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Leases | 12 Months Ended
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Dec. 31, 2011
Leases | 15: LEASES CMS Energy and Consumers lease various assets, including service vehicles, railcars, gas pipeline capacity, and buildings. In addition, CMS Energy and Consumers account for a number of their PPAs as capital and operating leases. Operating leases for coal-carrying railcars have lease terms expiring without extension provisions over the next 12 years and with extension provisions over the next 15 years. These leases contain fair market value extension and buyout provisions, with some providing for predetermined extension period rentals. Capital leases for Consumers' vehicle fleet operations have a maximum term of 120 months with some having Terminal Rental Adjustment Clause end-of-life provisions and others having fixed percentage purchase options. Consumers has capital leases for gas transportation pipelines to the Karn generating complex and Zeeland. The capital lease for the gas transportation pipeline into the Karn generating complex has a term of 15 years with a provision to extend the contract from month to month. The remaining term of the contract was 10 years at December 31, 2011. The capital lease for the gas transportation pipeline to Zeeland has a term of 12 years with a renewal provision at the end of the contract. The remaining term of the contract was one year at December 31, 2011. The remaining terms of Consumers' long-term PPAs range between one and 20 years. Most of these PPAs contain provisions at the end of the initial contract terms to renew the agreements annually. Consumers is authorized by the MPSC to record operating lease payments as operating expense and recover the total cost from customers. Presented in the following table are Consumers' operating lease expense and contingent rental expense. For each of the years ended December 31, 2011, 2010, and 2009, all of CMS Energy's operating lease expense and contingent rental expense were attributable to Consumers.
Years Ended December 31 |  | 2011 |  |  | 2010 |  |  | 2009 |
|  | In Millions |
CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |
PPA operating lease expense |  | $ | 10 |  |  | $ | 5 |  |  | $ | 9 |
Non-PPA operating lease expense |  |  | 22 |  |  |  | 22 |  |  |  | 23 |
Contingent rental expense 1 |  |  | 11 |  |  |  | 14 |  |  |  | 9 |
1 | Contingent rental expense comprises PPA energy and capacity payments and any other payments not associated with RECs. This expense is excluded from operating lease expense.
Presented in the following table are the minimum annual rental commitments under Consumers' non-cancelable leases at December 31, 2011. All of CMS Energy's non-cancelable leases at December 31, 2011 were attributable to Consumers.
|  | Capital Leases |  |  | Finance Lease1 |  |  | Operating Leases |
|  | In Millions |
CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |
2012 |  | $ | 20 |  |  | $ | 20 |  |  | $ | 27 |
2013 |  |  | 13 |  |  |  | 20 |  |  |  | 24 |
2014 |  |  | 11 |  |  |  | 19 |  |  |  | 22 |
2015 |  |  | 12 |  |  |  | 18 |  |  |  | 22 |
2016 |  |  | 8 |  |  |  | 17 |  |  |  | 17 |
2017 and thereafter |  |  | 39 |  |  |  | 79 |  |  |  | 68 |
Total minimum lease payments |  | $ | 103 |  |  | $ | 173 |  |  | $ | 180 |
Less imputed interest |  |  | 46 |  |  |  | 39 |  |  |  |  |
Present value of net minimum lease payments |  | $ | 57 |  |  | $ | 134 |  |  |  |  |
Less current portion |  |  | 11 |  |  |  | 13 |  |  |  |  |
Non-current portion |  | $ | 46 |  |  | $ | 121 |  |  |  |  |
1 | In 2007, Consumers sold Palisades to Entergy and entered into a 15-year PPA to buy all of the capacity and energy then capable of being produced by Palisades. Consumers has continuing involvement with Palisades through security provided to Entergy for Consumers' PPA obligation and other arrangements. Because of these ongoing arrangements, Consumers accounted for the transaction as a financing of Palisades and not a sale. Accordingly, no gain on the sale of Palisades was recognized on the consolidated statements of income. Consumers accounted for the remaining non-real-estate assets and liabilities associated with the transaction as a sale. Palisades remains on Consumers' consolidated balance sheets and Consumers continues to depreciate it. Consumers recorded the related proceeds as a finance obligation with payments recorded to interest expense and the finance obligation based on the amortization of the obligation over the life of the Palisades PPA. The value of the finance obligation was determined based on an allocation of the transaction proceeds to the fair values of the net assets sold and fair value of the plant asset under the financing. Total amortization and interest charges under the financing were $21 million, $22 million, and $23 million respectively, for the years ended December 31, 2011, 2010, and 2009.
