Item 15. Exhibits and Financial Statement Schedules
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Item 15. Exhibits and Financial Statement Schedules
The following financial statements are filed as part of this report under Item 8. Financial Statements and Supplementary Data:
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Consolidated Statements of Income of CMS Energy for the years ended December 31, 2021, 2020, and 2019
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Consolidated Statements of Comprehensive Income of CMS Energy for the years ended December 31, 2021, 2020, and 2019
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Consolidated Statements of Cash Flows of CMS Energy for the years ended December 31, 2021, 2020, and 2019
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Consolidated Balance Sheets of CMS Energy at December 31, 2021 and 2020
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Consolidated Statements of Changes in Equity of CMS Energy for the years ended December 31, 2021, 2020, and 2019
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Consolidated Statements of Income of Consumers for the years ended December 31, 2021, 2020, and 2019
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Consolidated Statements of Comprehensive Income of Consumers for the years ended December 31, 2021, 2020, and 2019
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Consolidated Statements of Cash Flows of Consumers for the years ended December 31, 2021, 2020, and 2019
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Consolidated Balance Sheets of Consumers at December 31, 2021 and 2020
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Consolidated Statements of Changes in Equity of Consumers for the years ended December 31, 2021, 2020, and 2019
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Notes to the Consolidated Financial Statements
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Report of Independent Registered Public Accounting Firm for CMS Energy
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Report of Independent Registered Public Accounting Firm for Consumers
The following financial statement schedules are included below:
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Schedule I — Condensed Financial Information of Registrant, CMS Energy—Parent Company at December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020, and 2019
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Schedule II — Valuation and Qualifying Accounts and Reserves of CMS Energy for the years ended December 31, 2021, 2020, and 2019
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Schedule II — Valuation and Qualifying Accounts and Reserves of Consumers for the years ended December 31, 2021, 2020, and 2019
Schedule I — Condensed Financial Information of Registrant
CMS Energy—Parent Company
Condensed Statements of Income
| In Millions | ||||||||||||||||||||
| Years Ended December 31 | 2021 | 2020 | 2019 | |||||||||||||||||
| Operating Expenses | ||||||||||||||||||||
| Other operating expenses | $ | (7) | $ | (6) | $ | (38) | ||||||||||||||
| Total operating expenses | (7) | (6) | (38) | |||||||||||||||||
| Operating Loss | (7) | (6) | (38) | |||||||||||||||||
| Other Income (Expense) | ||||||||||||||||||||
| Equity earnings of subsidiaries | 1,482 | 909 | 826 | |||||||||||||||||
| Nonoperating retirement benefits, net | (1) | (1) | (1) | |||||||||||||||||
| Interest income | 1 | 1 | 1 | |||||||||||||||||
| Other income | 1 | 1 | 1 | |||||||||||||||||
| Other expense | — | (19) | — | |||||||||||||||||
| Total other income | 1,483 | 891 | 827 | |||||||||||||||||
| Interest Charges | ||||||||||||||||||||
| Interest on long-term debt | 183 | 178 | 156 | |||||||||||||||||
| Intercompany interest expense and other | 7 | 7 | 10 | |||||||||||||||||
| Total interest charges | 190 | 185 | 166 | |||||||||||||||||
| Income Before Income Taxes | 1,286 | 700 | 623 | |||||||||||||||||
| Income Tax Benefit | (60) | (55) | (57) | |||||||||||||||||
| Income From Continuing Operations | 1,346 | 755 | 680 | |||||||||||||||||
| Income From Discontinued Operations, Net of Tax of $(5), $—, and $— | 7 | — | — | |||||||||||||||||
| Net Income Attributable to CMS Energy | 1,353 | 755 | 680 | |||||||||||||||||
| Preferred Stock Dividends | 5 | — | — | |||||||||||||||||
| Net Income Available to Common Stockholders | $ | 1,348 | $ | 755 | $ | 680 |
The accompanying notes are an integral part of these statements.
Schedule I — Condensed Financial Information of Registrant (Continued)
CMS Energy—Parent Company
Condensed Statements of Cash Flows
| In Millions | ||||||||||||||||||||
| Years Ended December 31 | 2021 | 2020 | 2019 | |||||||||||||||||
| Cash Flows from Operating Activities | ||||||||||||||||||||
| Net cash provided by operating activities | $ | 1,549 | $ | 507 | $ | 697 | ||||||||||||||
| Cash Flows from Investing Activities | ||||||||||||||||||||
| Investment in subsidiaries | (581) | (657) | (683) | |||||||||||||||||
| Increase in notes receivable – intercompany | (83) | (307) | — | |||||||||||||||||
| Net cash used in investing activities | (664) | (964) | (683) | |||||||||||||||||
| Cash Flows from Financing Activities | ||||||||||||||||||||
| Proceeds from issuance of debt | — | 1,225 | 1,158 | |||||||||||||||||
| Issuance of common stock | 26 | 253 | 12 | |||||||||||||||||
| Issuance of preferred stock | 224 | — | — | |||||||||||||||||
| Retirement of long-term debt | (200) | (425) | (738) | |||||||||||||||||
| Debt prepayment costs | — | (16) | — | |||||||||||||||||
| Payment of dividends on common and preferred stock | (507) | (465) | (434) | |||||||||||||||||
| Debt issuance costs and financing fees | (10) | (10) | (18) | |||||||||||||||||
| Change in notes payable – intercompany | (28) | (105) | 6 | |||||||||||||||||
| Net cash provided by (used in) financing activities | (495) | 457 | (14) | |||||||||||||||||
| Net Increase in Cash and Cash Equivalents, Including Restricted Amounts | 390 | — | — | |||||||||||||||||
| Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period | — | — | — | |||||||||||||||||
| Cash and Cash Equivalents, Including Restricted Amounts, End of Period | $ | 390 | $ | — | $ | — |
The accompanying notes are an integral part of these statements.
