1,793 | | 1,786 | |

| Average sales rate per kWh | | (¢) | | 11.63 | | 11.39 | | 12.04 | | 11.52 | | 10.94 | |

Based on such evaluation, CMS Energy’s CEO and CFO have concluded that its disclosure controls and procedures were effective as of December 31, [removed: 2016.][added: 2017.]

Under the supervision and with the participation of management, including its CEO and CFO, CMS Energy conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, [removed: 2016.][added: 2017.]

Based on such evaluation, CMS Energy’s management concluded that its internal control over financial reporting was effective as of December 31, [removed: 2016.][added: 2017.]

The effectiveness of CMS Energy’s internal control over financial reporting as of December 31, [removed: 2016] [added: 2017] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under Item 8.

Based on such evaluation, Consumers’ CEO and CFO have concluded that its disclosure controls and procedures were effective as of December 31, [removed: 2016.][added: 2017.]

Under the supervision and with the participation of management, including its CEO and CFO, Consumers conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, [removed: 2016.][added: 2017.]

Based on such evaluation, Consumers’ management concluded that its internal control over financial reporting was effective as of December 31, [removed: 2016.][added: 2017.]

The effectiveness of Consumers’ internal control over financial reporting as of December 31, [removed: 2016] [added: 2017] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under Item 8.

Information that is required in Item 10 of this Form 10-K regarding directors, executive officers, and corporate governance is incorporated by reference from CMS Energy’s [added: and Consumers’] definitive proxy statement for [removed: its 2017] [added: their 2018] Annual [removed: Meeting] [added: Meetings] of Shareholders to be held May [removed: 5, 2017.][added: 4, 2018.]

CMS Energy has adopted an employee code of ethics, entitled “CMS Energy [removed: 2016] [added: 2018] Code of Conduct and Guide to Ethical Business Behavior” (“Employee Code”) that applies to its CEO, CFO, and CAO, as well as all other officers and employees of CMS Energy and its affiliates, except for EnerBank, which has its own code of conduct.

Consumers has adopted an employee code of ethics, entitled “CMS Energy [removed: 2016] [added: 2018] Code of Conduct and Guide to Ethical Business Behavior” (“Employee Code”) that applies to its CEO, CFO, and CAO, as well as all other officers and employees of Consumers and its affiliates, except for EnerBank, which has its own code of conduct.

Information that is required in Item 10 of this Form 10-K regarding directors, executive officers, and corporate governance is incorporated by reference from CMS Energy’s and Consumers’ definitive proxy statement for their 2018 Annual Meetings of Shareholders to be held May 4, 2018.

Presented in the following table is information regarding CMS Energy’s equity compensation plans as of December 31, [removed: 2016:][added: 2017:]

| Equity compensation plan approved by shareholders | | \- | | $ | \- | | [removed: 4,983,931] [added: 4,342,829] | |

NOTE: Information that is required by Part III—Items 11, 12, 13, and 14 of this Form 10-K is incorporated by reference from CMS Energy’s [added: and Consumers’] definitive proxy statement for [removed: its 2017] [added: their 2018] Annual [removed: Meeting] [added: Meetings] of Shareholders to be held May [removed: 5, 2017.][added: 4, 2018.]

Financial Statements and Supplementary [removed: Data and are incorporated by reference herein.][added: Data:]

[removed: | [Schedule] [added: SCHEDULE] I — [removed: Condensed Financial Information of Registrant](#ScheduleICondensedFinancialInfor_043728 "Click to goto ") | 164 |][added: CONDENSED FINANCIAL INFORMATION OF REGISTRANT]

[removed: | [CMS] [added: CMS] Energy—Parent [removed: Company](#CMSENERGYPARENTCOMPANY_043738 "Click to goto ") | 164 |][added: Company]

[removed: | [Condensed] [added: Condensed] Statements of Cash [removed: Flows](#CondensedStatementsofCashFlows_043742 "Click to goto ") | 165 |][added: Flows]

[removed: | [Notes] [added: Notes] to the Condensed Financial [removed: Statements](#NotestotheCondensedFinancialStat_043750 "Click to goto ") | 168 |][added: Statements]

[removed: | [Schedule] [added: SCHEDULE] II — [removed: Valuation and Qualifying Accounts and Reserves](#ScheduleIIValuationandQualifying_043120 "Click to goto ") | 169 |][added: VALUATION AND QUALIFYING ACCOUNTS AND RESERVES]

The following financial statements are filed as part of this report under Item 8.

· Consolidated Statements of Income of CMS Energy for the years ended December 31, 2017, 2016, and 2015

· Consolidated Statements of Comprehensive Income of CMS Energy for the years ended December 31, 2017, 2016, and 2015

· Consolidated Statements of Cash Flows of CMS Energy for the years ended December 31, 2017, 2016, and 2015

· Consolidated Balance Sheets of CMS Energy at December 31, 2017 and 2016

· Consolidated Statements of Changes in Equity of CMS Energy for the years ended December 31, 2017, 2016, and 2015.

