v3.25.4

Fair Value Measurements | 12 Months Ended
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Dec. 31, 2025
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] |
Fair Value Measurements | Fair 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. The three levels of the fair value 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. 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 recorded at fair value on a recurring basis:
In Millions
| CMS Energy, including Consumers |  | Consumers
December 31 | 2025 | 2024 |  | 2025 | 2024
Assets 1 |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 154 |  |  | $ | 27 |  |  |  | $ | — |  |  | $ | — |
Restricted cash equivalents |  | 106 |  |  | 75 |  |  |  | 86 |  |  | 75 |
Nonqualified deferred compensation plan assets |  | 36 |  |  | 34 |  |  |  | 27 |  |  | 25 |
Derivative instruments |  | 2 |  |  | 2 |  |  |  | 2 |  |  | 2 |
Total assets |  | $ | 298 |  |  | $ | 138 |  |  |  | $ | 115 |  |  | $ | 102 |
Liabilities 1 |  |  |  |  |  |  |  |  |
Nonqualified deferred compensation plan liabilities |  | $ | 36 |  |  | $ | 34 |  |  |  | $ | 27 |  |  | $ | 25 |
Derivative instruments |  | 3 |  |  | — |  |  |  | — |  |  | — |
Total liabilities |  | $ | 39 |  |  | $ | 34 |  |  |  | $ | 27 |  |  | $ | 25 |
1 All assets and liabilities were classified as Level 1 with the exception of derivative contracts, which were classified as Level 2 and 3. Cash Equivalents: Cash equivalents and restricted cash equivalents consist of money market funds with daily liquidity. Nonqualified Deferred Compensation Plan Assets and Liabilities: The nonqualified deferred compensation plan assets consist of mutual funds, which are bought and sold only at the discretion of plan participants. The assets are valued using the daily quoted net asset values. CMS Energy and Consumers value their nonqualified deferred compensation plan liabilities based on the fair values of the plan assets, as they reflect the amount 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. 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’s and Consumers’ derivatives are classified as Level 2 and 3. The derivatives classified as Level 2 are interest rate swaps at NorthStar Clean Energy, which are valued using market-based inputs. In February 2025, a subsidiary of NorthStar Clean Energy entered into floating-to-fixed interest rate swaps to reduce the impact of interest rate fluctuations associated with interest payments on certain future long‑term variable-rate debt. The interest rate swaps economically hedge the future variability of interest payments on debt with a notional amount of $109 million. Gains or losses on these swaps are reported in other expense on CMS Energy’s consolidated statements of income. The amount recorded in other expense was $3 million for the year ended December 31, 2025. The fair value of these swaps recorded in other non-current liabilities on CMS Energy’s consolidated balance sheets totaled $3 million at December 31, 2025. The majority of derivatives classified as Level 3 are FTRs held by Consumers. Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements. Consumers reports derivatives associated with FTRs in other current assets on its consolidated balance sheets.There was no material activity within the Level 3 category of derivatives during the periods presented.
Consumers Energy Company |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] |
Fair Value Measurements | Fair 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. The three levels of the fair value 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. 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 recorded at fair value on a recurring basis:
In Millions
| CMS Energy, including Consumers |  | Consumers
December 31 | 2025 | 2024 |  | 2025 | 2024
Assets 1 |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 154 |  |  | $ | 27 |  |  |  | $ | — |  |  | $ | — |
Restricted cash equivalents |  | 106 |  |  | 75 |  |  |  | 86 |  |  | 75 |
Nonqualified deferred compensation plan assets |  | 36 |  |  | 34 |  |  |  | 27 |  |  | 25 |
Derivative instruments |  | 2 |  |  | 2 |  |  |  | 2 |  |  | 2 |
Total assets |  | $ | 298 |  |  | $ | 138 |  |  |  | $ | 115 |  |  | $ | 102 |
Liabilities 1 |  |  |  |  |  |  |  |  |
Nonqualified deferred compensation plan liabilities |  | $ | 36 |  |  | $ | 34 |  |  |  | $ | 27 |  |  | $ | 25 |
Derivative instruments |  | 3 |  |  | — |  |  |  | — |  |  | — |
Total liabilities |  | $ | 39 |  |  | $ | 34 |  |  |  | $ | 27 |  |  | $ | 25 |
1 All assets and liabilities were classified as Level 1 with the exception of derivative contracts, which were classified as Level 2 and 3. Cash Equivalents: Cash equivalents and restricted cash equivalents consist of money market funds with daily liquidity. Nonqualified Deferred Compensation Plan Assets and Liabilities: The nonqualified deferred compensation plan assets consist of mutual funds, which are bought and sold only at the discretion of plan participants. The assets are valued using the daily quoted net asset values. CMS Energy and Consumers value their nonqualified deferred compensation plan liabilities based on the fair values of the plan assets, as they reflect the amount 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. 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’s and Consumers’ derivatives are classified as Level 2 and 3. The derivatives classified as Level 2 are interest rate swaps at NorthStar Clean Energy, which are valued using market-based inputs. In February 2025, a subsidiary of NorthStar Clean Energy entered into floating-to-fixed interest rate swaps to reduce the impact of interest rate fluctuations associated with interest payments on certain future long‑term variable-rate debt. The interest rate swaps economically hedge the future variability of interest payments on debt with a notional amount of $109 million. Gains or losses on these swaps are reported in other expense on CMS Energy’s consolidated statements of income. The amount recorded in other expense was $3 million for the year ended December 31, 2025. The fair value of these swaps recorded in other non-current liabilities on CMS Energy’s consolidated balance sheets totaled $3 million at December 31, 2025. The majority of derivatives classified as Level 3 are FTRs held by Consumers. Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements. Consumers reports derivatives associated with FTRs in other current assets on its consolidated balance sheets.There was no material activity within the Level 3 category of derivatives during the periods presented.

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