Schedule I — Condensed Financial Information of Registrant (Continued)
CMS Energy—Parent Company
Condensed Balance Sheets
| ASSETS | ||||||||||||||
| In Millions | ||||||||||||||
| December 31 | 2021 | 2020 | ||||||||||||
| Current Assets | ||||||||||||||
| Cash and cash equivalents | $ | 390 | $ | — | ||||||||||
| Notes and accrued interest receivable – intercompany | 463 | 358 | ||||||||||||
| Accounts receivable – intercompany and related parties | 5 | 3 | ||||||||||||
| Accrued taxes | — | 48 | ||||||||||||
| Prepayments and other current assets | 1 | 1 | ||||||||||||
| Total current assets | 859 | 410 | ||||||||||||
| Other Non‑current Assets | ||||||||||||||
| Deferred income taxes | 147 | 91 | ||||||||||||
| Investments in subsidiaries | 9,870 | 9,372 | ||||||||||||
| Other investments | 6 | 5 | ||||||||||||
| Other | 8 | 5 | ||||||||||||
| Total other non‑current assets | 10,031 | 9,473 | ||||||||||||
| Total Assets | $ | 10,890 | $ | 9,883 |
| LIABILITIES AND EQUITY | ||||||||||||||
| In Millions | ||||||||||||||
| December 31 | 2021 | 2020 | ||||||||||||
| Current Liabilities | ||||||||||||||
| Current portion of long-term debt | $ | — | $ | 200 | ||||||||||
| Accounts and notes payable – intercompany | 61 | 69 | ||||||||||||
| Accrued interest, including intercompany | 33 | 33 | ||||||||||||
| Accrued taxes | 83 | — | ||||||||||||
| Other current liabilities | 8 | 9 | ||||||||||||
| Total current liabilities | 185 | 311 | ||||||||||||
| Non‑current Liabilities | ||||||||||||||
| Long-term debt | 3,928 | 3,926 | ||||||||||||
| Notes payable – intercompany | 112 | 116 | ||||||||||||
| Postretirement benefits | 19 | 21 | ||||||||||||
| Other non‑current liabilities | 15 | 13 | ||||||||||||
| Total non‑current liabilities | 4,074 | 4,076 | ||||||||||||
| Equity | ||||||||||||||
| Common stockholders’ equity | 6,407 | 5,496 | ||||||||||||
| Preferred stock | 224 | — | ||||||||||||
| Total equity | 6,631 | 5,496 | ||||||||||||
| Total Liabilities and Equity | $ | 10,890 | $ | 9,883 |
The accompanying notes are an integral part of these statements.
Schedule I — Condensed Financial Information of Registrant (Continued)
CMS Energy—Parent Company
Notes to the Condensed Financial Statements
1: Basis of Presentation
CMS Energy’s condensed financial statements have been prepared on a parent-only basis. In accordance with Rule 12-04 of Regulation S-X, these parent-only financial statements do not include all of the information and notes required by GAAP for annual financial statements, and therefore these parent-only financial statements and other information included should be read in conjunction with CMS Energy’s audited consolidated financial statements contained within Item 8. Financial Statements and Supplementary Data.
2: Guarantees
CMS Energy has issued guarantees with a maximum potential obligation of $633 million on behalf of some of its wholly owned subsidiaries and related parties. CMS Energy’s maximum potential obligation consists primarily of potential payments:
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to third parties under certain commodity purchase and swap agreements entered into with CMS ERM
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to third parties under certain agreements entered into with Grand River Wind, LLC, a wholly owned subsidiary of CMS Enterprises
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to EGLE on behalf of CMS Land and CMS Capital, for environmental remediation obligations at Bay Harbor
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to the U.S. Department of Energy on behalf of Consumers, in connection with Consumers’ 2011 settlement agreement with the U.S. Department of Energy regarding damages resulting from the department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by Consumers
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to a tax equity investor under certain agreements in connection with the purchase of a VIE
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to Regions Bank related to the sale of EnerBank
The expiry dates of these guarantees vary, depending upon contractual provisions or upon the statute of limitations under the relevant governing law.
