Plant, Property, and Equipment

12 Months Ended

Dec. 31, 2022

Public Utility, Property, Plant and Equipment [Line Items]

Plant, Property, and Equipment

Plant, Property, and Equipment

Presented in the following table are details of CMS Energy’s and Consumers’ plant, property, and equipment:

In Millions
December 31	Estimated Depreciable Life in Years	2022			2021
CMS Energy, including Consumers
Plant, property, and equipment, gross
Consumers	3 - 125		$	29,342		$	28,771
NorthStar Clean Energy
Independent power production1	3 - 40		1,124			1,121
Assets under finance leases2			24			—
Other	3 - 5		1			1
Plant, property, and equipment, gross			$	30,491		$	29,893
Construction work in progress			1,182			961
Accumulated depreciation and amortization			(8,960)			(8,502)
Total plant, property, and equipment3			$	22,713		$	22,352
Consumers
Plant, property, and equipment, gross
Electric
Generation	15 - 125		$	5,780		$	6,704
Distribution	15 - 75		10,590			9,815
Other	5 - 55		1,374			1,309
Assets under finance leases2			126			319
Gas
Distribution	20 - 85		6,951			6,338
Transmission	17 - 75		2,440			2,319
Underground storage facilities4	27 - 75		1,197			1,117
Other	5 - 55		835			814
Assets under finance leases2			20			13
Other non-utility property	3 - 51		29			23
Plant, property, and equipment, gross			$	29,342		$	28,771
Construction work in progress			994			915
Accumulated depreciation and amortization			(8,791)			(8,371)
Total plant, property, and equipment2			$	21,545		$	21,315

1A portion of independent power production assets are leased to others under operating leases. For information regarding CMS Energy’s operating leases of owned assets, see Note 8, Leases.

2For information regarding the amortization terms of CMS Energy’s and Consumers’ assets under finance leases, see Note 8, Leases.

3Consumers’ plant additions were $2.3 billion for the year ended December 31, 2022 and $2.4 billion for the year ended December 31, 2021. Consumers’ plant retirements, which include the impact of disallowances and transfers to held for sale, were $290 million for the year ended December 31, 2022 and $361 million

for the year ended December 31, 2021. Consumers plans to retire the J.H. Campbell 1, 2, & 3 coal-fueled electric generating units in 2025. Accordingly, in 2022, Consumers removed from total plant, property, and equipment $1.3 billion, representing the remaining book value of the three units upon their retirement, and recorded it as a regulatory asset. For additional details, see Note 2, Regulatory Matters.

4Underground storage includes base natural gas of $26 million at December 31, 2022 and 2021. Base natural gas is not subject to depreciation.

Intangible Assets: Included in net plant, property, and equipment are intangible assets. Presented in the following table are details about Consumers’ intangible assets:

In Millions
Description	Amortization Life in Years	December 31, 2022						December 31, 2021
		Gross Cost1			Accumulated Amortization			Gross Cost1			Accumulated Amortization
Consumers
Software development	3 - 15		$	846		$	593		$	840		$	592
Rights of way	50 - 85		218			61			211			60
Franchises and consents	5 - 50		16			10			16			10
Leasehold improvements	various2		9			6			9			6
Other intangibles	various		25			16			26			16
Total			$	1,114		$	686		$	1,102		$	684

1Consumers’ intangible asset additions were $116 million for the year ended December 31, 2022 and $88 million for the year ended December 31, 2021. Consumers’ intangible asset retirements were $104 million for the year ended December 31, 2022 and $91 million for the year ended December 31, 2021.

2Leasehold improvements are amortized over the life of the lease, which may change whenever the lease is renewed or extended.

Capitalization: CMS Energy and Consumers record plant, property, and equipment at original cost when placed into service. The cost includes labor, material, applicable taxes, overhead such as pension and other benefits, and AFUDC, if applicable. Consumers’ plant, property, and equipment is generally recoverable through its general ratemaking process.

With the exception of utility property for which the remaining book value has been securitized, mothballed utility property stays in rate base and continues to be depreciated at the same rate as before the mothball period. When utility property is retired or otherwise disposed of in the ordinary course of business, Consumers records the original cost to accumulated depreciation, along with associated cost of removal, net of salvage. CMS Energy and Consumers recognize gains or losses on the retirement or disposal of non‑regulated assets in income. Consumers records cost of removal collected from customers, but not spent, as a regulatory liability.