· Consolidated Statements of Income of Consumers for the years ended December 31, 2017, 2016, and 2015

· Consolidated Statements of Comprehensive Income of Consumers for the years ended December 31, 2017, 2016, and 2015

· Consolidated Statements of Cash Flows of Consumers for the years ended December 31, 2017, 2016, and 2015

· Consolidated Balance Sheets of Consumers at December 31, 2017 and 2016

· Consolidated Statements of Changes in Equity of Consumers for the years ended December 31, 2017, 2016, and 2015

· Notes to the Consolidated Financial Statements

· Report of Independent Registered Public Accounting Firm for CMS Energy

· Report of Independent Registered Public Accounting Firm for Consumers

The following financial statement schedules are included below:

· Schedule I — Condensed Financial Information of Registrant, CMS Energy—Parent Company at December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016, and 2015

· Schedule II — Valuation and Qualifying Accounts and Reserves of CMS Energy for the years ended December 31, 2017, 2016, and 2015

· Schedule II — Valuation and Qualifying Accounts and Reserves of Consumers for the years ended December 31, 2017, 2016, and 2015

Condensed Statements of Income

| | | _In Millions_ | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Years Ended December 31 | | 2017 | | | 2016 | | | 2015 | | |

| | | | | | | | | | | |

| Operating Expenses | | | | | | | | | | |

| Other operating expenses | | $ | (9 | ) | $ | (14 | ) | $ | (8 | ) |

| Total operating expenses | | (9 | | ) | (14 | | ) | (8 | | ) |

| | | | | | | | | | | |

| Operating Loss | | (9 | | ) | (14 | | ) | (8 | | ) |

| | | | | | | | | | | |

| Other Income (Expense) | | | | | | | | | | |

| Equity earnings of subsidiaries | | 633 | | | 660 | | | 625 | | |

| Nonoperating retirement benefits, net | | (1 | | ) | (1 | | ) | (1 | | ) |

| Interest income | | 1 | | | 1 | | | 1 | | |

| Other income | | 2 | | | \- | | | \- | | |

| Other expense | | (31 | | ) | (19 | | ) | (9 | | ) |

| Total other income | | 604 | | | 641 | | | 616 | | |

| | | | | | | | | | | |

| Interest Charges | | | | | | | | | | |

| Interest on long-term debt | | 143 | | | 150 | | | 134 | | |

| Intercompany interest expense and other | | 3 | | | 1 | | | 3 | | |

(a)(1) Financial Statements and Reports of Independent Public Accountants for CMS Energy and Consumers are included in Item 8.

(a)(2) Index to Financial Statement Schedules.

| [Reports of Independent Registered Public Accounting Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_060651 "Click to goto ") | 157 |

| --- | --- |

| [CMS Energy](#TotheBoardofDirectorsandStockhol_052636 "Click to goto ") | 157 |

| [Consumers](#TotheBoardofDirectorsandStockhol_052641 "Click to goto ") | 158 |

| [Condensed Statements of Income](#CondensedStatementsofIncome_043739 "Click to goto ") | 164 |

| [Condensed Balance Sheets](#CondensedBalanceSheets_043745 "Click to goto ") | 166 |

| [CMS Energy](#CMSEnergyCorporation_043636 "Click to goto ") | 169 |

| [Consumers](#ConsumersEnergyCompany_043638 "Click to goto ") | 169 |

(a)(3) and (b) See CMS Energy’s and Consumers’ Exhibit Index included as the last part of this report, which is incorporated herein by reference.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, CMS Energy Corporation has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the [removed: 7th] [added: 14th] day of February [removed: 2017.][added: 2018.]

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of CMS Energy Corporation and in the capacities indicated and on the [removed: 7th] [added: 14th] day of February [removed: 2017.][added: 2018.]

| Patricia K. Poppe | | [removed: Richard M. Gabrys,] [added: Stephen E. Ewing,] Director |

| [removed: /s/ Thomas J. Webb] | | /s/ William D. Harvey |

| [removed: Thomas J. Webb] | | William D. Harvey, Director |

| [removed: /s/] Glenn P. Barba | | [removed: /s/ Philip R. Lochner, Jr.] |

| [removed: Glenn P. Barba] [added: and Chief Financial Officer] | | Philip R. Lochner, Jr., Director |

| [removed: Vice President, Controller,] and Chief Accounting Officer | | [added: /s/ Myrna M. Soto] |

| /s/ Jon E. Barfield | | /s/ John G. [removed: Russell] [added: Sznewajs] |

| Jon E. Barfield, Director | | John G. [removed: Russell,] [added: Sznewajs,] Director |

| [removed: Deborah H. Butler, Director] [added: (Controller)] | | Myrna M. Soto, Director |

| /s/ Kurt L. Darrow | | [removed: /s/ John G. Sznewajs] |

| Kurt L. Darrow, Director | | [removed: John G. Sznewajs, Director] |

| [added: Patricia K. Poppe | |] Stephen E. Ewing, Director | [removed: | Laura H. Wright, Director |]

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Consumers Energy Company has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the [removed: 7th] [added: 14th] day of February [removed: 2017.][added: 2018.]

