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Financial Instruments | 12 Months Ended
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Dec. 31, 2016
Financial Instruments | 7:F inancial I nstruments Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value. The table excludes cash, cash equivalents, short-term financial instruments, and trade accounts receivable and payable whose carrying amounts approximate their fair values. For information about assets and liabilities recorded at fair value and for additional details regarding the fair value hierarchy, see Note 6, Fair Value Measurements.
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﻿In Millions
﻿ | December 31, 2016 |  | December 31, 2015 |
﻿ |  | Fair Value |  |  | Fair Value |
﻿ | Carrying |  |  |  | Level |  | Carrying |  |  |  | Level |
﻿ | Amount | Total | 1 | 2 | 3 |  | Amount | Total | 1 | 2 | 3 |
﻿CMS Energy, including Consumers |
﻿Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Long-term receivables 1 |  | $ | 22 |  | $ | 22 |  | $ | - |  | $ | - |  | $ | 22 |  |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |
﻿Notes receivable 2 |  |  | 1,326 |  |  | 1,415 |  |  | - |  |  | - |  |  | 1,415 |  |  |  | 1,161 |  |  | 1,228 |  |  | - |  |  | - |  |  | 1,228 |
﻿Securities held to maturity |  |  | 13 |  |  | 13 |  |  | - |  |  | 13 |  |  | - |  |  |  | 11 |  |  | 11 |  |  | - |  |  | 11 |  |  | - |
﻿Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Long-term debt 3 |  |  | 9,504 |  |  | 9,953 |  |  | - |  |  | 8,990 |  |  | 963 |  |  |  | 9,084 |  |  | 9,599 |  |  | - |  |  | 8,648 |  |  | 951 |
﻿Long-term payables 4 |  |  | 17 |  |  | 17 |  |  | - |  |  | - |  |  | 17 |  |  |  | 14 |  |  | 14 |  |  | - |  |  | - |  |  | 14 |
﻿Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Long-term receivables 1 |  | $ | 22 |  | $ | 22 |  | $ | - |  | $ | - |  | $ | 22 |  |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |
﻿Notes receivable 5 |  |  | 45 |  |  | 45 |  |  | - |  |  | - |  |  | 45 |  |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
﻿Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Long-term debt 6 |  |  | 5,628 |  |  | 5,903 |  |  | - |  |  | 4,940 |  |  | 963 |  |  |  | 5,381 |  |  | 5,684 |  |  | - |  |  | 4,733 |  |  | 951 |
﻿
| 1 |  | Includes current accounts receivable of $12 million at December 31, 2016.
| 2 |  | Includes current portion of notes receivable of $219 million at December 31, 2016 and $144 million at December 31, 2015.
| 3 |  | Includes current portion of long-term debt of $864 million at December 31, 2016 and $684 million at December 31, 2015.
| 4 |  | Includes current portion of long-term payables of $1 million at December 31, 2016 and 2015.
| 5 |  | Includes current portion of notes receivable of $29 million at Decemb er 31, 2 016.
| 6 |  | Includes current portion of long-term debt of $375 million at December 31, 2016 and $198 million at December 31, 2015.