Software: CMS Energy and Consumers capitalize the costs to purchase and develop internal-use computer software. These costs are expensed evenly over the estimated useful life of the internal-use computer software. If computer software is integral to computer hardware, then its cost is capitalized and depreciated with the hardware.

AFUDC: Consumers capitalizes AFUDC on regulated major construction projects. AFUDC represents the estimated cost of debt and authorized return-on-equity funds used to finance construction additions. Consumers records the offsetting credit as a reduction of interest for the amount representing the borrowed funds component and as other income for the equity funds component on the consolidated

statements of income. When construction is completed and the property is placed in service, Consumers depreciates and recovers the capitalized AFUDC from customers over the life of the related asset. Presented in the following table are Consumers’ average AFUDC capitalization rates:

Years Ended December 31	2022		2021		2020
Electric	6.2	%	6.2	%	6.9	%
Gas	5.6		5.6		5.7

Assets Under Finance Leases: Presented in the following table are further details about changes in CMS Energy’s and Consumers’ assets under finance leases:

In Millions
Years Ended December 31	2022			2021
CMS Energy, including Consumers
Balance at beginning of period		$	332		$	336
Additions		44			—
Net retirements and other adjustments		(206)			(4)
Balance at end of period		$	170		$	332
Consumers
Balance at beginning of period		$	332		$	336
Additions		20			—
Net retirements and other adjustments		(206)			(4)
Balance at end of period		$	146		$	332

Assets under finance leases are presented as gross amounts. CMS Energy and Consumers’ accumulated amortization of assets under finance leases was $88 million at December 31, 2022 and $272 million at December 31, 2021.

Depreciation and Amortization: Presented in the following table are further details about CMS Energy’s and Consumers’ accumulated depreciation and amortization:

In Millions
Years Ended December 31	2022			2021
CMS Energy, including Consumers
Utility plant assets		$	8,785		$	8,366
Non-utility plant assets		175			136
Consumers
Utility plant assets		$	8,785		$	8,366
Non-utility plant assets		6			5

Consumers depreciates utility property on an asset-group basis, in which it applies a single MPSC-approved depreciation rate to the gross investment in a particular class of property within the electric and

gas segments. Consumers performs depreciation studies periodically to determine appropriate group lives. Presented in the following table are the composite depreciation rates for Consumers’ segment properties:

Years Ended December 31	2022		2021		2020
Electric utility property	3.7	%	3.9	%	3.9	%
Gas utility property	2.9		2.9		2.9
Other property	8.9		9.4		9.8

CMS Energy and Consumers record property repairs and minor property replacement as maintenance expense. CMS Energy and Consumers record planned major maintenance activities as operating expense unless the cost represents the acquisition of additional long-lived assets or the replacement of an existing long-lived asset.

Presented in the following table are the components of CMS Energy’s and Consumers’ depreciation and amortization expense:

In Millions
Years Ended December 31	2022			2021			2020
CMS Energy, including Consumers
Depreciation expense – plant, property, and equipment		$	990		$	975		$	901
Amortization expense
Software		103			108			112
Other intangible assets		5			4			4
Securitized regulatory assets		28			27			26
Total depreciation and amortization expense		$	1,126		$	1,114		$	1,043
Consumers
Depreciation expense – plant, property, and equipment		$	952		$	938		$	881
Amortization expense
Software		103			108			112
Other intangible assets		5			4			4
Securitized regulatory assets		28			27			26
Total depreciation and amortization expense		$	1,088		$	1,077		$	1,023

Presented in the following table is Consumers’ estimated amortization expense on intangible assets for each of the next five years:

In Millions
	2023			2024			2025			2026			2027
Consumers
Intangible asset amortization expense		$	96		$	82		$	80		$	76		$	64

Jointly Owned Regulated Utility Facilities

Presented in the following table are Consumers’ investments in jointly owned regulated utility facilities at December 31, 2022:

In Millions, Except Ownership Share
	J.H. Campbell Unit 3				Ludington				Other
Ownership share		93.3		%		51.0		%		various
Utility plant in service		$	1,767			$	591			$	412
Accumulated depreciation		(816)				(210)				(93)
Construction work in progress		10				21				21
Net investment		$	961			$	402			$	340

Consumers includes its share of the direct expenses of the jointly owned plants in operating expenses. Consumers shares operation, maintenance, and other expenses of these jointly owned utility facilities in proportion to each participant’s undivided ownership interest. Consumers is required to provide only its share of financing for the jointly owned utility facilities.

