CMS ENERGY CORP (Form: 10-Q, Received: 05/01/2017 09:03:16)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

	x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2017
	OR
	o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____to_____

Commission	Registrant; State of Incorporation;	IRS Employer
File Number	Address; and Telephone Number	Identification No.
1-9513	CMS ENERGY CORPORATION	38-2726431
	(A Michigan Corporation)
	One Energy Plaza, Jackson, Michigan 49201
	(517) 788-0550

1-5611	CONSUMERS ENERGY COMPANY	38-0442310
	(A Michigan Corporation)
	One Energy Plaza, Jackson, Michigan 49201
	(517) 788-0550

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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

CMS Energy Corporation:
Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o
Emerging growth company o
Consumers Energy Company:
Large accelerated filer o	Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)	Smaller reporting company o
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

CMS Energy Corporation: o

Consumers Energy Company: o

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 April 11, 2017:

CMS Energy Corporation:
CMS Energy Common Stock, $0.01 par value
(including 443,148 shares owned by Consumers Energy Company)		280,453,409
Consumers Energy Company:
Consumers Common Stock, $10 par value, privately held by CMS Energy Corporation		84,108,789

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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 March 31, 2017

TABLE OF CONTENTS

Glossary		2
Filing Format		7
Available Information		7
Forward-Looking Statements and Information		7
Part I—Financial Information		11
Item 1.	Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	67
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	67
Item 4.	Controls and Procedures	67
Part II—Other Information		68
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	69

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GLOSSARY

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

2016 Energy Law
Comprehensive energy reform package enacted in Michigan in 2016

2016 Form 10-K
Each of CMS Energy’s and Consumers’ Annual Report on Form 10-K for the year ended December 31, 2016

ABATE
Association of Businesses Advocating Tariff Equity

AOCI
Accumulated other comprehensive income (loss)

ARO
Asset retirement obligation

ASU
Financial Accounting Standards Board Accounting Standards Update

Bay Harbor
A residential/commercial real estate area located near Petoskey, Michigan, in which CMS Energy sold its interest in 2002

bcf
Billion cubic feet

Cantera Gas Company
Cantera Gas Company LLC, a non-affiliated company, formerly known as CMS Field Services

Cantera Natural Gas, Inc.
Cantera Natural Gas, Inc., a non-affiliated company that purchased CMS Field Services

CCR
Coal combustion residual

CEO
Chief Executive Officer

CERCLA
Comprehensive Environmental Response, Compensation, and Liability Act of 1980

CFO
Chief Financial Officer

Clean Air Act
Federal Clean Air Act of 1963, as amended

Clean Water Act
Federal Water Pollution Control Act of 1972, as amended

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CMS Capital
CMS Capital, L.L.C., a wholly owned subsidiary of CMS Energy

CMS Energy
CMS Energy Corporation and its consolidated subsidiaries, unless otherwise noted; the parent of Consumers and CMS Enterprises

CMS Enterprises
CMS Enterprises Company, a wholly owned subsidiary of CMS Energy

CMS Field Services
CMS Field Services, Inc., a former wholly owned subsidiary of CMS Gas Transmission Company, a wholly owned subsidiary of CMS Enterprises

CMS Land
CMS Land Company, a wholly owned subsidiary of CMS Capital

CMS MST
CMS Marketing, Services and Trading Company, a wholly owned subsidiary of CMS Enterprises, whose name was changed to CMS Energy Resource Management Company in 2004

Consumers
Consumers Energy Company and its consolidated subsidiaries, unless otherwise noted; a wholly owned subsidiary of CMS Energy

CSAPR
The Cross-State Air Pollution Rule

DB Pension Plan
Defined benefit pension plan of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries

DB SERP
Defined Benefit Supplemental Executive Retirement Plan

DIG
Dearborn Industrial Generation, L.L.C., a wholly owned subsidiary of Dearborn Industrial Energy, L.L.C., a wholly owned subsidiary of CMS Energy

Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

EBITDA
Earnings before interest, taxes, depreciation, and amortization

EnerBank
EnerBank USA, a wholly owned subsidiary of CMS Capital

energy waste reduction
The reduction of energy consumption through energy efficiency and demand-side energy conservation, as established under the 2016 Energy Law

Entergy
Entergy Corporation, a non-affiliated company

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EPA
U.S. Environmental Protection Agency

EPS
Earnings per share

Exchange Act
Securities Exchange Act of 1934

FDIC
Federal Deposit Insurance Corporation

FERC
The Federal Energy Regulatory Commission

Forsite
Forsite Development, Inc. and its subsidiaries, each a non-affiliated company

FTR
Financial transmission right

GAAP
U.S. Generally Accepted Accounting Principles

Gas AMR
Consumers’ gas automated meter reading project, which involves the installation of communication modules to allow drive-by meter reading

GCR
Gas cost recovery

Genesee
Genesee Power Station Limited Partnership, a variable interest entity in which HYDRA-CO Enterprises, Inc., a wholly owned subsidiary of CMS Enterprises, has a 50-percent interest

kWh
Kilowatt-hour, a unit of energy equal to one thousand watt-hours

Ludington
Ludington pumped-storage plant, jointly owned by Consumers and DTE Electric Company, a non-affiliated company

MATS
Mercury and Air Toxics Standards, which limit mercury, acid gases, and other toxic pollution from coal-fueled and oil-fueled power plants

MD&A
Management’s Discussion and Analysis of Financial Condition and Results of Operations

MDEQ
Michigan Department of Environmental Quality

MGP
Manufactured gas plant

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Michigan Mercury Rule
Michigan Air Pollution Control Rules, Part 15, Emission Limitations and Prohibitions – Mercury, addressing mercury emissions from coal-fueled electric generating units

MISO
Midcontinent Independent System Operator, Inc.

mothball
To place a generating unit into a state of extended reserve shutdown in which the unit is inactive and unavailable for service for a specified period, during which the unit can be brought back into service after receiving appropriate notification and completing any necessary maintenance or other work; generation owners in MISO must request approval to mothball a unit, and MISO then evaluates the request for reliability impacts