Consumers Energy Company [Member] |
Leases | 15: LEASES CMS Energy and Consumers lease various assets, including service vehicles, railcars, gas pipeline capacity, and buildings. In addition, CMS Energy and Consumers account for a number of their PPAs as capital and operating leases. Operating leases for coal-carrying railcars have lease terms expiring without extension provisions over the next 12 years and with extension provisions over the next 15 years. These leases contain fair market value extension and buyout provisions, with some providing for predetermined extension period rentals. Capital leases for Consumers' vehicle fleet operations have a maximum term of 120 months with some having Terminal Rental Adjustment Clause end-of-life provisions and others having fixed percentage purchase options. Consumers has capital leases for gas transportation pipelines to the Karn generating complex and Zeeland. The capital lease for the gas transportation pipeline into the Karn generating complex has a term of 15 years with a provision to extend the contract from month to month. The remaining term of the contract was 10 years at December 31, 2011. The capital lease for the gas transportation pipeline to Zeeland has a term of 12 years with a renewal provision at the end of the contract. The remaining term of the contract was one year at December 31, 2011. The remaining terms of Consumers' long-term PPAs range between one and 20 years. Most of these PPAs contain provisions at the end of the initial contract terms to renew the agreements annually. Consumers is authorized by the MPSC to record operating lease payments as operating expense and recover the total cost from customers. Presented in the following table are Consumers' operating lease expense and contingent rental expense. For each of the years ended December 31, 2011, 2010, and 2009, all of CMS Energy's operating lease expense and contingent rental expense were attributable to Consumers.
Years Ended December 31 |  | 2011 |  |  | 2010 |  |  | 2009 |
|  | In Millions |
CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |
PPA operating lease expense |  | $ | 10 |  |  | $ | 5 |  |  | $ | 9 |
Non-PPA operating lease expense |  |  | 22 |  |  |  | 22 |  |  |  | 23 |
Contingent rental expense 1 |  |  | 11 |  |  |  | 14 |  |  |  | 9 |
1 | Contingent rental expense comprises PPA energy and capacity payments and any other payments not associated with RECs. This expense is excluded from operating lease expense.
Presented in the following table are the minimum annual rental commitments under Consumers' non-cancelable leases at December 31, 2011. All of CMS Energy's non-cancelable leases at December 31, 2011 were attributable to Consumers.
|  | Capital Leases |  |  | Finance Lease1 |  |  | Operating Leases |
|  | In Millions |
CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |
2012 |  | $ | 20 |  |  | $ | 20 |  |  | $ | 27 |
2013 |  |  | 13 |  |  |  | 20 |  |  |  | 24 |
2014 |  |  | 11 |  |  |  | 19 |  |  |  | 22 |
2015 |  |  | 12 |  |  |  | 18 |  |  |  | 22 |
2016 |  |  | 8 |  |  |  | 17 |  |  |  | 17 |
2017 and thereafter |  |  | 39 |  |  |  | 79 |  |  |  | 68 |
Total minimum lease payments |  | $ | 103 |  |  | $ | 173 |  |  | $ | 180 |
Less imputed interest |  |  | 46 |  |  |  | 39 |  |  |  |  |
Present value of net minimum lease payments |  | $ | 57 |  |  | $ | 134 |  |  |  |  |
Less current portion |  |  | 11 |  |  |  | 13 |  |  |  |  |
Non-current portion |  | $ | 46 |  |  | $ | 121 |  |  |  |  |
1 | In 2007, Consumers sold Palisades to Entergy and entered into a 15-year PPA to buy all of the capacity and energy then capable of being produced by Palisades. Consumers has continuing involvement with Palisades through security provided to Entergy for Consumers' PPA obligation and other arrangements. Because of these ongoing arrangements, Consumers accounted for the transaction as a financing of Palisades and not a sale. Accordingly, no gain on the sale of Palisades was recognized on the consolidated statements of income. Consumers accounted for the remaining non-real-estate assets and liabilities associated with the transaction as a sale. Palisades remains on Consumers' consolidated balance sheets and Consumers continues to depreciate it. Consumers recorded the related proceeds as a finance obligation with payments recorded to interest expense and the finance obligation based on the amortization of the obligation over the life of the Palisades PPA. The value of the finance obligation was determined based on an allocation of the transaction proceeds to the fair values of the net assets sold and fair value of the plant asset under the financing. Total amortization and interest charges under the financing were $21 million, $22 million, and $23 million respectively, for the years ended December 31, 2011, 2010, and 2009.

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6453985&loc=d3e41499-112717 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 10 -Section 55 -Paragraph 40 -Subparagraph (Note 1,3) -URI http://asc.fasb.org/extlink&oid=6584154&loc=d3e38371-112697 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6455398&loc=d3e45280-112737 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6453985&loc=d3e41502-112717 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6452660&loc=d3e36991-112694 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 460 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6851643&loc=d3e12069-110248 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 13 -Paragraph 16 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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