Consumers Energy Company

Public Utility, Property, Plant and Equipment [Line Items]

Plant, Property, and Equipment

Plant, Property, and Equipment

Presented in the following table are details of CMS Energy’s and Consumers’ plant, property, and equipment:

In Millions
December 31	Estimated Depreciable Life in Years	2022			2021
CMS Energy, including Consumers
Plant, property, and equipment, gross
Consumers	3 - 125		$	29,342		$	28,771
NorthStar Clean Energy
Independent power production1	3 - 40		1,124			1,121
Assets under finance leases2			24			—
Other	3 - 5		1			1
Plant, property, and equipment, gross			$	30,491		$	29,893
Construction work in progress			1,182			961
Accumulated depreciation and amortization			(8,960)			(8,502)
Total plant, property, and equipment3			$	22,713		$	22,352
Consumers
Plant, property, and equipment, gross
Electric
Generation	15 - 125		$	5,780		$	6,704
Distribution	15 - 75		10,590			9,815
Other	5 - 55		1,374			1,309
Assets under finance leases2			126			319
Gas
Distribution	20 - 85		6,951			6,338
Transmission	17 - 75		2,440			2,319
Underground storage facilities4	27 - 75		1,197			1,117
Other	5 - 55		835			814
Assets under finance leases2			20			13
Other non-utility property	3 - 51		29			23
Plant, property, and equipment, gross			$	29,342		$	28,771
Construction work in progress			994			915
Accumulated depreciation and amortization			(8,791)			(8,371)
Total plant, property, and equipment2			$	21,545		$	21,315

1A portion of independent power production assets are leased to others under operating leases. For information regarding CMS Energy’s operating leases of owned assets, see Note 8, Leases.

2For information regarding the amortization terms of CMS Energy’s and Consumers’ assets under finance leases, see Note 8, Leases.

3Consumers’ plant additions were $2.3 billion for the year ended December 31, 2022 and $2.4 billion for the year ended December 31, 2021. Consumers’ plant retirements, which include the impact of disallowances and transfers to held for sale, were $290 million for the year ended December 31, 2022 and $361 million

for the year ended December 31, 2021. Consumers plans to retire the J.H. Campbell 1, 2, & 3 coal-fueled electric generating units in 2025. Accordingly, in 2022, Consumers removed from total plant, property, and equipment $1.3 billion, representing the remaining book value of the three units upon their retirement, and recorded it as a regulatory asset. For additional details, see Note 2, Regulatory Matters.

4Underground storage includes base natural gas of $26 million at December 31, 2022 and 2021. Base natural gas is not subject to depreciation.

Intangible Assets: Included in net plant, property, and equipment are intangible assets. Presented in the following table are details about Consumers’ intangible assets:

In Millions
Description	Amortization Life in Years	December 31, 2022						December 31, 2021
		Gross Cost1			Accumulated Amortization			Gross Cost1			Accumulated Amortization
Consumers
Software development	3 - 15		$	846		$	593		$	840		$	592
Rights of way	50 - 85		218			61			211			60
Franchises and consents	5 - 50		16			10			16			10
Leasehold improvements	various2		9			6			9			6
Other intangibles	various		25			16			26			16
Total			$	1,114		$	686		$	1,102		$	684

1Consumers’ intangible asset additions were $116 million for the year ended December 31, 2022 and $88 million for the year ended December 31, 2021. Consumers’ intangible asset retirements were $104 million for the year ended December 31, 2022 and $91 million for the year ended December 31, 2021.

2Leasehold improvements are amortized over the life of the lease, which may change whenever the lease is renewed or extended.

Capitalization: CMS Energy and Consumers record plant, property, and equipment at original cost when placed into service. The cost includes labor, material, applicable taxes, overhead such as pension and other benefits, and AFUDC, if applicable. Consumers’ plant, property, and equipment is generally recoverable through its general ratemaking process.

With the exception of utility property for which the remaining book value has been securitized, mothballed utility property stays in rate base and continues to be depreciated at the same rate as before the mothball period. When utility property is retired or otherwise disposed of in the ordinary course of business, Consumers records the original cost to accumulated depreciation, along with associated cost of removal, net of salvage. CMS Energy and Consumers recognize gains or losses on the retirement or disposal of non‑regulated assets in income. Consumers records cost of removal collected from customers, but not spent, as a regulatory liability.