MPSC
Michigan Public Service Commission

MW
Megawatt, a unit of power equal to one million watts

NAAQS
National Ambient Air Quality Standards

NPDES
National Pollutant Discharge Elimination System, a permit system for regulating point sources of pollution under the Clean Water Act

NREPA
Part 201 of the Michigan Natural Resources and Environmental Protection Act, a statute that covers environmental activities including remediation

NSR
New Source Review, a construction-permitting program under the Clean Air Act

OPEB
Other Post-Employment Benefits

OPEB Plan
Postretirement health care and life insurance plans of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries

Palisades
Palisades nuclear power plant, sold by Consumers to Entergy in 2007

PCB
Polychlorinated biphenyl

PPA
Power purchase agreement

PSCR
Power supply cost recovery

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RCRA
The Federal Resource Conservation and Recovery Act of 1976

REC
Renewable energy credit

ROA
Retail Open Access, which allows electric generation customers to choose alternative electric suppliers pursuant to a Michigan statute enacted in 2000

SEC
U.S. Securities and Exchange Commission

securitization
A financing method authorized by statute and approved by the MPSC which allows a utility to sell its right to receive a portion of the rate payments received from its customers for the repayment of securitization bonds issued by a special-purpose entity affiliated with such utility

Sherman Act
Sherman Antitrust Act of 1890

Smart Energy
Consumers’ Smart Energy grid modernization project, which includes the installation of smart meters that transmit and receive data, a two-way communications network, and modifications to Consumers’ existing information technology system to manage the data and enable changes to key business processes

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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 2016 Form 10-K.

AVAILABLE INFORMATION

CMS Energy’s internet address is www.cmsenergy.com. CMS Energy routinely posts important information on its website and considers the Investor Relations section, www.cmsenergy.com/investor-relations, a channel of distribution. Information contained on CMS Energy’s website is not incorporated 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, 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, Michigan Electric Transmission Company, LLC, 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 challenges to federal or state laws or regulations, or changes in applicable laws, rules, regulations, principles, or practices, or in their interpretation, such as those related to energy policy and ROA, infrastructure integrity or security,

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gas pipeline safety, gas pipeline capacity, energy waste reduction, the environment, regulation or deregulation, reliability, health care reforms (including comprehensive health care reform enacted in 2010), taxes, accounting matters, climate change, air emissions, renewable energy, 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

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

· increases in demand for renewable energy by customers seeking to meet sustainability goals

· the ability of Consumers to execute its cost-reduction strategies

· 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’ routine maintenance, repair, and replacement 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

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

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· 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

· the impact of credit markets, economic conditions, and any new banking and consumer protection 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

· factors affecting development of electric generation projects and gas and electric transmission and 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, acquisition of property rights, and government approvals

· potential disruption to, interruption of, or other impacts on facilities, utility infrastructure, or operations due to accidents, explosions, physical disasters, cyber incidents, 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 supplier bankruptcy and delivery disruptions

· 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 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 or to impose environmental liability associated with 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 policies, regulatory violations, inappropriate use of social media, and other 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

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· 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

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

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. Financial Statements—MD&A—Outlook and Notes to the Unaudited Consolidated Financial Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments; and Part II—Item 1A. Risk Factors.

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Part I—Financial Information

Item 1. Financial Statements

INDEX TO FINANCIAL STATEMENTS

Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
CMS Energy Consolidated Financial Statements		32
Consolidated Statements of Income (Unaudited)		32
Consolidated Statements of Comprehensive Income (Unaudited)		33
Consolidated Statements of Cash Flows (Unaudited)		35
Consolidated Balance Sheets (Unaudited)		36
Consolidated Statements of Changes in Equity (Unaudited)		38
Consumers Consolidated Financial Statements		40
Consolidated Statements of Income (Unaudited)		40
Consolidated Statements of Comprehensive Income (Unaudited)		41
Consolidated Statements of Cash Flows (Unaudited)		43
Consolidated Balance Sheets (Unaudited)		44
Consolidated Statements of Changes in Equity (Unaudited)		46
Notes to the Unaudited Consolidated Financial Statements		47
1:	New Accounting Standards	47
2:	Regulatory Matters	49
3:	Contingencies and Commitments	50
4:	Financings and Capitalization	54
5:	Fair Value Measurements	55
6:	Financial Instruments	57
7:	Notes Receivable	59
8:	Retirement Benefits	60
9:	Income Taxes	61
10:	Earnings Per Share—CMS Energy	62
11:	Cash and Cash Equivalents	63
12:	Reportable Segments	64

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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, transmission, distribution, 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

· their securities’ credit ratings

The key elements of CMS Energy’s and Consumers’ business strategy are depicted below:

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CMS Energy and Consumers are focused on the “triple bottom line”: people, planet, and profit, underpinned by performance. They are committed to sustainable business practices and to pursuing the goals of safe and excellent operations, a strong ethical culture, environmental quality, and social responsibility. Consumers’ 2016 Sustainability Report, which is available to the public, provides an overview of Consumers’ efforts to continue meeting Michigan’s energy needs safely, efficiently, affordably, and reliably. The report also highlights Consumers’ commitment to Michigan businesses, its corporate citizenship, and its role in reducing the state’s air emissions. In a 2016 report published by Sustainalytics, a global leader in sustainability research and analysis, CMS Energy scored the highest among 54 U.S. utilities in environmental, social, and governance performance.

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. The number of recordable safety incidents in 2016 was the lowest in Consumers’ history.

Customer Value

Consumers places a high priority on customer value. Consumers’ capital investment program is aimed at improving safety and increasing electric and gas reliability, which has resulted in measureable improvements in customer satisfaction.

Additionally, Consumers has undertaken several initiatives to keep electricity and natural gas affordable for its customers. These initiatives include the adoption of a lean operations model that is focused on completing work safely and correctly the first time, thus minimizing rework and waste, while delivering services on time. Other cost-saving initiatives undertaken by Consumers include accelerated pension funding, employee and retiree health care cost sharing, replacement of coal-fueled generation with more efficient gas-fueled generation, targeted infrastructure investment, including the installation of smart meters, negotiated labor agreements, information and control system efficiencies, and productivity improvements. In addition, Consumers’ gas commodity costs declined by 68 percent from 2006 through 2016, due not only to a decrease in market prices but also to Consumers’ improvements to its gas infrastructure and optimization of its gas purchasing and storage strategy. These savings are all passed on to customers.

