XML 55 R13.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Fair Value Measurements | 9 Months Ended
--- | ---
Sep. 30, 2013
Fair Value Measurements | 4:F AIR VALUE MEASUREMENTS Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. When measuring fair value, CMS Energy and Consumers are required to incorporate all assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. A fair value hierarchy prioritizes inputs used to measure fair value according to their observability in the market. T he three levels of the fair valu e hierarchy are as follows:
· | Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
· | Level 2 inputs are observable, market-based inputs, other than Level 1 prices. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, and inputs derived from or corroborated by observable market data.
· | Level 3 inputs are unobservable inputs that reflect CMS Energy’s or Consumers’ own assumptions about how market participants would value their assets and liabilities.
To the extent possible, CMS Energy and Consumers use quoted market prices or other observable market pricing data in valuing assets and liabilities measured at fair value. If this information is unavailable, they use market-corroborated data or reasonable estimates about market participant assumptions. CMS Energy and Consumers classify fair value measurements within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement in its entirety. Assets and Liabilities Measured at Fair Value on a Recurring Basis Presented in the following table are CMS Energy’s and Consumers’ assets and liabilities, by level within the fair value hierarchy, recorded at fair value on a recurring basis:
In Millions
| September 30, 2013 |  | December 31, 2012 |
|  |  |  | Level |  |  |  |  | Level |
| Total | 1 | 2 | 3 |  | Total | 1 | 2 | 3 |
CMS Energy, including Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 100 |  | $ | 100 |  | $ | - |  | $ | - |  |  | $ | 53 |  | $ | 53 |  | $ | - |  | $ | - |
Restricted cash equivalents |  |  | 14 |  |  | 14 |  |  | - |  |  | - |  |  |  | 14 |  |  | 14 |  |  | - |  |  | - |
Nonqualified deferred compensation plan assets |  |  | 6 |  |  | 6 |  |  | - |  |  | - |  |  |  | 5 |  |  | 5 |  |  | - |  |  | - |
DB SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  |  | - |  |  | - |  |  | - |  |  | - |  |  |  | 2 |  |  | 2 |  |  | - |  |  | - |
Mutual funds |  |  | 137 |  |  | 137 |  |  | - |  |  | - |  |  |  | 126 |  |  | 126 |  |  | - |  |  | - |
Derivative instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  |  | 9 |  |  | - |  |  | 2 |  |  | 7 |  |  |  | 3 |  |  | - |  |  | - |  |  | 3 |
Total |  | $ | 266 |  | $ | 257 |  | $ | 2 |  | $ | 7 |  |  | $ | 203 |  | $ | 200 |  | $ | - |  | $ | 3 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonqualified deferred compensation plan liabilities |  | $ | 6 |  | $ | 6 |  | $ | - |  | $ | - |  |  | $ | 5 |  | $ | 5 |  | $ | - |  | $ | - |
Derivative instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  |  | 2 |  |  | - |  |  | 1 |  |  | 1 |  |  |  | 4 |  |  | - |  |  | 3 |  |  | 1 |
Total |  | $ | 8 |  | $ | 6 |  | $ | 1 |  | $ | 1 |  |  | $ | 9 |  | $ | 5 |  | $ | 3 |  | $ | 1 |
Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 84 |  | $ | 84 |  | $ | - |  | $ | - |  |  | $ | - |  | $ | - |  | $ | - |  | $ | - |
Restricted cash equivalents |  |  | 13 |  |  | 13 |  |  | - |  |  | - |  |  |  | 13 |  |  | 13 |  |  | - |  |  | - |
CMS Energy common stock |  |  | 29 |  |  | 29 |  |  | - |  |  | - |  |  |  | 32 |  |  | 32 |  |  | - |  |  | - |
Nonqualified deferred compensation plan assets |  |  | 4 |  |  | 4 |  |  | - |  |  | - |  |  |  | 4 |  |  | 4 |  |  | - |  |  | - |
DB SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  |  | - |  |  | - |  |  | - |  |  | - |  |  |  | 1 |  |  | 1 |  |  | - |  |  | - |
Mutual funds |  |  | 96 |  |  | 96 |  |  | - |  |  | - |  |  |  | 85 |  |  | 85 |  |  | - |  |  | - |
Derivative instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  |  | 6 |  |  | - |  |  | - |  |  | 6 |  |  |  | 2 |  |  | - |  |  | - |  |  | 2 |
Total |  | $ | 232 |  | $ | 226 |  | $ | - |  | $ | 6 |  |  | $ | 137 |  | $ | 135 |  | $ | - |  | $ | 2 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonqualified deferred compensation plan liabilities |  | $ | 4 |  | $ | 4 |  | $ | - |  | $ | - |  |  | $ | 4 |  | $ | 4 |  | $ | - |  | $ | - |
Total |  | $ | 4 |  | $ | 4 |  | $ | - |  | $ | - |  |  | $ | 4 |  | $ | 4 |  | $ | - |  | $ | - |