3: Note Payable—Intercompany
CMS Energy has a demand note payable to the DB SERP rabbi trust. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028. This note payable is not recorded at fair value; however, its carrying value approximates fair value at December 31, 2021. This fair value measurement is classified in Level 3 within the fair value hierarchy.
4: Preferred Stock
In 2021, CMS Energy issued 9.2 million depositary shares, each representing a 1/1,000th interest in a share of its cumulative Series C preferred stock, traded on the New York Stock Exchange under the symbol CMS PRC, at a price of $25.00 per depositary share. The transaction resulted in net proceeds of $224 million, which was used for general corporate purposes. Dividends on the preferred stock accumulate at an annual rate of 4.200 percent and are payable quarterly.
The Series C preferred stock has no maturity or mandatory redemption date and is not redeemable at the option of the holders. CMS Energy may, at its option, redeem the Series C preferred stock, in whole or in part, at a price equal to $25,000 per share (equivalent to $25.00 per depositary share), plus accumulated and unpaid dividends, at any time on or after July 15, 2026. The Series C preferred stock ranks senior to CMS Energy’s common stock with respect to dividend rights and distribution rights upon liquidation.
Schedule II — Valuation and Qualifying Accounts and Reserves
CMS Energy Corporation
Years Ended December 31, 2021, 2020, and 2019
| In Millions | ||||||||||||||||||||||||||||||||
| Description | Balance at Beginning of Period | Charged to Expense | Charged to Other Accounts | Deductions | Balance at End of Period | |||||||||||||||||||||||||||
| Allowance for uncollectible accounts1 | ||||||||||||||||||||||||||||||||
| 2021 | $ | 29 | $ | 22 | $ | — | $ | 31 | $ | 20 | ||||||||||||||||||||||
| 2020 | 20 | 33 | — | 24 | 29 | |||||||||||||||||||||||||||
| 2019 | 20 | 29 | — | 29 | 20 | |||||||||||||||||||||||||||
| Deferred tax valuation allowance | ||||||||||||||||||||||||||||||||
| 2021 | $ | 1 | $ | 1 | $ | — | $ | — | $ | 2 | ||||||||||||||||||||||
| 2020 | 2 | — | — | 1 | 1 | |||||||||||||||||||||||||||
| 2019 | 8 | — | — | 6 | 2 | |||||||||||||||||||||||||||
1Deductions represent write-offs of uncollectible accounts, net of recoveries.
Consumers Energy Company
Years Ended December 31, 2021, 2020, and 2019
| In Millions | ||||||||||||||||||||||||||||||||
| Description | Balance at Beginning of Period | Charged to Expense | Charged to Other Accounts | Deductions | Balance at End of Period | |||||||||||||||||||||||||||
| Allowance for uncollectible accounts1 | ||||||||||||||||||||||||||||||||
| 2021 | $ | 29 | $ | 22 | $ | — | $ | 31 | $ | 20 | ||||||||||||||||||||||
| 2020 | 20 | 33 | — | 24 | 29 | |||||||||||||||||||||||||||
| 2019 | 20 | 29 | — | 29 | 20 | |||||||||||||||||||||||||||
1Deductions represent write-offs of uncollectible accounts, net of recoveries.
Exhibit Index
The agreements included as exhibits to this Form 10-K filing are included solely to provide information regarding the terms of the agreements and are not intended to provide any other factual or disclosure information about CMS Energy, Consumers, or other parties to the agreements. The agreements may contain representations and warranties made by each of the parties to each of the agreements that were made exclusively for the benefit of the parties involved in each of the agreements and should not be treated as statements of fact. The representations and warranties were made as a way to allocate risk if one or more of those statements prove to be incorrect. The statements were qualified by disclosures of the parties to each of the agreements that may not be reflected in each of the agreements. The agreements may apply standards of materiality that are different than standards applied to other investors. Additionally, the statements were made as of the date of the agreements or as specified in the agreements and have not been updated. The representations and warranties may not describe the actual state of affairs of the parties to each agreement.
Additional information about CMS Energy and Consumers may be found in this filing, at www.cmsenergy.com, at www.consumersenergy.com, and through the SEC’s website at www.sec.gov.
| Previously Filed | ||||||||||||||
| Exhibits | With File Number | As Exhibit Number | Description | |||||||||||
| 101.INS | — | Inline XBRL Instance Document | ||||||||||||
| 101.SCH | — | Inline XBRL Taxonomy Extension Schema | ||||||||||||
| 101.CAL | — | Inline XBRL Taxonomy Extension Calculation Linkbase | ||||||||||||
| 101.DEF | — | Inline XBRL Taxonomy Extension Definition Linkbase | ||||||||||||
| 101.LAB | — | Inline XBRL Taxonomy Extension Labels Linkbase | ||||||||||||
| 101.PRE | — | Inline XBRL Taxonomy Extension Presentation Linkbase | ||||||||||||
| 104 | — | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document) |
1Obligations of CMS Energy or its subsidiaries, but not of Consumers.
2Management contract or compensatory plan or arrangement.
Exhibits that have been previously filed with the SEC, designated above, are incorporated herein by reference and made a part hereof.
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