In December 2016, Consumers and Entergy reached an agreement to terminate their PPA in May 2018, four years ahead of schedule. Under the PPA, Consumers purchases virtually all of the capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. The prices that Consumers pays under the PPA, and which it recovers from its electric customers, are presently higher than the cost to purchase electricity from the market. Under the agreement, Consumers will make a termination payment of $172 million to Entergy. Consumers expects that, as a result of terminating the PPA, its electric customers will realize substantial savings from lower future energy and capacity costs. Actual savings will depend on market conditions. The agreement is contingent on the MPSC’s approval of Consumers’ recovery in electric rates of the termination payment. The MPSC has indicated that it will make a final determination on this recovery by September 2017, after full evaluation of the prudency of the termination payment and of how the termination will impact Michigan’s electric reliability and resource adequacy.

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Utility Investment

Consumers expects to make capital investments of $18 billion from 2017 through 2026. While it has substantially more investment opportunities that would 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 six to eight percent. This rate-base growth, together with cost-control initiatives, should allow Consumers to maintain sustainable customer base rate increases (excluding PSCR and GCR charges) at or below the rate of inflation.

Presented in the following illustration are planned capital investments of $9.0 billion that Consumers expects to make from 2017 through 2021:

		Electric base ($2.6 billion)

		Gas base ($2.0 billion)

		Gas reliability enhancements ($1.8 billion)

		Electric reliability enhancements ($0.7 billion)

		Environmental ($0.5 billion)

		Smart Energy and Gas AMR ($0.3 billion)

		Other ($1.1 billion)

Consumers’ planned base capital investments of $4.6 billion represent projects to maintain its system and comprise $2.6 billion at the electric utility to preserve reliability and capacity and $2.0 billion at the gas utility to sustain deliverability and enhance pipeline integrity. An additional $2.5 billion of planned reliability investments are aimed at reducing outages and improving customer satisfaction; these investments comprise $1.8 billion at the gas utility to replace mains and enhance transmission and storage systems and $0.7 billion at the electric utility to strengthen circuits and substations and replace poles. Consumers also expects to spend $0.5 billion on environmental investments needed to comply with state and federal laws and regulations.

Consumers’ Smart Energy program also represents a major capital investment. Consumers began the full-scale deployment of advanced metering infrastructure for electric and combination customers in 2012 and plans to complete it by the end of 2017. Consumers has spent $0.6 billion through 2016 on its Smart Energy program, and expects to spend an additional $0.1 billion in 2017. In addition, Consumers expects to spend $0.2 billion through 2019 in deploying Gas AMR technology for gas-only customers.

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Regulation

Regulatory matters are a key aspect of CMS Energy’s and Consumers’ businesses, particularly Consumers’ rate cases and regulatory proceedings before the MPSC. Important regulatory events and developments are summarized below.

· 2016 Electric Rate Case: In March 2016, Consumers filed an application with the MPSC seeking an annual rate increase of $225 million, based on a 10.7 percent authorized return on equity. In September 2016, Consumers self-implemented an annual rate increase of $170 million, subject to refund with interest. The MPSC issued an order in February 2017, authorizing an annual rate increase of $113 million, based on a 10.1 percent authorized return on equity.

· 2017 Electric Rate Case: In March 2017, Consumers filed an application with the MPSC seeking an annual rate increase of $173 million, based on a 10.5 percent authorized return on equity.

· Gas Rate Case: In August 2016, Consumers filed an application with the MPSC seeking an annual rate increase of $90 million, based on a 10.6 percent authorized return on equity. In March 2017, Consumers reduced its requested annual rate increase to $80 million. The filing seeks approval of two rate adjustment mechanisms: one that would reconcile annually Consumers’ actual nonfuel revenues with the revenues approved by the MPSC, and another that would provide for additional annual rate increases of $35 million beginning in 2018 and another $35 million beginning in 2019 for incremental investments that Consumers plans to make in those years, subject to reconciliation. The MPSC issued an order in January 2017, limiting Consumers’ self-implementation to an annual rate increase of $20 million. Accordingly, in January 2017, Consumers self-implemented an annual rate increase of $20 million, subject to refund with interest.

In December 2016, Michigan’s governor signed the 2016 Energy Law, which became effective in April 2017. Among other things, the 2016 Energy Law:

· raises the renewable energy standard from the present ten-percent requirement to 12.5 percent by 2019 and 15 percent by 2021

· establishes a goal of 35 percent combined renewable energy and energy waste reduction by 2025

· authorizes incentives for demand response programs and expands existing incentives for energy efficiency programs

· authorizes incentives for new PPAs with non-affiliates

· establishes an integrated planning process for new generation resources

· shortens from twelve months to ten months the time by which the MPSC must issue a final order in general rate cases, but prohibits electric and gas utilities from filing general rate cases for increases in rates more often than once every twelve months

· eliminates utilities’ self-implementation of rates under general rate cases

· requires the MPSC to implement equitable cost-of-service rates for customers participating in a net metering program

The 2016 Energy Law also establishes a path to ensure that forward capacity is secured for all electric customers in Michigan, including customers served by alternative electric suppliers under ROA. Under existing Michigan law, electric customers in Consumers’ service territory are allowed to buy electric generation service from alternative electric suppliers in an aggregate amount up to ten percent of Consumers’ weather-adjusted retail sales for the preceding calendar year. The 2016 Energy Law retains the ten percent cap on ROA, with certain exceptions. The new law also authorizes the MPSC to ensure that alternative electric suppliers have procured enough capacity to cover their anticipated capacity

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requirements for the four-year forward period. In March 2017, the MPSC indicated that it plans to achieve this objective through the use of a state reliability mechanism. Under such a mechanism, if an alternative electric supplier did not demonstrate that it had procured its capacity requirements for the four-year forward period, ROA customers would pay a charge to the utility for capacity that is not provided by the alternative electric supplier.