At CMS Energy, n otes receivable consist primarily 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. 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 and models may be used that rely on assumptions that cannot be observed or confirmed through market transactions. The effects of third-party credit enhancements are excluded from the fair value measurements of long-term debt. At December 31, 2016 and 2015, 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 classified as available for sale or held to maturity:
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﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿In Millions
﻿ | December 31, 2016 |  | December 31, 2015 |
﻿ |  | Unrealized | Unrealized | Fair |  |  | Unrealized | Unrealized | Fair |
﻿ | Cost | Gains | Losses | Value |  | Cost | Gains | Losses | Value |
﻿CMS Energy, including Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿DB SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Mutual funds |  | $ | 141 |  | $ | - |  | $ | - |  | $ | 141 |  |  | $ | 152 |  | $ | - |  | $ | 6 |  | $ | 146 |
﻿Held to maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Debt securities |  |  | 13 |  |  | - |  |  | - |  |  | 13 |  |  |  | 11 |  |  | - |  |  | - |  |  | 11 |
﻿Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿DB SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Mutual funds |  | $ | 102 |  | $ | - |  | $ | - |  | $ | 102 |  |  | $ | 108 |  | $ | - |  | $ | 4 |  | $ | 104 |
﻿CMS Energy common stock |  |  | 4 |  |  | 29 |  |  | - |  |  | 33 |  |  |  | 4 |  |  | 25 |  |  | - |  |  | 29 |
﻿ The mutual funds classified as available for sale hold primarily fixed-income instruments of varying maturities. Debt securities classified as held to maturity consist primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank. CMS Energy and Consumers determined that the unrealized losses on the mutual funds in the DB SERP were other than temporary at December 31, 2016. Accordingly, CMS Energy reclassified unrealized losses of $5 million ($3 million, net of tax) from AOCI to other expense on the consolidated statements of income and established a new cost basis of $141 million for these investments, which was equal to fair value at December 31, 2016. Consumers reclassified net unrealized losses of $4 million ($2 million, net of tax) from AOCI to other expense on the consolidated statements of income and established a new cost basis of $102 million for these investments, which was equal to fair value at December 31, 2016. Presented in the following table is a summary of the sales activity for CMS Energy’s and Consumers’ investment securities:
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﻿ |  |  |  |  |  |  |  |  |  |
﻿In Millions
﻿Years Ended December 31 | 2016 | 2015 | 2014 |
﻿CMS Energy, including Consumers |  |  |  |  |  |  |  |  |  |
﻿Proceeds from sales of investment securities |  | $ | 6 |  | $ | 3 |  | $ | 8 |
﻿Consumers |  |  |  |  |  |  |  |  |  |
﻿Proceeds from sales of investment securities |  | $ | 4 |  | $ | 2 |  | $ | 6 |
﻿ The sales proceeds for all periods represent sales of investments that were held within the DB SERP and classified as available for sale. Realized gains and losses on the sales were insignificant for CMS Energy and Consumers during each period. Consumers recognized a gain of $9 million in 2015 from transferring shares of CMS Energy common stock to a related charitable foundation. The gains reflected the excess of fair value over cost of the stock donated and were recorded in other income on Consumers’ consolidated statements of income. The gains were eliminated on CMS Energy’s consolidated statements of income. Consumers did not transfer shares in 2016 or 2014.
Consumers Energy Company [Member] |
Financial Instruments | 7:F inancial I nstruments Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value. The table excludes cash, cash equivalents, short-term financial instruments, and trade accounts receivable and payable whose carrying amounts approximate their fair values. For information about assets and liabilities recorded at fair value and for additional details regarding the fair value hierarchy, see Note 6, Fair Value Measurements.
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﻿In Millions
﻿ | December 31, 2016 |  | December 31, 2015 |
﻿ |  | Fair Value |  |  | Fair Value |
﻿ | Carrying |  |  |  | Level |  | Carrying |  |  |  | Level |
﻿ | Amount | Total | 1 | 2 | 3 |  | Amount | Total | 1 | 2 | 3 |
﻿CMS Energy, including Consumers |
﻿Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Long-term receivables 1 |  | $ | 22 |  | $ | 22 |  | $ | - |  | $ | - |  | $ | 22 |  |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |
﻿Notes receivable 2 |  |  | 1,326 |  |  | 1,415 |  |  | - |  |  | - |  |  | 1,415 |  |  |  | 1,161 |  |  | 1,228 |  |  | - |  |  | - |  |  | 1,228 |
﻿Securities held to maturity |  |  | 13 |  |  | 13 |  |  | - |  |  | 13 |  |  | - |  |  |  | 11 |  |  | 11 |  |  | - |  |  | 11 |  |  | - |
﻿Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Long-term debt 3 |  |  | 9,504 |  |  | 9,953 |  |  | - |  |  | 8,990 |  |  | 963 |  |  |  | 9,084 |  |  | 9,599 |  |  | - |  |  | 8,648 |  |  | 951 |
﻿Long-term payables 4 |  |  | 17 |  |  | 17 |  |  | - |  |  | - |  |  | 17 |  |  |  | 14 |  |  | 14 |  |  | - |  |  | - |  |  | 14 |
﻿Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Long-term receivables 1 |  | $ | 22 |  | $ | 22 |  | $ | - |  | $ | - |  | $ | 22 |  |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |
﻿Notes receivable 5 |  |  | 45 |  |  | 45 |  |  | - |  |  | - |  |  | 45 |  |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
﻿Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Long-term debt 6 |  |  | 5,628 |  |  | 5,903 |  |  | - |  |  | 4,940 |  |  | 963 |  |  |  | 5,381 |  |  | 5,684 |  |  | - |  |  | 4,733 |  |  | 951 |
﻿
| 1 |  | Includes current accounts receivable of $12 million at December 31, 2016.