Cash Equivalents: Cash equivalents and restricted cash equivalents consist of money market funds with daily liquidity. Short-term debt instruments classified as cash equivalents or restricted cash equivalents on the consolidated balance sheets are not included since they are recorded at amortized cost. Nonqualified Deferred Compensation Plan Assets and Liabilities: The nonqualified deferred compensation plan assets consist of mutual funds, which are valued using the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in each fund. CMS Energy and Consumers value their nonqualified deferred compensation plan liabilities based on the fair values of the plan assets, as they reflect what is owed to the plan participants in accordance with their investment elections. CMS Energy and Consumers report the assets in other non‑current assets and the liabilities in other non‑current liabilities on their consolidated balance sheets. DB SERP Assets: CMS Energy and Consumers value their DB SERP assets using a market approach that incorporates quoted market prices. The DB SERP cash equivalents consist of a money market fund with daily liquidity. The DB SERP invests in mutual funds that hold primarily fixed-income instruments of varying maturities. In order to meet their investment objectives, the funds hold investment-grade debt securities, and may invest a portion of their assets in high-yield securities, foreign debt, and derivative instruments. CMS Energy and Consumers value these funds using the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in each fund. CMS Energy and Consumers report their DB SERP assets in other non‑current assets on their consolidated balance sheets. For additional details about DB SERP securities, see Note 5, Financial Instruments. Derivative Instruments: CMS Energy and Consumers value their derivative instruments using either a market approach that incorporates information from market transactions, or an income approach that discounts future expected cash flows to a present value amount. CMS Energy values its exchange-traded derivative contracts based on Level 1 quoted prices and values other derivatives using Level 2 inputs, including commodity forward prices and credit risk factors. CMS Energy and Consumers have classified certain derivatives as Level 3 since the fair value measurements incorporate assumptions that cannot be observed or confirmed through market transactions. The most significant derivatives classified as Level 3 are FTRs held by Consumers. Consumers uses FTRs to manage price risk related to electricity transmission congestion. An FTR is a financial instrument that entitles its holder to receive compensation or requires its holder to remit payment for congestion-related transmission charges. FTRs are accounted for as derivatives. Under regulatory accounting, all changes in fair value associated with FTRs are deferred as regulatory assets or liabilities until the instruments are settled. Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements. A ssets and Liabilities Measured at Fair Value on a Recurring Basis using Significant Level 3 Inputs The largest change in the fair values of Level 3 assets and liabilities at CMS Energy and Consumers during the three and nine months ended September 30, 2013 and 2012 was attributable to the FTRs.
Consumers Energy Company [Member] |
Fair Value Measurements | 4:F AIR VALUE MEASUREMENTS Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. When measuring fair value, CMS Energy and Consumers are required to incorporate all assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. A fair value hierarchy prioritizes inputs used to measure fair value according to their observability in the market. T he three levels of the fair valu e hierarchy are as follows:
· | Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
· | Level 2 inputs are observable, market-based inputs, other than Level 1 prices. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, and inputs derived from or corroborated by observable market data.
· | Level 3 inputs are unobservable inputs that reflect CMS Energy’s or Consumers’ own assumptions about how market participants would value their assets and liabilities.
To the extent possible, CMS Energy and Consumers use quoted market prices or other observable market pricing data in valuing assets and liabilities measured at fair value. If this information is unavailable, they use market-corroborated data or reasonable estimates about market participant assumptions. CMS Energy and Consumers classify fair value measurements within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement in its entirety. Assets and Liabilities Measured at Fair Value on a Recurring Basis Presented in the following table are CMS Energy’s and Consumers’ assets and liabilities, by level within the fair value hierarchy, recorded at fair value on a recurring basis:
In Millions
| September 30, 2013 |  | December 31, 2012 |
|  |  |  | Level |  |  |  |  | Level |
| Total | 1 | 2 | 3 |  | Total | 1 | 2 | 3 |
CMS Energy, including Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 100 |  | $ | 100 |  | $ | - |  | $ | - |  |  | $ | 53 |  | $ | 53 |  | $ | - |  | $ | - |
Restricted cash equivalents |  |  | 14 |  |  | 14 |  |  | - |  |  | - |  |  |  | 14 |  |  | 14 |  |  | - |  |  | - |
Nonqualified deferred compensation plan assets |  |  | 6 |  |  | 6 |  |  | - |  |  | - |  |  |  | 5 |  |  | 5 |  |  | - |  |  | - |
DB SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  |  | - |  |  | - |  |  | - |  |  | - |  |  |  | 2 |  |  | 2 |  |  | - |  |  | - |
Mutual funds |  |  | 137 |  |  | 137 |  |  | - |  |  | - |  |  |  | 126 |  |  | 126 |  |  | - |  |  | - |
Derivative instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  |  | 9 |  |  | - |  |  | 2 |  |  | 7 |  |  |  | 3 |  |  | - |  |  | - |  |  | 3 |