Environmental and health and safety regulations are other areas of importance for CMS Energy and Consumers, and they are monitoring numerous legislative and regulatory initiatives, including those to regulate greenhouse gases, and related litigation. CMS Energy and Consumers believe that these laws and regulations related to their operations will require them to make additional substantial capital expenditures for emissions control equipment, CCR disposal and storage, cooling water intake equipment, effluent treatment, PCB remediation, and gas pipeline safety. Present and reasonably anticipated state and federal environmental statutes and regulations will continue to have a material effect on CMS Energy and Consumers.

Financial Performance

For the three months ended March 31, 2017, CMS Energy’s net income available to common stockholders was $199 million and diluted EPS were $0.71. This compares with net income available to common stockholders of $164 million and diluted EPS of $0.59 for the three months ended March 31, 2016. Among the primary factors contributing to CMS Energy’s increased earnings in 2017 were benefits from electric and gas rate increases, higher electric deliveries, a property tax settlement, and cost reductions. These changes were offset partially by higher depreciation and property taxes on increased plant in service.

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.

Consumers expects that a continued rise in industrial production in its service territory will drive its total electric deliveries to increase annually by about one-half percent on average through 2021. Excluding the impacts of energy waste reduction programs, Consumers expects its total electric deliveries to increase by about one percent annually through 2021. Consumers is projecting that its gas deliveries will remain stable through 2021. 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 will continue to pursue cost savings through its lean operations model, and will continue 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

		In Millions, Except Per Share Amounts
Three Months Ended March 31			2017			2016			Change
Net Income Available to Common Stockholders			$	199		$	164		$	35
Basic Earnings Per Share			$	0.71		$	0.59		$	0.12
Diluted Earnings Per Share			$	0.71		$	0.59		$	0.12

	In Millions
Three Months Ended March 31			2017			2016			Change
Electric utility			$	124		$	91		$	33
Gas utility			87			81			6
Enterprises			12			6			6
Corporate interest and other			(24		)	(14		)	(10		)
Net Income Available to Common Stockholders			$	199		$	164		$	35

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

	In Millions
	March 31, 2017 better/(worse) than 2016
Reasons for the change	Three Months Ended
Consumers electric utility and gas utility
Electric sales
Weather	$ (2)
Non-weather	8	$ 6
Gas sales
Weather	(2)
Non-weather	1	(1)
Electric rate increase		20
Gas rate increase		4
Property tax settlement		7
Operating and maintenance costs		5
Depreciation and property taxes, net		(17)
Other, including intercompany gain		15	$ 39
Enterprises
Subsidiary earnings			6
Corporate interest and other
Elimination of intercompany gain			(9)
Other			(1)
Total change			$ 35

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Consumers Electric Utility Results of Operations

In Millions
Three Months Ended March 31	2017			2016			Change
Net Income Available to Common Stockholders		$	124		$	91		$	33
Reasons for the change
Electric deliveries and rate increases								$	45
Maintenance and other operating expenses									3
Depreciation and amortization									(13)
General taxes									9
Other income, net of expenses									6
Interest charges									(1)
Income taxes									(16)
Total change								$	33

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

Electric Deliveries and Rate Increases: For the three months ended March 31, 2017, electric delivery revenues increased $45 million compared with 2016. This change reflected a $32 million rate increase, $9 million in higher deliveries, and a $4 million increase in other revenues. Deliveries to end-use customers were 9.2 billion kWh in 2017 and 9.1 billion kWh in 2016.

Maintenance and Other Operating Expenses: For the three months ended March 31, 2017, maintenance and other operating expenses decreased $3 million compared with 2016. This change reflected the absence, in 2017, of $7 million in expenses at the seven coal-fuel electric generating units that Consumers retired in April 2016. Additionally, postretirement benefit costs decreased by $3 million, reflecting a $5 million reduction associated with the early adoption of a new accounting standard, offset partially by $2 million of cost increases. For additional details on the implementation of this standard, see Note 1, New Accounting Standards. These decreases were offset partially by a $7 million increase in maintenance and other operating expenses, resulting primarily from higher service restoration costs associated with a March 2017 wind storm.

Depreciation and Amortization: For the three months ended March 31, 2017, depreciation and amortization expense increased $13 million compared with 2016, due primarily to increased plant in service.

General Taxes: For the three months ended March 31, 2017, general taxes decreased $9 million compared with 2016, due largely to the settlement of a property tax appeal related to Consumers’ Zeeland plant.

Other Income, Net of Expenses: For the three months ended March 31, 2017, other income, net of expenses, increased $6 million compared with 2016. This change was due to a $9 million gain on a donation of CMS Energy stock by Consumers, which was eliminated on CMS Energy’s consolidated statements of income, and a $1 million increase in other income, net of expenses. These increases were offset partially by a $4 million reduction in nonoperating retirement benefit credits associated with the early adoption of a new accounting standard. For additional details on the implementation of this standard, see Note 1, New Accounting Standards.

Income Taxes: For the three months ended March 31, 2017, income taxes increased $16 million compared with 2016. This change reflected a $19 million increase attributable to higher electric utility earnings, offset partially by a $3 million reduction of other income taxes.

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Consumers Gas Utility Results of Operations

In Millions
Three Months Ended March 31	2017			2016			Change
Net Income Available to Common Stockholders		$	87		$	81		$	6
Reasons for the change
Gas deliveries and rate increases								$	10
Maintenance and other operating expenses									10
Depreciation and amortization									(11)
General taxes									(3)
Other income, net of expenses									2
Income taxes									(2)
Total change								$	6

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

Gas Deliveries and Rate Increases: For the three months ended March 31, 2017, gas delivery revenues increased $10 million compared with 2016. This change reflected a January 2017 self-implemented rate increase of $6 million and a $4 million increase in other revenues. Deliveries to end-use customers were 119 bcf in 2017 and 121 bcf in 2016.