Software: CMS Energy and Consumers capitalize the costs to purchase and develop internal-use computer software. These costs are expensed evenly over the estimated useful life of the internal-use computer software. If computer software is integral to computer hardware, then its cost is capitalized and depreciated with the hardware.

AFUDC: Consumers capitalizes AFUDC on regulated major construction projects. AFUDC represents the estimated cost of debt and authorized return-on-equity funds used to finance construction additions. Consumers records the offsetting credit as a reduction of interest for the amount representing the borrowed funds component and as other income for the equity funds component on the consolidated

statements of income. When construction is completed and the property is placed in service, Consumers depreciates and recovers the capitalized AFUDC from customers over the life of the related asset. Presented in the following table are Consumers’ average AFUDC capitalization rates:

Years Ended December 31	2022		2021		2020
Electric	6.2	%	6.2	%	6.9	%
Gas	5.6		5.6		5.7

Assets Under Finance Leases: Presented in the following table are further details about changes in CMS Energy’s and Consumers’ assets under finance leases:

In Millions
Years Ended December 31	2022			2021
CMS Energy, including Consumers
Balance at beginning of period		$	332		$	336
Additions		44			—
Net retirements and other adjustments		(206)			(4)
Balance at end of period		$	170		$	332
Consumers
Balance at beginning of period		$	332		$	336
Additions		20			—
Net retirements and other adjustments		(206)			(4)
Balance at end of period		$	146		$	332

Assets under finance leases are presented as gross amounts. CMS Energy and Consumers’ accumulated amortization of assets under finance leases was $88 million at December 31, 2022 and $272 million at December 31, 2021.

Depreciation and Amortization: Presented in the following table are further details about CMS Energy’s and Consumers’ accumulated depreciation and amortization:

In Millions
Years Ended December 31	2022			2021
CMS Energy, including Consumers
Utility plant assets		$	8,785		$	8,366
Non-utility plant assets		175			136
Consumers
Utility plant assets		$	8,785		$	8,366
Non-utility plant assets		6			5

Consumers depreciates utility property on an asset-group basis, in which it applies a single MPSC-approved depreciation rate to the gross investment in a particular class of property within the electric and

gas segments. Consumers performs depreciation studies periodically to determine appropriate group lives. Presented in the following table are the composite depreciation rates for Consumers’ segment properties:

Years Ended December 31	2022		2021		2020
Electric utility property	3.7	%	3.9	%	3.9	%
Gas utility property	2.9		2.9		2.9
Other property	8.9		9.4		9.8

CMS Energy and Consumers record property repairs and minor property replacement as maintenance expense. CMS Energy and Consumers record planned major maintenance activities as operating expense unless the cost represents the acquisition of additional long-lived assets or the replacement of an existing long-lived asset.

Presented in the following table are the components of CMS Energy’s and Consumers’ depreciation and amortization expense:

In Millions
Years Ended December 31	2022			2021			2020
CMS Energy, including Consumers
Depreciation expense – plant, property, and equipment		$	990		$	975		$	901
Amortization expense
Software		103			108			112
Other intangible assets		5			4			4
Securitized regulatory assets		28			27			26
Total depreciation and amortization expense		$	1,126		$	1,114		$	1,043
Consumers
Depreciation expense – plant, property, and equipment		$	952		$	938		$	881
Amortization expense
Software		103			108			112
Other intangible assets		5			4			4
Securitized regulatory assets		28			27			26
Total depreciation and amortization expense		$	1,088		$	1,077		$	1,023

Presented in the following table is Consumers’ estimated amortization expense on intangible assets for each of the next five years:

In Millions
	2023			2024			2025			2026			2027
Consumers
Intangible asset amortization expense		$	96		$	82		$	80		$	76		$	64

Jointly Owned Regulated Utility Facilities

Presented in the following table are Consumers’ investments in jointly owned regulated utility facilities at December 31, 2022:

In Millions, Except Ownership Share
	J.H. Campbell Unit 3				Ludington				Other
Ownership share		93.3		%		51.0		%		various
Utility plant in service		$	1,767			$	591			$	412
Accumulated depreciation		(816)				(210)				(93)
Construction work in progress		10				21				21
Net investment		$	961			$	402			$	340

Consumers includes its share of the direct expenses of the jointly owned plants in operating expenses. Consumers shares operation, maintenance, and other expenses of these jointly owned utility facilities in proportion to each participant’s undivided ownership interest. Consumers is required to provide only its share of financing for the jointly owned utility facilities.