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of Consumers Energy Company and in the capacities indicated and on the [removed: 7th] [added: 14th] day of February [removed: 2017.][added: 2018.]

| /s/ Patricia K. Poppe | | /s/ Stephen E. Ewing |

| /s/ Rejji P. Hayes | | |

| Rejji P. Hayes | | |

| Executive Vice President | | /s/ Philip R. Lochner, Jr. |

| | | /s/ John G. Russell |

| /s/ Glenn P. Barba | | John G. Russell, Director |

| Vice President, Controller, | | |

| /s/ Deborah H. Butler | | /s/ Laura H. Wright |

| Deborah H. Butler, Director | | Laura H. Wright, Director |

| /s/ Patricia K. Poppe | | /s/ Stephen E. Ewing |

| | | /s/ William D. Harvey |

| | | William D. Harvey, Director |

| /s/ Rejji P. Hayes | | |

| Rejji P. Hayes | | |

| Executive Vice President | | /s/ Philip R. Lochner, Jr. |

| and Chief Financial Officer | | Philip R. Lochner, Jr., Director |

| | | /s/ John G. Russell |

| /s/ Glenn P. Barba | | John G. Russell, Director |

| Glenn P. Barba | | |

| Vice President, Controller, | | |

| and Chief Accounting Officer | | /s/ Myrna M. Soto |

| (Controller) | | Myrna M. Soto, Director |

| /s/ Jon E. Barfield | | /s/ John G. Sznewajs |

| Jon E. Barfield, Director | | John G. Sznewajs, Director |

| /s/ Deborah H. Butler | | /s/ Laura H. Wright |

| Deborah H. Butler, Director | | Laura H. Wright, Director |

| /s/ Kurt L. Darrow | | |

| Kurt L. Darrow, Director | | |

CMS Energy Corporation

Schedule I — Condensed Financial Information of Registrant

CMS ENERGY—PARENT COMPANY

Condensed Statements of Income

| _In Millions_ | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Years Ended December 31 | | 2016 | | | 2015 | | | 2014 | | |

| | | | | | | | | | | |

| Operating Expenses | | | | | | | | | | |

| Other operating expenses | | $ | (15 | ) | $ | (9 | ) | $ | (6 | ) |

| Total operating expenses | | (15 | | ) | (9 | | ) | (6 | | ) |

| Operating Loss | | (15 | | ) | (9 | | ) | (6 | | ) |

| Other Income (Expense) | | | | | | | | | | |

| Equity earnings of subsidiaries | | 660 | | | 625 | | | 585 | | |

| Interest income | | 1 | | | 1 | | | 1 | | |

| Other expense | | (19 | | ) | (9 | | ) | (20 | | ) |

| Total other income | | 642 | | | 617 | | | 566 | | |

| Interest Charges | | | | | | | | | | |

| Interest on long-term debt | | 150 | | | 134 | | | 150 | | |

| Intercompany interest expense and other | | 1 | | | 3 | | | 2 | | |

| Total interest charges | | 151 | | | 137 | | | 152 | | |

| Income Before Income Taxes | | 476 | | | 471 | | | 408 | | |

| Income Tax Benefit | | (75 | | ) | (52 | | ) | (69 | | ) |

| Net Income Available to Common Stockholders | | $ | 551 | | $ | 523 | | $ | 477 | |

The accompanying notes are an integral part of these statements.

Condensed Statements of Cash Flows

| Years Ended December 31 | 2016 | | | 2015 | | | 2014 | | | |

| Cash Flows from Operating Activities | | | | | | | | | | |

| Net income | | $ | 551 | | $ | 523 | | $ | 477 | |

| _Adjustments to reconcile net income to net cash provided by operating activities_ | | | | | | | | | | |

| Equity earnings of subsidiaries | | (660 | | ) | (625 | | ) | (585 | | ) |

| Dividends received from subsidiaries | | 499 | | | 499 | | | 544 | | |

| Deferred income taxes | | (26 | | ) | (24 | | ) | 30 | | |

| Other non-cash operating activities and reconciling adjustments | | 18 | | | \- | | | 20 | | |

| _Cash provided by (used in) changes in assets and liabilities_ | | | | | | | | | | |

| Accounts and notes receivable | | 85 | | | (86 | | ) | (3 | | ) |

| Accounts payable | | (9 | | ) | 16 | | | (2 | | ) |

| Accrued taxes | | (74 | | ) | (115 | | ) | 97 | | |

| Other current and non-current assets and liabilities | | 38 | | | 21 | | | 31 | | |

| Net cash provided by operating activities | | 422 | | | 209 | | | 609 | | |