Maintenance and Other Operating Expenses: For the three months ended March 31, 2017, maintenance and other operating expenses decreased $10 million compared with 2016. This decrease reflects $6 million of lower gas distribution and customer operations expense and a $2 million reduction in uncollectible accounts expense. Also contributing to the change was a $2 million decrease in postretirement benefit costs, reflecting a $4 million reduction associated with the early adoption of a new accounting standard, offset partially by $2 million of cost increases. For additional details on the implementation of this standard, see Note 1, New Accounting Standards.

Depreciation and Amortization: For the three months ended March 31, 2017, depreciation and amortization expense increased $11 million compared with 2016, due primarily to increased plant in service.

General Taxes: For the three months ended March 31, 2017, general taxes increased $3 million compared with 2016, due to increased property taxes, reflecting higher capital spending.

Other Income, Net of Expenses: For the three months ended March 31, 2017, other income, net of expenses, increased $2 million compared with 2016. This change was due to a $5 million gain on a donation of CMS Energy stock by Consumers, which was eliminated on CMS Energy’s consolidated statements of income. This increase was offset partially by a $3 million reduction in nonoperating retirement benefit credits associated with the early adoption of a new accounting standard. For additional details on the implementation of this standard, see Note 1, New Accounting Standards.

Income Taxes: For the three months ended March 31, 2017, income taxes increased $2 million compared with 2016, attributable to higher gas utility earnings.

Enterprises Results of Operations

In Millions
Three Months Ended March 31	2017			2016			Change
Net Income Available to Common Stockholders		$	12		$	6		$	6

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For the three months ended March 31, 2017, net income of the enterprises segment increased $6 million compared with 2016, due primarily to higher prices for capacity and demand revenue at DIG.

Corporate Interest and Other Results of Operations

In Millions
Three Months Ended March 31	2017			2016			Change
Net Income (Loss) Available to Common Stockholders		$	(24)		$	(14)		$	(10)

For the three months ended March 31, 2017, corporate interest and other net expenses increased $10 million compared with 2016, due primarily to the elimination of a $9 million after-tax gain resulting from the donation of CMS Energy stock by Consumers.

CASH POSITION, INVESTING, AND FINANCING

At March 31, 2017, CMS Energy had $463 million of consolidated cash and cash equivalents, which included $30 million of restricted cash and cash equivalents. At March 31, 2017, Consumers had $212 million of consolidated cash and cash equivalents, which included $30 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 three months ended March 31, 2017 and 2016:

In Millions
Three Months Ended March 31	2017			2016			Change
CMS Energy, including Consumers
Net income		$	199		$	164		$	35
Non-cash transactions 1			373			327			46
Changes in core working capital 2			198			242			(44)
Postretirement benefits contributions			(5)			(2)			(3)
Changes in other assets and liabilities, net			(119)			(99)			(20)
Net cash provided by operating activities		$	646		$	632		$	14
Consumers
Net income		$	211		$	172		$	39
Non-cash transactions 1			351			316			35
Changes in core working capital 2			202			261			(59)
Postretirement benefits contributions			(3)			(1)			(2)
Changes in other assets and liabilities, net			(113)			(83)			(30)
Net cash provided by operating activities		$	648		$	665		$	(17)

1 Non-cash transactions comprise depreciation and amortization, changes in deferred income taxes, and other non-cash operating activities and reconciling adjustments.

2 Core working capital comprises accounts receivable, notes receivable, accrued revenue, inventories, accounts payable, and accrued rate refunds.

For the three months ended March 31, 2017, net cash provided by operating activities at CMS Energy increased $14 million compared with 2016 and net cash provided by operating activities at Consumers decreased $17 million compared with 2016. At both CMS Energy and Consumers, higher net income, net of non-cash transactions, was offset partially by reduced customer collections, attributable to lower gas

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prices and sales volumes. The change at Consumers also reflected a reimbursement received from CMS Energy in 2016 for a prior-year postretirement benefits contribution.

Investing Activities

Presented in the following table are specific components of net cash used in investing activities for the three months ended March 31, 2017 and 2016:

In Millions
Three Months Ended March 31	2017			2016			Change
CMS Energy, including Consumers
Capital expenditures		$	(365)		$	(407)		$	42
Decrease (increase) in EnerBank notes receivable			14			(16)			30
Proceeds from the sale of EnerBank notes receivable			19			-			19
Costs to retire property and other investing activities			(14)			(21)			7
Net cash used in investing activities		$	(346)		$	(444)		$	98
Consumers
Capital expenditures		$	(361)		$	(406)		$	45
Costs to retire property and other investing activities			(21)			(19)			(2)
Net cash used in investing activities		$	(382)		$	(425)		$	43

For the three months ended March 31, 2017, net cash used in investing activities at CMS Energy decreased $98 million compared with 2016 and net cash used in investing activities at Consumers decreased $43 million compared with 2016. These changes were due primarily to lower capital expenditures at Consumers. The change at CMS Energy was also due to slower growth in EnerBank consumer lending and the sale of EnerBank notes receivable.

Financing Activities

Presented in the following table are specific components of net cash used in financing activities for the three months ended March 31, 2017 and 2016:

In Millions
Three Months Ended March 31	2017			2016			Change
CMS Energy, including Consumers
Issuance of debt		$	923		$	30		$	893
Issuance of common stock			3			63			(60)
Net increase (decrease) in EnerBank certificates of deposit			(29	)		14			(43)
Payment of dividends on common stock			(94	)		(86)			(8)
Retirement of debt			(475	)		(30)			(445)
Decrease in notes payable			(398	)		(249)			(149)
Payment of capital leases and other financing activities			(24	)		(12)			(12)
Net cash used in financing activities		$	(94	)	$	(270)		$	176
Consumers
Issuance of debt		$	349		$	-		$	349
Stockholder contribution from CMS Energy			250			150			100
Payment of dividends on common stock			(148	)		(155)			7
Retirement of debt			(250	)		-			(250)
Decrease in notes payable			(398	)		(249)			(149)
Payment of capital leases and other financing activities			(9	)		(1)			(8)
Net cash used in financing activities		$	(206	)	$	(255)		$	49

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For the three months ended March 31, 2017, net cash used in financing activities at CMS Energy decreased $176 million compared with 2016 and net cash used in financing activities at Consumers decreased $49 million compared with 2016. Higher debt issuances and, at Consumers, an increased stockholder contribution from CMS Energy were offset partially by higher debt retirements and higher repayments under Consumers’ commercial paper program.

