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Financial Instruments | 3 Months Ended
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Mar. 31, 2012
Financial Instruments |
7: | FINANCIAL INSTRUMENTS
The carrying amounts of CMS Energy's and Consumers' cash, cash equivalents, current accounts and notes receivable, short-term investments, and current liabilities approximate their fair values because of their short-term nature. Presented in the following table are the cost or carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy's and Consumers' long-term financial instruments. For additional details regarding the fair value hierarchy, see Note 2: Fair Value Measurements.
In Millions |
|  | March 31, 2012 |  |  | December 31, 2011 |
|  | Cost or |  |  | Fair Value |  |  | Cost or |  |  |  |
|  | Carrying Amount |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Carrying Amount |  |  | Fair Value |
CMS ENERGY, INCLUDING CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities held to maturity |  | $ | 8 |  |  | $ | 9 |  |  | $ | - |  |  | $ | 9 |  |  | $ | - |  |  | $ | 7 |  |  | $ | 7 |
Securities available for sale |  |  | 126 |  |  |  | 126 |  |  |  | 126 |  |  |  | - |  |  |  | - |  |  |  | 113 |  |  |  | 113 |
Notes receivable 1 |  |  | 477 |  |  |  | 504 |  |  |  | - |  |  |  | - |  |  |  | 504 |  |  |  | 480 |  |  |  | 504 |
Long-term debt 2 |  |  | 7,007 |  |  |  | 7,972 |  |  |  | - |  |  |  | 7,972 |  |  |  | - |  |  |  | 7,073 |  |  |  | 8,025 |
CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale |  | $ | 90 |  |  | $ | 114 |  |  | $ | 114 |  |  | $ | - |  |  | $ | - |  |  | $ | 81 |  |  | $ | 109 |
Long-term debt 3 |  |  | 4,016 |  |  |  | 4,576 |  |  |  | - |  |  |  | 4,576 |  |  |  | - |  |  |  | 4,326 |  |  |  | 4,882 |
| 1 | Includes current portion of notes receivable of $24 million at March 31, 2012 and $19 million at December 31, 2011.
| 2 | Includes current portion of long-term debt of $814 million at March 31, 2012 and $1,033 million at December 31, 2011.
| 3 | Includes current portion of long-term debt of $39 million at March 31, 2012 and $339 million at December 31, 2011.
Notes receivable consist of EnerBank's fixed-rate installment loans. EnerBank estimates the fair value of these loans using a discounted cash flows technique that incorporates market interest rates as well as assumptions about the remaining life of the loans and credit risk. Fair values for impaired loans are estimated using discounted cash flows or underlying collateral values. CMS Energy and Consumers estimate the fair value of their long-term debt using quoted prices from market trades of the debt, if available. In the absence of quoted prices, CMS Energy and Consumers calculate market yields and prices for the debt using a matrix method that incorporates market data for similarly rated debt. Depending on the information available, other valuation techniques may be used that rely on internal assumptions and models. CMS Energy includes the value of the conversion features in estimating the fair value of its convertible debt, and incorporates, as appropriate, information on the market prices of CMS Energy common stock. The effects of third-party credit enhancements are excluded from the fair value measurements of long-term debt. At March 31, 2012 and December 31, 2011, CMS Energy's long-term debt included $103 million principal amount that was supported by third-party credit enhancements. This entire principal amount was at Consumers. Presented in the following table are CMS Energy's and Consumers' investment securities:
In Millions |
|  | March 31, 2012 |  |  | December 31, 2011 |
|  | Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Fair Value |  |  | Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Fair Value |
CMS ENERGY, INCLUDING CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |  |
Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  |  | $ 126 |  |  |  | $ - |  |  |  | $ - |  |  |  | $ 126 |  |  |  | $ 113 |  |  |  | $ - |  |  |  | $ - |  |  |  | $ 113 |
Held to maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities |  |  | 8 |  |  |  | 1 |  |  |  | - |  |  |  | 9 |  |  |  | 7 |  |  |  | - |  |  |  | - |  |  |  | 7 |
CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  |  | $ 85 |  |  |  | $ - |  |  |  | $ - |  |  |  | $ 85 |  |  |  | $ 74 |  |  |  | $ - |  |  |  | $ - |  |  |  | $ 74 |
CMS Energy common stock |  |  | 5 |  |  |  | 24 |  |  |  | - |  |  |  | 29 |  |  |  | 7 |  |  |  | 28 |  |  |  | - |  |  |  | 35 |
The mutual funds classified as available for sale are fixed-income funds of varying maturities. During the three months ended March 31, 2012, CMS Energy contributed $13 million to the SERP, which included a contribution of $9 million by Consumers. The contributions were used to acquire additional shares in the mutual funds. Debt securities classified as held to maturity consist primarily of mortgage-backed securities held by EnerBank, as well as state and municipal bonds held by EnerBank.