Total |  | $ | 266 |  | $ | 257 |  | $ | 2 |  | $ | 7 |  |  | $ | 203 |  | $ | 200 |  | $ | - |  | $ | 3 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonqualified deferred compensation plan liabilities |  | $ | 6 |  | $ | 6 |  | $ | - |  | $ | - |  |  | $ | 5 |  | $ | 5 |  | $ | - |  | $ | - |
Derivative instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  |  | 2 |  |  | - |  |  | 1 |  |  | 1 |  |  |  | 4 |  |  | - |  |  | 3 |  |  | 1 |
Total |  | $ | 8 |  | $ | 6 |  | $ | 1 |  | $ | 1 |  |  | $ | 9 |  | $ | 5 |  | $ | 3 |  | $ | 1 |
Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 84 |  | $ | 84 |  | $ | - |  | $ | - |  |  | $ | - |  | $ | - |  | $ | - |  | $ | - |
Restricted cash equivalents |  |  | 13 |  |  | 13 |  |  | - |  |  | - |  |  |  | 13 |  |  | 13 |  |  | - |  |  | - |
CMS Energy common stock |  |  | 29 |  |  | 29 |  |  | - |  |  | - |  |  |  | 32 |  |  | 32 |  |  | - |  |  | - |
Nonqualified deferred compensation plan assets |  |  | 4 |  |  | 4 |  |  | - |  |  | - |  |  |  | 4 |  |  | 4 |  |  | - |  |  | - |
DB SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  |  | - |  |  | - |  |  | - |  |  | - |  |  |  | 1 |  |  | 1 |  |  | - |  |  | - |
Mutual funds |  |  | 96 |  |  | 96 |  |  | - |  |  | - |  |  |  | 85 |  |  | 85 |  |  | - |  |  | - |
Derivative instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  |  | 6 |  |  | - |  |  | - |  |  | 6 |  |  |  | 2 |  |  | - |  |  | - |  |  | 2 |
Total |  | $ | 232 |  | $ | 226 |  | $ | - |  | $ | 6 |  |  | $ | 137 |  | $ | 135 |  | $ | - |  | $ | 2 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonqualified deferred compensation plan liabilities |  | $ | 4 |  | $ | 4 |  | $ | - |  | $ | - |  |  | $ | 4 |  | $ | 4 |  | $ | - |  | $ | - |
Total |  | $ | 4 |  | $ | 4 |  | $ | - |  | $ | - |  |  | $ | 4 |  | $ | 4 |  | $ | - |  | $ | - |
Cash Equivalents: Cash equivalents and restricted cash equivalents consist of money market funds with daily liquidity. Short-term debt instruments classified as cash equivalents or restricted cash equivalents on the consolidated balance sheets are not included since they are recorded at amortized cost. Nonqualified Deferred Compensation Plan Assets and Liabilities: The nonqualified deferred compensation plan assets consist of mutual funds, which are valued using the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in each fund. CMS Energy and Consumers value their nonqualified deferred compensation plan liabilities based on the fair values of the plan assets, as they reflect what is owed to the plan participants in accordance with their investment elections. CMS Energy and Consumers report the assets in other non‑current assets and the liabilities in other non‑current liabilities on their consolidated balance sheets. DB SERP Assets: CMS Energy and Consumers value their DB SERP assets using a market approach that incorporates quoted market prices. The DB SERP cash equivalents consist of a money market fund with daily liquidity. The DB SERP invests in mutual funds that hold primarily fixed-income instruments of varying maturities. In order to meet their investment objectives, the funds hold investment-grade debt securities, and may invest a portion of their assets in high-yield securities, foreign debt, and derivative instruments. CMS Energy and Consumers value these funds using the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in each fund. CMS Energy and Consumers report their DB SERP assets in other non‑current assets on their consolidated balance sheets. For additional details about DB SERP securities, see Note 5, Financial Instruments. Derivative Instruments: CMS Energy and Consumers value their derivative instruments using either a market approach that incorporates information from market transactions, or an income approach that discounts future expected cash flows to a present value amount. CMS Energy values its exchange-traded derivative contracts based on Level 1 quoted prices and values other derivatives using Level 2 inputs, including commodity forward prices and credit risk factors. CMS Energy and Consumers have classified certain derivatives as Level 3 since the fair value measurements incorporate assumptions that cannot be observed or confirmed through market transactions. The most significant derivatives classified as Level 3 are FTRs held by Consumers. Consumers uses FTRs to manage price risk related to electricity transmission congestion. An FTR is a financial instrument that entitles its holder to receive compensation or requires its holder to remit payment for congestion-related transmission charges. FTRs are accounted for as derivatives. Under regulatory accounting, all changes in fair value associated with FTRs are deferred as regulatory assets or liabilities until the instruments are settled. Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements. A ssets and Liabilities Measured at Fair Value on a Recurring Basis using Significant Level 3 Inputs The largest change in the fair values of Level 3 assets and liabilities at CMS Energy and Consumers during the three and nine months ended September 30, 2013 and 2012 was attributable to the FTRs.

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration