Leases

12 Months Ended

Dec. 31, 2025

Lessee

CMS Energy and Consumers lease various assets from third parties, including coal-carrying railcars, real estate, service vehicles, and gas pipeline capacity. In addition, CMS Energy and Consumers account for several of their PPAs as leases.

CMS Energy and Consumers do not record right-of-use assets or lease liabilities on their consolidated balance sheets for rentals with lease terms of 12 months or less, most of which are for the lease of real estate and service vehicles. Lease expense for these rentals is recognized on a straight-line basis over the lease term.

CMS Energy and Consumers include future payments for all renewal options, fair market value extensions, and buyout provisions reasonably certain of exercise in their measurement of lease right-of-use assets and lease liabilities. In addition, certain leases for service vehicles contain end-of-lease adjustment clauses based on proceeds received from the sale or disposition of the vehicles. CMS Energy and Consumers also include executory costs in the measurement of their right-of-use assets and lease liabilities, except for maintenance costs related to their coal-carrying railcar leases.

Most of Consumers’ PPAs contain provisions at the end of the initial contract terms to renew the agreements annually under mutually agreed‑upon terms at the time of renewal. Energy and capacity payments that vary depending on quantities delivered are recognized as variable lease costs when incurred. Consumers accounts for a PPA with one of CMS Energy’s equity method subsidiaries as a finance lease.

Presented in the following table is information about CMS Energy’s and Consumers’ lease right-of-use assets and lease liabilities:


In Millions, Except as Noted
	CMS Energy, including Consumers								Consumers
December 31	2025				2024				2025				2024
Operating leases
Right-of-use assets1		$	22			$	24			$	18			$	20
Lease liabilities
Current lease liabilities2		3				3				3				3
Non-current lease liabilities3		19				21				15				17
Finance leases
Right-of-use assets		140				119				90				76
Lease liabilities4
Current lease liabilities		6				4				6				4
Non-current lease liabilities		135				112				81				69
Weighted-average remaining lease term (in years)
Operating leases		20				20				20				19
Finance leases		24				26				19				22
Weighted-average discount rate
Operating leases		5.3		%		5.3		%		5.4		%		5.4		%
Finance leases5		5.9		%		5.8		%		4.9		%		4.8		%

1CMS Energy’s and Consumers’ operating right-of-use lease assets are reported as other non‑current assets on their consolidated balance sheets.

2The current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other current liabilities on their consolidated balance sheets.

3The non‑current portion of CMS Energy’s and Consumers’ operating lease liabilities are reported as other non‑current liabilities on their consolidated balance sheets.

4Includes related-party lease liabilities of $22 million, of which $1 million was current, at December 31, 2025 and 2024.

5This rate excludes the impact of Consumers’ pipeline agreements and long-term PPAs accounted for as finance leases. The required capacity payments under these agreements, when compared to the underlying fair value of the leased assets, result in effective interest rates that exceed market rates for leases with similar terms.

CMS Energy and Consumers report operating, variable, and short-term lease costs as operating expenses on their consolidated statements of income, except for certain amounts that may be capitalized to other assets. Presented in the following table is a summary of CMS Energy’s and Consumers’ total lease costs:


In Millions
Years Ended December 31	2025			2024
CMS Energy, including Consumers
Operating lease costs		$	4		$	6
Finance lease costs
Amortization of right-of-use assets		8			6
Interest on lease liabilities		18			16
Variable lease costs		115			107
Short-term lease costs		25			13
Total lease costs		$	170		$	148
Consumers
Operating lease costs		$	4		$	5
Finance lease costs
Amortization of right-of-use assets		6			5
Interest on lease liabilities		14			13
Variable lease costs		115			107
Short-term lease costs		24			12
Total lease costs		$	163		$	142

Presented in the following table is supplemental cash flow information related to CMS Energy’s and Consumers’ lease liabilities:


In Millions
Years Ended December 31	2025			2024
CMS Energy, including Consumers
Cash paid for amounts included in the measurement of lease liabilities
Cash used in operating activities for operating leases		$	4		$	6
Cash used in operating activities for finance leases		17			15
Cash used in financing activities for finance leases		5			6
Lease liabilities arising from obtaining right-of-use assets
Operating leases		1			3
Finance leases		22			55
Consumers
Cash paid for amounts included in the measurement of lease liabilities
Cash used in operating activities for operating leases		$	4		$	5
Cash used in operating activities for finance leases		14			13
Cash used in financing activities for finance leases		6			5
Lease liabilities arising from obtaining right-of-use assets
Operating leases		1			1
Finance leases		22			34

Presented in the following table are the minimum rental commitments under CMS Energy’s and Consumers’ non‑cancelable leases:


In Millions
				Finance Leases
December 31, 2025	Operating Leases			Pipelines and PPAs			Land and Other			Total
CMS Energy, including Consumers
2026		$	4		$	17		$	6		$	23
2027		2			17			6			23
2028		2			17			5			22
2029		2			17			6			23
2030		1			17			6			23
2031 and thereafter		27			2			200			202
Total minimum lease payments		$	38		$	87		$	229		$	316
Less discount		16			42			133			175
Present value of minimum lease payments		$	22		$	45		$	96		$	141
Consumers
2026		$	4		$	17		$	3		$	20
2027		2			17			3			20
2028		1			17			2			19
2029		1			17			2			19
2030		1			17			2			19
2031 and thereafter		22			2			72			74
Total minimum lease payments		$	31		$	87		$	84		$	171
Less discount		13			42			42			84
Present value of minimum lease payments		$	18		$	45		$	42		$	87

Lessor

CMS Energy and Consumers are the lessor under power sales and natural gas delivery agreements that are accounted for as leases.

CMS Energy has power sales agreements that are accounted for as operating leases. In addition to fixed payments, these agreements have variable payments based on energy delivered. For the year ended December 31, 2025, lease revenue from these power sales agreements was $149 million, which included variable lease payments of $105 million. For the year ended December 31, 2024, lease revenue from these power sales agreements was $105 million, which included variable lease payments of $61 million. These non-cancelable operating leases expire in 2026; remaining minimum rental payments amount to $18 million.

Consumers has a natural gas transportation agreement with a subsidiary of CMS Energy that extends through 2038, related to a pipeline owned by Consumers. This agreement is accounted for as a direct finance lease and will automatically extend annually unless terminated by either party. The effects of the lease are eliminated on CMS Energy’s consolidated financial statements.

Minimum rental payments to be received under Consumers’ direct financing lease are $1 million for each of the next five years and $6 million for the years thereafter. The lease receivable was $5 million as of December 31, 2025, which does not include unearned income of $5 million.

Consumers Energy Company

Leases [Line Items]

Leases