CAPITAL RESOURCES AND LIQUIDITY

CMS Energy uses dividends and tax-sharing payments from its subsidiaries and external financing and capital transactions to invest in its utility and non-utility businesses, retire debt, pay dividends, and fund its other obligations. The ability of CMS Energy’s subsidiaries, including Consumers, to pay dividends to CMS Energy depends upon each subsidiary’s revenues, earnings, cash needs, and other factors. In addition, Consumers’ ability to pay dividends is restricted by certain terms included in its debt covenants and articles of incorporation and potentially by FERC requirements and provisions under the Federal Power Act and the Natural Gas Act. For additional details on Consumers’ dividend restrictions, see Note 4, Financings and Capitalization—Dividend Restrictions. For the three months ended March 31, 2017, Consumers paid $148 million in dividends on its common stock to CMS Energy.

As a result of federal tax legislation passed in 2015 that extends bonus depreciation, CMS Energy expects to be able to extend the use of federal net operating loss carryforwards and, accordingly, defer its federal income tax payments through 2020. As a consequence, however, CMS Energy expects to receive lower tax-sharing payments from Consumers during that period. This may require CMS Energy to maintain higher levels of debt in order to invest in its businesses, pay dividends, and fund its general obligations. Despite this, CMS Energy does not anticipate a need for a block equity offering.

In March 2017, CMS Energy entered into an updated continuous equity offering program. Under this program, CMS Energy may sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $100 million. There have been no sales of securities under this program.

Consumers uses cash flows generated from operations and external financing transactions, as well as stockholder contributions from CMS Energy, to fund capital expenditures, retire debt, pay dividends, contribute to its employee benefit plans, and fund its other obligations. As a result of accelerated pension funding in recent years and several initiatives to reduce costs, Consumers anticipates continued strong cash flows from operating activities for the remainder of 2017.

Access to the financial and capital markets depends on CMS Energy’s and Consumers’ credit ratings and on market conditions. As evidenced by past financing transactions, CMS Energy and Consumers have had ready access to these markets. Barring major market dislocations or disruptions, CMS Energy and Consumers expect to continue to have ready access to the financial and capital markets. If access to these markets were to diminish or otherwise become restricted, CMS Energy and Consumers would implement contingency plans to address debt maturities, which could include reduced capital spending.

At March 31, 2017, CMS Energy had $549 million of its secured revolving credit facility available and Consumers had $893 million available. CMS Energy and Consumers use these credit facilities for general working capital purposes and to issue letters of credit. An additional source of liquidity is Consumers’ commercial paper program, which allows Consumers to issue, in one or more placements, up to $500 million in the aggregate in commercial paper notes with maturities of up to 365 days and that bear interest at fixed or floating rates. These issuances are supported by one of Consumers’ revolving credit facilities. While the amount of outstanding commercial paper does not reduce the revolving credit facility’s available capacity, Consumers does not intend to issue commercial paper in an amount exceeding the available facility capacity. At March 31, 2017, no commercial paper notes were outstanding under this program. For additional details on CMS Energy’s and Consumers’ secured revolving credit facilities and commercial paper program, see Note 4, Financings and Capitalization.

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Certain of CMS Energy’s and Consumers’ credit agreements, debt indentures, and other facilities contain covenants that require CMS Energy and Consumers to maintain certain financial ratios, as defined therein. At March 31, 2017, no default had occurred with respect to any financial covenants contained in CMS Energy’s and Consumers’ credit agreements, debt indentures, or other facilities. CMS Energy and Consumers were each in compliance with these covenants as of March 31, 2017, as presented in the following table:

	March 31, 2017
Credit Agreement, Indenture, or Facility	Limit			Actual
CMS Energy, parent only
Debt to EBITDA 1		≤	6.0 to 1.0	4.2 to 1.0
Consumers
Debt to Capital 2		≤	0.65 to 1.0	0.47 to 1.0

1 Applies to CMS Energy’s $550 million revolving and $180 million term loan credit agreements.

2 Applies to Consumers’ $650 million and $250 million revolving credit agreements and its $68 million, $35 million, and $30 million reimbursement agreements.

Components of CMS Energy’s and Consumers’ cash management plan include controlling operating expenses and capital expenditures and evaluating market conditions for financing and refinancing opportunities. CMS Energy’s and Consumers’ present level of cash and expected cash flows from operating activities, together with access to sources of liquidity, are anticipated to be sufficient to fund the companies’ contractual obligations for 2017 and beyond.

Off-Balance-Sheet Arrangements

CMS Energy, Consumers, and certain of their subsidiaries enter into various arrangements in the normal course of business to facilitate commercial transactions with third parties. These arrangements include indemnities, surety bonds, letters of credit, and financial and performance guarantees. Indemnities are usually agreements to reimburse a counterparty that may incur losses due to outside claims or breach of contract terms. The maximum payment that could be required under a number of these indemnity obligations is not estimable; the maximum obligation under indemnities for which such amounts were estimable was $153 million at March 31, 2017. While CMS Energy and Consumers believe it is unlikely that they will incur any material losses related to indemnities they have not recorded as liabilities, they cannot predict the impact of these contingent obligations on their liquidity and financial condition. For additional details on these and other guarantee arrangements, see Note 3, Contingencies and Commitments—Guarantees.

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OUTLOOK

Several business trends and uncertainties may affect CMS Energy’s and Consumers’ financial condition and results of operations. These trends and uncertainties could have a material impact on CMS Energy’s and Consumers’ consolidated income, cash flows, or financial position. For additional details regarding these and other uncertainties, see Forward-Looking Statements and Information; Note 2, Regulatory Matters; Note 3, Contingencies and Commitments; and Part II—Item 1A. Risk Factors.

