Form 10-Q CMS ENERGY CORP For: Sep 30

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

CMS Energy Corporation:  Yes x     No o   Consumers Energy Company:  Yes x     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

CMS Energy Corporation:  Yes x     No o   Consumers Energy Company:  Yes x     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

CMS Energy Corporation:  Yes o    No x   Consumers Energy Company:  Yes o    No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock at October 13, 2015:

CMS Energy Corporation:

Consumers Energy Company:

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CMS Energy Corporation

Consumers Energy Company

Quarterly Reports on Form 10-Q to the Securities and Exchange Commission for the Period Ended

September 30, 2015

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GLOSSARY

Certain terms used in the text and financial statements are defined below.

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FILING FORMAT

This combined Form 10-Q is separately filed by CMS Energy and Consumers.  Information in this combined Form 10-Q relating to each individual registrant is filed by such registrant on its own behalf.  Consumers makes no representation regarding information relating to any other companies affiliated with CMS Energy other than its own subsidiaries.  None of CMS Energy, CMS Enterprises, nor any of CMS Energy’s other subsidiaries (other than Consumers) has any obligation in respect of Consumers’ debt securities and holders of such debt securities should not consider the financial resources or results of operations of CMS Energy, CMS Enterprises, nor any of CMS Energy’s other subsidiaries (other than Consumers and its own subsidiaries (in relevant circumstances)) in making a decision with respect to Consumers’ debt securities.  Similarly, neither Consumers nor any other subsidiary of CMS Energy has any obligation in respect of debt securities of CMS Energy.

This report should be read in its entirety.  No one section of this report deals with all aspects of the subject matter of this report.  This report should be read in conjunction with the consolidated financial statements and related notes and with MD&A included in the 2014 Form 10-K.

AVAILABLE INFORMATION

CMS Energy routinely posts important information on its website and considers the Investor Relations section, www.cmsenergy.com/investor-relations, a channel of distribution.  This website information is not incorporated by reference herein.

FORWARD-LOOKING STATEMENTS AND INFORMATION

This Form 10-Q and other CMS Energy and Consumers disclosures may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.  The use of “might,” “may,” “could,” “should,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “forecasts,” “predicts,” “assumes,” and other similar words is intended to identify forward-looking statements that involve risk and uncertainty.  This discussion of potential risks and uncertainties is designed to highlight important factors that may impact CMS Energy’s and Consumers’ businesses and financial outlook.  CMS Energy and Consumers have no obligation to update or revise forward-looking statements regardless of whether new information, future events, or any other factors affect the information contained in the statements.  These forward-looking statements are subject to various factors that could cause CMS Energy’s and Consumers’ actual results to differ materially from the results anticipated in these statements.  These factors include, but are not limited to, the following, all of which are potentially significant:

·                 the impact of new regulation by the MPSC or FERC and other applicable governmental proceedings and regulations, including any associated impact on electric or gas rates or rate structures;

·                 potentially adverse regulatory treatment or failure to receive timely regulatory orders affecting Consumers that are or could come before the MPSC, FERC, or other governmental authorities;

·                 changes in the performance of or regulations applicable to MISO, METC, pipelines, railroads, vessels, or other service providers that CMS Energy, Consumers, or any of their affiliates rely on to serve their customers;

·                 the adoption of federal or state laws or regulations or changes in applicable laws, rules, regulations, principles, or practices, or in their interpretation, including those related to energy policy and ROA, gas pipeline safety, energy efficiency, the environment, regulation or deregulation, health care reforms (including the Health Care Acts), taxes, accounting matters,

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climate change, air emissions, potential effects of the Dodd-Frank Act, and other business issues that could have an impact on CMS Energy’s, Consumers’, or any of their affiliates’ businesses or financial results;

·                 potentially adverse regulatory or legal interpretations or decisions regarding environmental matters, or delayed regulatory treatment or permitting decisions that are or could come before the MDEQ, EPA, and/or U.S. Army Corps of Engineers, and potential environmental remediation costs associated with these interpretations or decisions, including those that may affect Bay Harbor or Consumers’ RMRR classification under NSR regulations;

·                 changes in energy markets, including availability and price of electric capacity and the timing and extent of changes in commodity prices and availability and deliverability of coal, natural gas, natural gas liquids, electricity, oil, and certain related products;

·                 the price of CMS Energy common stock, the credit ratings of CMS Energy and Consumers, capital and financial market conditions, and the effect of these market conditions on CMS Energy’s and Consumers’ interest costs and access to the capital markets, including availability of financing to CMS Energy, Consumers, or any of their affiliates;

·                 the investment performance of the assets of CMS Energy’s and Consumers’ pension and benefit plans, the discount rates used in calculating the plans’ obligations, and the resulting impact on future funding requirements;

·                 the impact of the economy, particularly in Michigan, and potential future volatility in the financial and credit markets on CMS Energy’s, Consumers’, or any of their affiliates’ revenues, ability to collect accounts receivable from customers, or cost and availability of capital;

·                 changes in the economic and financial viability of CMS Energy’s and Consumers’ suppliers, customers, and other counterparties and the continued ability of these third parties, including those in bankruptcy, to meet their obligations to CMS Energy and Consumers;

·                 population changes in the geographic areas where CMS Energy and Consumers conduct business;

·                 national, regional, and local economic, competitive, and regulatory policies, conditions, and developments, including municipal bankruptcy filings;

·                 loss of customer demand for electric generation supply to alternative energy suppliers or to increased use of distributed generation;

·                 federal regulation of electric sales and transmission of electricity, including periodic re-examination by federal regulators of CMS Energy’s and Consumers’ market-based sales authorizations in wholesale power markets without price restrictions;

·                 the impact of credit markets, economic conditions, and any new banking regulations on EnerBank;

·                 the availability, cost, coverage, and terms of insurance, the stability of insurance providers, and the ability of Consumers to recover the costs of any insurance from customers;

·                 the effectiveness of CMS Energy’s and Consumers’ risk management policies, procedures, and strategies, including strategies to hedge risk related to future prices of electricity, natural gas, and other energy-related commodities;

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·                 factors affecting development of electric generation projects and gas and electric distribution infrastructure replacement, conversion, and expansion projects, including factors related to project site identification, construction material pricing, schedule delays, availability of qualified construction personnel, permitting, and government approvals;

·                 factors affecting operations, such as costs and availability of personnel, equipment, and materials, unusual weather conditions, catastrophic weather-related damage, scheduled or unscheduled equipment outages, maintenance or repairs, environmental incidents, equipment failures, and electric transmission and distribution or gas pipeline system constraints;

·                 potential disruption to, interruption of, or other impacts on facilities, utility infrastructure, or operations due to accidents, explosions, physical disasters, vandalism, war, or terrorism, and the ability to obtain or maintain insurance coverage for these events;

·                 changes or disruption in fuel supply, including but not limited to rail or vessel transport of coal and pipeline transport of natural gas;

·                 potential costs, lost revenues, or other consequences resulting from misappropriation of assets or sensitive information, corruption of data, or operational disruption in connection with a cyber attack or other cyber incident;

·                 technological developments in energy production, storage, delivery, usage, and metering;

·                 the ability to implement technology, including Smart Energy, successfully;

·                 the impact of CMS Energy’s and Consumers’ integrated business software system and its effects on their operations, including utility customer billing and collections;

·                 adverse consequences resulting from any past, present, or future assertion of indemnity or warranty claims associated with assets and businesses previously owned by CMS Energy or Consumers, including claims resulting from attempts by foreign or domestic governments to assess taxes on past operations or transactions;

·                 the outcome, cost, and other effects of any legal or administrative claims, proceedings, investigations, or settlements;

·                 the reputational impact on CMS Energy and Consumers of operational incidents, violations of corporate compliance policies, regulatory violations, and other business events;

·                 restrictions imposed by various financing arrangements and regulatory requirements on the ability of Consumers and other subsidiaries of CMS Energy to transfer funds to CMS Energy in the form of cash dividends, loans, or advances;

·                 earnings volatility resulting from the application of fair value accounting to certain energy commodity contracts or interest rate contracts;

·                 changes in financial or regulatory accounting principles or policies, including a possible future requirement to comply with International Financial Reporting Standards, which differ from GAAP in various ways, including the present lack of special accounting treatment for regulated activities; and

·                 other matters that may be disclosed from time to time in CMS Energy’s and Consumers’ SEC filings, or in other public documents.

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All forward-looking statements should be considered in the context of the risk and other factors described above and as detailed from time to time in CMS Energy’s and Consumers’ SEC filings.  For additional details regarding these and other uncertainties, see Part I – Item 1. Consolidated Financial Statements (Unaudited) – Notes to the Unaudited Consolidated Financial Statements – Note 2, Regulatory Matters and Note 3, Contingencies and Commitments; Part I – Item 2. MD&A – Outlook; and Part II – Item 1A. Risk Factors.

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CMS Energy Corporation

Consumers Energy Company

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This MD&A is a combined report of CMS Energy and Consumers.

EXECUTIVE OVERVIEW

CMS Energy is an energy company operating primarily in Michigan.  It is the parent holding company of several subsidiaries, including Consumers, an electric and gas utility, and CMS Enterprises, primarily a domestic independent power producer.  Consumers’ electric utility operations include the generation, purchase, distribution, transmission, and sale of electricity, and Consumers’ gas utility operations include the purchase, transmission, storage, distribution, and sale of natural gas.  Consumers’ customer base consists of a mix of residential, commercial, and diversified industrial customers.  CMS Enterprises, through its subsidiaries and equity investments, owns and operates power generation facilities.

CMS Energy and Consumers manage their businesses by the nature of services each provides.  CMS Energy operates principally in three business segments:  electric utility; gas utility; and enterprises, its non-utility operations and investments.  Consumers operates principally in two business segments:  electric utility and gas utility.

CMS Energy and Consumers earn revenue and generate cash from operations by providing electric and natural gas utility services; electric distribution, transmission, and generation; gas transmission, storage, and distribution; and other energy-related services.  Their businesses are affected primarily by:

·    regulation and regulatory matters;

·    economic conditions;

·    weather;

·    energy commodity prices;

·    interest rates; and

·    CMS Energy’s and Consumers’ securities’ credit ratings.

CMS Energy’s and Consumers’ business strategy emphasizes the key elements depicted below:

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Accountability is part of CMS Energy’s and Consumers’ corporate culture.  CMS Energy and Consumers are committed to making the right choices to serve their customers safely and affordably and to acting responsibly as corporate citizens.  CMS Energy and Consumers hold themselves accountable to the highest standards of safety, operational performance, and ethical behavior, and work diligently to comply with all laws, rules, and regulations that govern the electric and gas industry.  Consumers’ 2015 Accountability Report, which is available to the public, provides an overview of Consumers’ efforts to continue meeting Michigan’s energy needs safely and efficiently, and highlights Consumers’ commitment to Michigan businesses, its corporate citizenship, and its role in reducing the state’s air emissions.

SAFE, EXCELLENT OPERATIONS

The safety of employees, customers, and the general public remains a priority of CMS Energy and Consumers.  Accordingly, CMS Energy and Consumers have worked to integrate a set of safety principles into their business operations and culture.  These principles include complying with applicable safety, health, and security regulations and implementing programs and processes aimed at continually improving safety and security conditions.  From 2006 through 2014, Consumers achieved a 70 percent reduction in the annual number of recordable safety incidents.

CUSTOMER VALUE

Consumers is undertaking a number of initiatives that reflect its intensified customer focus.  Consumers’ planned investments in reliability are aimed at improving safety, reducing customer outage frequency, reducing repetitive outages, and increasing customer satisfaction.  Also, in order to minimize increases in customer base rates, Consumers has undertaken several additional initiatives to reduce costs through accelerated pension funding, employee and retiree health care cost sharing, negotiated labor agreements, information and control system efficiencies, and productivity improvements.