| 2 |  | Includes current portion of notes receivable of $219 million at December 31, 2016 and $144 million at December 31, 2015.
| 3 |  | Includes current portion of long-term debt of $864 million at December 31, 2016 and $684 million at December 31, 2015.
| 4 |  | Includes current portion of long-term payables of $1 million at December 31, 2016 and 2015.
| 5 |  | Includes current portion of notes receivable of $29 million at Decemb er 31, 2 016.
| 6 |  | Includes current portion of long-term debt of $375 million at December 31, 2016 and $198 million at December 31, 2015.
At CMS Energy, n otes receivable consist primarily 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. 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 and models may be used that rely on assumptions that cannot be observed or confirmed through market transactions. The effects of third-party credit enhancements are excluded from the fair value measurements of long-term debt. At December 31, 2016 and 2015, 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 classified as available for sale or held to maturity:
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﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿In Millions
﻿ | December 31, 2016 |  | December 31, 2015 |
﻿ |  | Unrealized | Unrealized | Fair |  |  | Unrealized | Unrealized | Fair |
﻿ | Cost | Gains | Losses | Value |  | Cost | Gains | Losses | Value |
﻿CMS Energy, including Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿DB SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Mutual funds |  | $ | 141 |  | $ | - |  | $ | - |  | $ | 141 |  |  | $ | 152 |  | $ | - |  | $ | 6 |  | $ | 146 |
﻿Held to maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Debt securities |  |  | 13 |  |  | - |  |  | - |  |  | 13 |  |  |  | 11 |  |  | - |  |  | - |  |  | 11 |
﻿Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿DB SERP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Mutual funds |  | $ | 102 |  | $ | - |  | $ | - |  | $ | 102 |  |  | $ | 108 |  | $ | - |  | $ | 4 |  | $ | 104 |
﻿CMS Energy common stock |  |  | 4 |  |  | 29 |  |  | - |  |  | 33 |  |  |  | 4 |  |  | 25 |  |  | - |  |  | 29 |
﻿ The mutual funds classified as available for sale hold primarily fixed-income instruments of varying maturities. Debt securities classified as held to maturity consist primarily of mortgage-backed securities and Utah Housing Corporation bonds held by EnerBank. CMS Energy and Consumers determined that the unrealized losses on the mutual funds in the DB SERP were other than temporary at December 31, 2016. Accordingly, CMS Energy reclassified unrealized losses of $5 million ($3 million, net of tax) from AOCI to other expense on the consolidated statements of income and established a new cost basis of $141 million for these investments, which was equal to fair value at December 31, 2016. Consumers reclassified net unrealized losses of $4 million ($2 million, net of tax) from AOCI to other expense on the consolidated statements of income and established a new cost basis of $102 million for these investments, which was equal to fair value at December 31, 2016. Presented in the following table is a summary of the sales activity for CMS Energy’s and Consumers’ investment securities:
﻿ |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |
﻿In Millions
﻿Years Ended December 31 | 2016 | 2015 | 2014 |
﻿CMS Energy, including Consumers |  |  |  |  |  |  |  |  |  |
﻿Proceeds from sales of investment securities |  | $ | 6 |  | $ | 3 |  | $ | 8 |
﻿Consumers |  |  |  |  |  |  |  |  |  |
﻿Proceeds from sales of investment securities |  | $ | 4 |  | $ | 2 |  | $ | 6 |
﻿ The sales proceeds for all periods represent sales of investments that were held within the DB SERP and classified as available for sale. Realized gains and losses on the sales were insignificant for CMS Energy and Consumers during each period. Consumers recognized a gain of $9 million in 2015 from transferring shares of CMS Energy common stock to a related charitable foundation. The gains reflected the excess of fair value over cost of the stock donated and were recorded in other income on Consumers’ consolidated statements of income. The gains were eliminated on CMS Energy’s consolidated statements of income. Consumers did not transfer shares in 2016 or 2014.

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