Consumers Energy Company [Member] |
Financial Instruments |
7: | FINANCIAL INSTRUMENTS
The carrying amounts of CMS Energy's and Consumers' cash, cash equivalents, current accounts and notes receivable, short-term investments, and current liabilities approximate their fair values because of their short-term nature. Presented in the following table are the cost or carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy's and Consumers' long-term financial instruments. For additional details regarding the fair value hierarchy, see Note 2: Fair Value Measurements.
In Millions |
|  | March 31, 2012 |  |  | December 31, 2011 |
|  | Cost or |  |  | Fair Value |  |  | Cost or |  |  |  |
|  | Carrying Amount |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Carrying Amount |  |  | Fair Value |
CMS ENERGY, INCLUDING CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities held to maturity |  | $ | 8 |  |  | $ | 9 |  |  | $ | - |  |  | $ | 9 |  |  | $ | - |  |  | $ | 7 |  |  | $ | 7 |
Securities available for sale |  |  | 126 |  |  |  | 126 |  |  |  | 126 |  |  |  | - |  |  |  | - |  |  |  | 113 |  |  |  | 113 |
Notes receivable 1 |  |  | 477 |  |  |  | 504 |  |  |  | - |  |  |  | - |  |  |  | 504 |  |  |  | 480 |  |  |  | 504 |
Long-term debt 2 |  |  | 7,007 |  |  |  | 7,972 |  |  |  | - |  |  |  | 7,972 |  |  |  | - |  |  |  | 7,073 |  |  |  | 8,025 |
CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale |  | $ | 90 |  |  | $ | 114 |  |  | $ | 114 |  |  | $ | - |  |  | $ | - |  |  | $ | 81 |  |  | $ | 109 |
Long-term debt 3 |  |  | 4,016 |  |  |  | 4,576 |  |  |  | - |  |  |  | 4,576 |  |  |  | - |  |  |  | 4,326 |  |  |  | 4,882 |
| 1 | Includes current portion of notes receivable of $24 million at March 31, 2012 and $19 million at December 31, 2011.
| 2 | Includes current portion of long-term debt of $814 million at March 31, 2012 and $1,033 million at December 31, 2011.
| 3 | Includes current portion of long-term debt of $39 million at March 31, 2012 and $339 million at December 31, 2011.
Notes receivable consist of EnerBank's fixed-rate installment loans. EnerBank estimates the fair value of these loans using a discounted cash flows technique that incorporates market interest rates as well as assumptions about the remaining life of the loans and credit risk. Fair values for impaired loans are estimated using discounted cash flows or underlying collateral values. CMS Energy and Consumers estimate the fair value of their long-term debt using quoted prices from market trades of the debt, if available. In the absence of quoted prices, CMS Energy and Consumers calculate market yields and prices for the debt using a matrix method that incorporates market data for similarly rated debt. Depending on the information available, other valuation techniques may be used that rely on internal assumptions and models. CMS Energy includes the value of the conversion features in estimating the fair value of its convertible debt, and incorporates, as appropriate, information on the market prices of CMS Energy common stock. The effects of third-party credit enhancements are excluded from the fair value measurements of long-term debt. At March 31, 2012 and December 31, 2011, CMS Energy's long-term debt included $103 million principal amount that was supported by third-party credit enhancements. This entire principal amount was at Consumers. Presented in the following table are CMS Energy's and Consumers' investment securities:
In Millions |
|  | March 31, 2012 |  |  | December 31, 2011 |
|  | Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Fair Value |  |  | Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Fair Value |
CMS ENERGY, INCLUDING CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |  |
Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  |  | $ 126 |  |  |  | $ - |  |  |  | $ - |  |  |  | $ 126 |  |  |  | $ 113 |  |  |  | $ - |  |  |  | $ - |  |  |  | $ 113 |
Held to maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities |  |  | 8 |  |  |  | 1 |  |  |  | - |  |  |  | 9 |  |  |  | 7 |  |  |  | - |  |  |  | - |  |  |  | 7 |
CONSUMERS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  |  | $ 85 |  |  |  | $ - |  |  |  | $ - |  |  |  | $ 85 |  |  |  | $ 74 |  |  |  | $ - |  |  |  | $ - |  |  |  | $ 74 |
CMS Energy common stock |  |  | 5 |  |  |  | 24 |  |  |  | - |  |  |  | 29 |  |  |  | 7 |  |  |  | 28 |  |  |  | - |  |  |  | 35 |
The mutual funds classified as available for sale are fixed-income funds of varying maturities. During the three months ended March 31, 2012, CMS Energy contributed $13 million to the SERP, which included a contribution of $9 million by Consumers. The contributions were used to acquire additional shares in the mutual funds. Debt securities classified as held to maturity consist primarily of mortgage-backed securities held by EnerBank, as well as state and municipal bonds held by EnerBank.

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- Definition The entire disclosure of the fair value of financial instruments and investments in debt and equity securities. + References No definition available. + Details
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