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UTILITY INVESTMENT

Consumers expects to make capital investments of about $15.5 billion from 2015 through 2024.  This amount includes $7.8 billion through 2019, as presented in the following illustration:

While Consumers has substantially more opportunities for capital investments that add customer value, Consumers has limited its capital investment program to those investments it believes are needed to provide safe, reliable, and efficient service to its customers.  Consumers’ capital investment program is expected to result in annual rate base growth of five to seven percent while allowing Consumers to maintain sustainable customer base rate increases (excluding PSCR and GCR charges) at or below the rate of inflation.

Among the key components of Consumers’ investment program are projects that will enhance customer value.  Consumers’ planned base capital investments of $4.5 billion represent projects to maintain Consumers’ system and comprise $2.8 billion at the electric utility to preserve reliability and capacity and $1.7 billion at the gas utility to sustain deliverability and enhance pipeline integrity.  An additional $1.7 billion of planned reliability investments at Consumers are aimed at reducing outages and improving customer satisfaction; these investments comprise $0.7 billion at the electric utility to strengthen circuits and substations, replace poles, and upgrade Ludington and $1.0 billion at the gas utility to replace mains and enhance transmission and storage systems.  Consumers also expects to spend $0.8 billion on environmental investments needed to comply with state and federal laws and regulations.

Consumers’ Smart Energy program also represents a major capital investment.  The full-scale deployment of advanced metering infrastructure began in 2012 and is planned to continue through 2017.  Consumers has spent $0.3 billion through 2014 on its Smart Energy program and expects to spend an additional $0.5 billion, following a phased approach, from 2015 through 2017.

Consumers also expects to spend $0.2 billion on new natural gas-fueled electric generation.  The majority of this amount relates to an agreement that Consumers signed in 2013 to purchase a 540-MW natural gas-fueled electric generating plant located in Jackson, Michigan for $155 million.  As provided for in the

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agreement, the purchase is subject to MPSC and other approvals.  Consumers expects to close the purchase in late 2015 or early 2016.

REGULATION

Regulatory matters are a key aspect of CMS Energy’s and Consumers’ businesses, particularly Consumers’ rate cases and regulatory proceedings before the MPSC.  In July 2015, Michigan Governor Rick Snyder appointed Norm Saari to serve on the three-member MPSC for a six-year term beginning in August 2015, replacing retiring Commissioner Greg White.  Other important regulatory events and developments are summarized below.

·                 Electric Rate Case:  Consumers filed a general electric rate case with the MPSC in December 2014, seeking an annual rate increase of $163 million, based on a 10.7 percent authorized return on equity.  The filing also seeks approval of an investment recovery mechanism that would allow recovery of an additional $163 million in total for incremental investments that Consumers plans to make in 2016 and 2017 and $78 million for incremental investments planned in 2018, subject to reconciliation.  In June 2015, Consumers self-implemented an annual rate increase of $110 million, subject to refund with interest.

·                 Gas Rate Case:  In July 2015, Consumers filed an application with the MPSC seeking an annual rate increase of $85 million, based on a 10.7 percent authorized return on equity.  The largest component of the request is an annual revenue requirement of $64 million related to new investments that will allow Consumers to strengthen infrastructure and improve system capacity and deliverability.

The filing also seeks approval of two rate adjustment mechanisms:  one that would reconcile annually Consumers’ actual weather-adjusted nonfuel revenues with the revenues approved by the MPSC, and another that would allow recovery of an additional $147 million associated with investments to be made from January 2017 through December 2019, subject to reconciliation.  These future investments would help to ensure adequate system capacity and deliverability.

The 2008 Energy Law allows electric customers in Consumers’ service territory to buy electric generation service from alternative electric suppliers in an aggregate amount up to ten percent of Consumers’ weather-adjusted retail sales of the preceding calendar year.  At September 30, 2015, Consumers’ electric deliveries under the ROA program were at the ten-percent limit.  Earlier this year, members of the Michigan Senate and House of Representatives introduced various bills related to ROA.  These bills propose a range of changes to ROA, including eliminating ROA, maintaining the existing ROA program but imposing conditions on a customer’s return to utility service, and raising the ROA limit.  Consumers is unable to predict the form and timing of any final legislation or whether other bills might be introduced in 2015.  An increase to the ROA limit could negatively affect Consumers’ financial results and operations.

In March 2015, Michigan’s governor outlined several key goals for the state’s energy policy, with a focus on increasing the use of clean energy sources, reducing Michigan’s reliance on coal, deploying smart meters, investing in the power grid and pipeline system, eliminating energy waste, and ensuring affordable, reliable, and adaptable energy while protecting the environment.  The governor also created the Michigan Agency for Energy, a single entity dedicated to providing all of state government the information and context needed to support Michigan’s energy priorities.

Environmental regulation is another area of importance for CMS Energy and Consumers, and they are monitoring numerous legislative and regulatory initiatives, including initiatives to regulate greenhouse gases, and related litigation.  CMS Energy and Consumers believe that environmental laws and regulations related to their operations will continue to become more stringent and require them to make

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additional substantial capital expenditures for emissions control equipment, CCR disposal and storage, cooling water intake equipment, effluent treatment, and PCB remediation.  Present and reasonably anticipated state and federal environmental statutes and regulations, including but not limited to the Clean Air Act, including the Clean Power Plan, as well as the Clean Water Act, the Resource Conservation and Recovery Act, and CERCLA, will continue to have a material effect on CMS Energy and Consumers.

FINANCIAL PERFORMANCE

For the nine months ended September 30, 2015, CMS Energy’s net income available to common stockholders was $417 million and diluted EPS were $1.51.  This compares with net income available to common stockholders of $381 million and diluted EPS of $1.39 for the nine months ended September 30, 2014.  Among the factors contributing to CMS Energy’s improved performance in 2015 were electric and gas rate increases, which were offset partially by higher depreciation and property taxes on new capital investments.

Consumers’ utility operations are seasonal.  The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment, while peak demand for natural gas occurs in the winter due to colder temperatures and the resulting use of natural gas as heating fuel.  In addition, Consumers’ electric rates, which follow a seasonal rate design, are higher in the summer months than in the remaining months of the year.  A more detailed discussion of the factors affecting CMS Energy’s and Consumers’ performance can be found in the Results of Operations section that follows this Executive Overview.

Michigan is placed in the first quartile of states based on its strong economic growth since 2010.  Consumers expects that the continued rise in industrial production will drive its electric deliveries to increase annually by about one-half to one percent on average through 2019.  Excluding the impacts of energy efficiency programs, Consumers expects its electric deliveries to increase by about 1.5 to 2 percent annually through 2019.  Consumers is projecting that its gas deliveries will remain stable through 2019.  This outlook reflects growth in gas demand offset by energy efficiency and conservation.

As Consumers seeks to continue to receive fair and timely regulatory treatment, delivering customer value will remain a key strategic priority.  In order to minimize increases in customer base rates, Consumers has set goals to achieve further annual productivity improvements.  Additionally, Consumers will strive to give priority to capital investments that increase customer value or lower costs.

Consumers expects to continue to have sufficient borrowing capacity to fund its investment-based growth plans.  CMS Energy also expects its sources of liquidity to remain sufficient to meet its cash requirements.  To identify potential implications for CMS Energy’s and Consumers’ businesses and future financial needs, the companies will continue to monitor developments in the financial and credit markets, as well as government policy responses to those developments.

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RESULTS OF OPERATIONS

CMS ENERGY CONSOLIDATED RESULTS OF OPERATIONS

Presented in the following table are specific after-tax changes to net income available to common stockholders:

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CONSUMERS ELECTRIC UTILITY RESULTS OF OPERATIONS

Following is a discussion of significant changes to net income available to common stockholders.

Electric deliveries and rate increases:  For the three months ended September 30, 2015, electric delivery revenues increased $73 million compared with 2014.  This change reflected a $41 million increase in sales due primarily to warmer weather in 2015, $30 million from a rate increase that Consumers self-implemented in June 2015, and a $2 million increase in other revenues.  Deliveries to end-use customers were 10.1 billion kWh in 2015 and 9.6 billion kWh in 2014.

For the nine months ended September 30, 2015, electric delivery revenues increased $67 million compared with 2014.  This change reflected a $24 million increase in sales due primarily to warmer weather in 2015, $38 million from a rate increase that Consumers self-implemented in June 2015, and a $5 million increase in other revenues.  Deliveries to end-use customers were 28.4 billion kWh in 2015 and 28.3 billion kWh in 2014.

Other income, net of expenses:  For the nine months ended September 30, 2015, other income, net of expenses, increased $8 million compared with 2014.  This change was due to a $6 million gain related to a donation of CMS Energy stock by Consumers and the absence in 2015 of $2 million of other costs incurred in 2014.  The gain was eliminated on CMS Energy’s consolidated statements of income.

Maintenance and other operating expenses:  For the three months ended September 30, 2015, maintenance and other operating expenses decreased $3 million compared with 2014.  This change reflected a $6 million decrease in forestry and other operating expenses and a $3 million decrease in service restoration costs, reflecting in part the increased capitalization of utility pole units, consistent with a change in regulatory treatment.  These decreases were offset partially by $6 million of higher postretirement benefits expense.

For the nine months ended September 30, 2015, maintenance and other operating expenses were unchanged compared with 2014, reflecting $19 million of higher postretirement benefits expense offset by a $15 million reduction in service restoration costs and a $4 million decrease in other operating expenses.  The reduction in service restoration costs was due primarily to the increased capitalization of utility pole units, consistent with a change in regulatory treatment.

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Depreciation and amortization:  For the three months ended September 30, 2015, depreciation and amortization expense increased $19 million compared with 2014, and for the nine months ended September 30, 2015, depreciation and amortization expense increased $47 million compared with 2014.  These increases were due primarily to increased plant in service and higher amortization of securitized assets.

General taxes:  For the nine months ended September 30, 2015, general taxes increased $6 million compared with 2014 due to increased property taxes, reflecting higher capital spending.

Interest charges:  For the nine months ended September 30, 2015, interest charges increased $8 million compared with 2014 due primarily to higher average debt levels.

Income taxes:  For the three months ended September 30, 2015, income taxes increased $17 million compared with 2014.  Of this increase, $22 million was attributable to higher electric utility earnings, which was offset partially by a $3 million benefit associated with Cross Winds® Energy Park production tax credits and $2 million in other tax-related items.

For the nine months ended September 30, 2015, income taxes decreased $1 million compared with 2014.  This decrease reflected a $6 million benefit associated with Cross Winds® Energy Park production tax credits, offset partially by $5 million attributable to higher electric utility earnings.

CONSUMERS GAS UTILITY RESULTS OF OPERATIONS

Following is a discussion of significant changes to net income available to common stockholders.

Gas deliveries and rate increases:  For the three months ended September 30, 2015, gas delivery revenues increased $2 million compared with 2014.  This change reflected $7 million from a January 2015 rate increase, offset partially by a $5 million decrease in sales.  Deliveries to end-use customers were 27 bcf in 2015 and 29 bcf in 2014.

For the nine months ended September 30, 2015, gas delivery revenues increased $23 million compared with 2014.  This change reflected $32 million from a January 2015 rate increase and a $2 million increase in other revenues.  These increases were offset partially by an $11 million decrease in sales, due primarily to colder winter weather in 2014.  Deliveries to end-use customers were 223 bcf in 2015 and 234 bcf in 2014.

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Other income, net of expenses:  For the nine months ended September 30, 2015, other income, net of expenses, increased $4 million compared with 2014 due primarily to a gain related to a donation of CMS Energy stock by Consumers.  The gain was eliminated on CMS Energy’s consolidated statements of income.

Maintenance and other operating expenses:  For the three months ended September 30, 2015, maintenance and other operating expenses decreased $4 million compared with 2014.  This change was due primarily to a $4 million reduction in uncollectible accounts expense and a $4 million decrease in other operating and maintenance expenses.  These decreases were offset partially by a $4 million increase in postretirement benefits expense.

For the nine months ended September 30, 2015, maintenance and other operating expenses increased $11 million compared with 2014.  This change was due to a $12 million increase in postretirement benefits expense and a $4 million increase in other operating and maintenance expenses, offset partially by a $5 million reduction in uncollectible accounts expense.

Depreciation and amortization:  For the nine months ended September 30, 2015, depreciation and amortization expense increased $15 million compared with 2014 due primarily to increased plant in service.

General taxes:  For the nine months ended September 30, 2015, general taxes increased $5 million compared with 2014 due to increased property taxes, reflecting higher capital spending.

Interest charges:  For the nine months ended September 30, 2015, interest charges increased $4 million compared with 2014 due primarily to higher average debt levels.

Income taxes:  For the nine months ended September 30, 2015, income taxes decreased $2 million compared with 2014 attributable primarily to lower gas utility earnings.

ENTERPRISES RESULTS OF OPERATIONS

For the three months ended September 30, 2015, net income of the enterprises segment increased $10 million compared with 2014, due primarily to the absence in 2015 of a $9 million after-tax increase in the environmental remediation liability associated with Bay Harbor.

For the nine months ended September 30, 2015, net income of the enterprises segment increased $13 million compared with 2014, due to the absence in 2015 of a $9 million after-tax increase in the environmental remediation liability associated with Bay Harbor, and a $4 million benefit resulting primarily from lower fuel costs, offset partially by higher costs associated with planned major maintenance.

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CORPORATE INTEREST AND OTHER RESULTS OF OPERATIONS

For the three months ended September 30, 2015, corporate interest and other net expenses decreased $4 million compared with 2014, due to $2 million of lower fixed charges on lower average debt levels in 2015 and $2 million of higher earnings at EnerBank.

For the nine months ended September 30, 2015, corporate interest and other net expenses decreased $13 million compared with 2014, due to the absence in 2015 of an $8 million loss on the early extinguishment of debt and $5 million of higher earnings at EnerBank.

CASH POSITION, INVESTING, AND FINANCING

At September 30, 2015, CMS Energy had $202 million of consolidated cash and cash equivalents, which included $52 million of restricted cash and cash equivalents.  At September 30, 2015, Consumers had $95 million of consolidated cash and cash equivalents, which included $52 million of restricted cash and cash equivalents.

OPERATING ACTIVITIES

Presented in the following table are specific components of net cash provided by operating activities for the nine months ended September 30, 2015 and 2014:

1 Non-cash transactions comprise depreciation and amortization, changes in deferred income taxes, postretirement benefits expense, and other non-cash items.

2 Core working capital comprises accounts and notes receivable and accrued revenues (including accrued power supply and gas revenues), inventories, accounts payable, and accrued rate refunds.

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For the nine months ended September 30, 2015, net cash provided by operating activities at CMS Energy increased $458 million compared with 2014 and net cash provided by operating activities at Consumers increased $479 million compared with 2014.  These changes were due primarily to gas purchases at lower prices, the absence of large increases in GCR and PSCR underrecoveries that were a result of severe winter weather in 2014, and higher net income, net of non-cash transactions.  Lower income tax payments to CMS Energy also contributed to the improvement in 2015 at Consumers.

INVESTING ACTIVITIES

Presented in the following table are specific components of net cash used in investing activities for the nine months ended September 30, 2015 and 2014:

For the nine months ended September 30, 2015, net cash used in investing activities at CMS Energy decreased $7 million compared with 2014 and net cash used in investing activities at Consumers increased $4 million compared with 2014.  At CMS Energy, the change was due primarily to proceeds from the sale of EnerBank notes receivable and lower capital expenditures at Consumers, offset partially by DB SERP fund contributions and continued growth in EnerBank consumer lending.  The change at Consumers was due primarily to DB SERP fund contributions and an increase in restricted cash related to surcharges collected to cover Securitization bonds that Consumers issued in 2014, offset partially by lower capital expenditures.

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