Consumers Electric Utility and Gas Utility Outlook and Uncertainties

Energy Waste Reduction Plan: The 2016 Energy Law, which became effective in April 2017, expands the existing energy optimization program to include demand response programs, calling the combined initiatives energy waste reduction. The 2016 Energy Law:

· extends the requirement to achieve annual reductions of 1.0 percent in customers’ electricity use through 2021 and 0.75 percent in customers’ natural gas use indefinitely

· removes limits on investments under the program and provides for a higher return on those investments; together, these provisions effectively double the financial incentives Consumers may earn for exceeding the statutory targets

· establishes a goal of 35 percent combined renewable energy and energy waste reduction by 2025

Under its existing energy optimization plan, Consumers provides its customers with incentives to reduce usage by offering energy audits, rebates and discounts on purchases of highly efficient appliances, and other incentives and programs. In March 2017, Consumers filed applications with the MPSC for approval of an energy waste reduction plan that would amend and expand Consumers’ existing energy optimization plan and allow for recovery of increased investments to meet the requirements of the 2016 Energy Law.

Smart Energy and Gas AMR: Consumers began the full-scale deployment of smart meters in 2012 and expects to complete it by the end of 2017. Smart meters allow customers to monitor and manage their energy usage, which Consumers expects will help reduce demand during critical peak times, resulting in lower peak electric capacity requirements. In addition, Consumers is able to disconnect and reconnect service, read, and bill from smart meters remotely. Consumers will continue to add further functionality to its smart meters. Consumers is also installing communication modules on gas meters in areas where it provides both electricity and natural gas to customers. The communication modules allow Consumers to read and bill from gas meters remotely.

Consumers expects that under its Smart Energy program it will have installed a total of 1.8 million smart meters and 600,000 communication modules throughout its service territory by the end of 2017. As of March 31, 2017, Consumers had upgraded 1.5 million electric customers to smart meters and had installed 470,000 communication modules on gas meters.

In areas where it provides only natural gas to customers, Consumers began the deployment of Gas AMR technology in 2017 and expects to complete it in 2019. Under this program, Consumers plans to install communication modules on 1.2 million gas meters, allowing it to conduct drive-by meter reading.

Consumers Electric Utility Outlook and Uncertainties

Energy Resource Planning: Consumers continues to experience increasing demand for electricity due to Michigan’s growing economy and increased use of air conditioning, consumer electronics, and other electric devices, offset partially by the predicted effects of energy efficiency and conservation.

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In April 2016, Consumers retired seven of its coal-fueled electric generating units, representing 950 MW of capacity. In December 2016, Consumers and Entergy reached an agreement to terminate their PPA under which Consumers purchases virtually all of the capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. Under the agreement, which is contingent on the MPSC’s approval of Consumers’ recovery in electric rates of the termination payment, the PPA would terminate in May 2018, four years ahead of schedule.

Even with the retirements of seven of its coal-fueled units and the expected termination of the Palisades PPA, Consumers expects to meet the capacity requirements of its full-service customers through:

· energy waste reduction

· expanded use of renewable energy

· the use of the Jackson plant, a 540-MW natural gas-fueled electric generating plant purchased in 2015

· construction or purchase of electric generating units

· continued operation or upgrade of existing units, including upgrades at Ludington

· renegotiations of existing PPAs

· purchases of short-term market capacity

Specifically, to address the potential termination of the Palisades PPA, Consumers issued a request for proposals in April 2017 to acquire a natural gas-fueled generating plant of up to 800 MW. Consumers is interested in acquiring a simple-cycle or combined-cycle generating plant operating in Michigan’s Lower Peninsula. Also, Consumers completed an auction to purchase generation capacity for 2018. Any contracts entered into as a result of the request for proposals and the auction are subject to MPSC approval and are contingent on the MPSC’s approval of the termination of the Palisades PPA.

Renewable Energy Plan: The 2016 Energy Law raises the renewable energy standard from the present ten-percent requirement to 15 percent in 2021, with an interim target of 12.5 percent in 2019. Consumers is required to submit RECs, which represent proof that the associated electricity was generated from a renewable energy resource, in an amount equal to at least the required percentage of Consumers’ electric sales volume each year. Under its renewable energy plan, Consumers expects to meet its renewable energy requirement each year with a combination of newly generated RECs and previously generated RECs carried over from prior years.

In conjunction with its renewable energy plan, Consumers signed a 15-year agreement in 2015 to purchase renewable capacity, energy, and RECs from a 100-MW wind park to be constructed in Huron County, Michigan. The wind park is expected to be operational by the end of 2017. In addition, Consumers has obtained a special land use permit for the construction of two additional phases at its Cross Winds ® Energy Park: Phase II, with a nameplate capacity of 44 MW, and Phase III, with a nameplate capacity of 76 MW. In March 2017, the MPSC approved Consumers’ application to construct Phase II, which is expected to be operational by the end of 2017. Both phases of the project will qualify for certain federal production tax credits, which are expected to generate cost savings that will be passed on to customers.

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Electric Customer Deliveries and Revenue: Consumers’ electric customer deliveries are largely dependent on Michigan’s economy. Consumers expects weather-adjusted electric deliveries to increase in 2017 by one percent compared with 2016.

Over the next five years, Consumers plans conservatively for average electric delivery growth of about one-half percent annually. This increase reflects growth in electric demand, offset partially by the predicted effects of energy waste reduction programs and appliance efficiency standards. Actual delivery levels will depend on:

· energy conservation measures and results of energy waste reduction programs

· weather fluctuations

· Michigan’s economic conditions, including utilization, expansion, or contraction of manufacturing facilities, population trends, and housing activity

Electric ROA: Under existing Michigan law, electric customers in Consumers’ service territory are allowed to buy electric generation service from alternative electric suppliers in an aggregate amount up to ten percent of Consumers’ weather-adjusted retail sales for the preceding calendar year. At March 31, 2017, electric deliveries under the ROA program were at the ten-percent limit. Of Consumers’ 1.8 million electric customers, 302 customers, or 0.02 percent, purchased electric generation service under the ROA program.

The 2016 Energy Law, which became effective in April 2017, retains the ten percent cap on ROA, with certain exceptions, but establishes a path to ensure that forward capacity is secured for all electric customers in Michigan, including customers served by alternative electric suppliers under ROA. The new law also authorizes the MPSC to ensure that alternative electric suppliers have procured enough capacity to cover their anticipated capacity requirements for the four-year forward period. To this end, the MPSC issued an order in March 2017, directing Consumers to file an application to implement a state reliability mechanism. Under such a mechanism, if an alternative electric supplier did not demonstrate that it had procured its capacity requirements for the four-year forward period, ROA customers would pay a charge to the utility for capacity that is not provided by the alternative electric supplier. Consumers filed its application in April 2017.

Electric Rate Matters: Rate matters are critical to Consumers’ electric utility business. For additional details on rate matters, see Note 2, Regulatory Matters.

2017 Electric Rate Case: In March 2017, Consumers filed an application with the MPSC seeking an annual rate increase of $173 million, based on a 10.5 percent authorized return on equity. The filing requested authority to recover new investment in system reliability, environmental compliance, and technology enhancements. Presented in the following table are the components of the requested increase in revenue:

In Millions
Components of the rate increase
Investment in rate base	$	47
Operating and maintenance costs	56
Gross margin	42
Cost of capital	37
Working capital	(9		)
Total	$	173

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Palisades PPA: In December 2016, Consumers and Entergy reached an agreement to terminate their PPA in May 2018, four years ahead of schedule. Under the PPA, Consumers purchases virtually all of the capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. The prices that Consumers pays under the PPA, and which it recovers from its electric customers through the PSCR ratemaking process, are presently higher than the cost to purchase electricity from the market. In exchange for early termination, Consumers agreed to pay Entergy $172 million on the termination date.

The agreement is subject to MPSC approval. In February 2017, Consumers requested authorization to recover the termination payment through securitization. The MPSC indicated that it will make a final determination on the securitization filing by September 2017. If the MPSC does not approve Consumers’ request by September 30, 2017, the agreement will be null and void (unless otherwise extended) and the PPA will continue until April 2022 under its original terms.

Depreciation Rate Case: In November 2016, Consumers filed a depreciation rate case related to its Ludington electric utility property, requesting to increase depreciation expense by $15 million annually.

Sale of Coal-Fueled Generating Units: In April 2017, Consumers reached an agreement to sell its retired B.C. Cobb and J.R. Whiting coal-fueled electric generating units to Forsite. Under the terms of the agreement, which is contingent on MPSC approval, Consumers will transfer the generating units and associated land to Forsite. Consumers securitized the generating units in 2014; thus, the book value of the assets is zero. In addition, Consumers will pay Forsite $63 million to decommission the units and perform cleanup activities at the sites. This payment will be recorded as a reduction to Consumers’ cost of removal regulatory liability. Consumers estimates that this divestiture will save its electric customers $30 million in decommissioning costs.

Electric Environmental Outlook: Consumers’ operations are subject to various state and federal environmental laws and regulations. Consumers estimates that it will incur capital expenditures of $0.5 billion from 2017 through 2021 to continue to comply with the Clean Air Act, Clean Water Act, and numerous state and federal environmental regulations. Consumers expects to recover these costs in customer rates, but cannot guarantee this result. Consumers’ primary environmental compliance focus includes, but is not limited to, the following matters.

Air Quality: CSAPR, which became effective in 2015, requires Michigan and 27 other states to improve air quality by reducing power plant emissions that, according to EPA computer models, contribute to ground-level ozone and fine particle pollution in other downwind states. In September 2016, the EPA finalized new ozone season standards for CSAPR, which will begin in May 2017. CSAPR is presently being litigated; however, any decision will not impact Consumers’ compliance strategy, as Consumers expects its emissions to be within the CSAPR allowance allocations.

In 2012, the EPA published emission standards for electric generating units, based on Section 112 of the Clean Air Act, calling the final rule MATS. Under MATS, all of Consumers’ existing coal-fueled electric generating units were required to add additional controls for hazardous air pollutants. Consumers met the extended deadline of April 2016 for five coal-fueled units and two oil/gas-fueled units it continues to operate and retired its seven remaining coal-fueled units. MATS is presently being litigated, but any decision is not expected to impact Consumers’ MATS compliance strategy. In addition, Consumers must comply with the Michigan Mercury Rule and with its settlement agreement with the EPA entered into in 2014 concerning opacity and NSR.

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In 2015, the EPA released its new rule to lower the NAAQS for ozone. The new ozone NAAQS will make it more difficult to construct or modify power plants in many areas of the country, including some parts of Michigan, if the areas are designated to be in nonattainment of the new standard. The NAAQS for ozone are presently being litigated. Consumers is monitoring the designation process of this rule, as well as the litigation, to determine what, if any, effect it will have on its electric generating units.

Consumers’ strategy to comply with air quality regulations, including CSAPR, NAAQS, and MATS, involved the installation of emission control equipment at some facilities and the suspension of operations at others; however, Consumers continues to evaluate these rules in conjunction with other EPA rulemakings, litigation, and congressional action. This evaluation could result in:

· a change in Consumers’ fuel mix

· changes in the types of generating units Consumers may purchase or build in the future

· changes in how certain units are used

· the retirement, mothballing, or repowering with an alternative fuel of some of Consumers’ generating units

· changes in Consumers’ environmental compliance costs

Greenhouse Gases: There have been numerous legislative and regulatory initiatives at the state, regional, national, and international levels that involve the potential regulation of greenhouse gases. Consumers continues to monitor and comment on these initiatives and to follow litigation involving greenhouse gases.

In 2015, the EPA finalized new rules pursuant to Section 111(b) of the Clean Air Act to limit carbon dioxide emissions from new electric generating units. New coal-fueled units will not be able to meet this limit without installing carbon dioxide control equipment using such methods as carbon capture and sequestration. In addition, the EPA finalized new rules pursuant to Section 111(b) of the Clean Air Act to limit carbon dioxide emissions from modified or reconstructed electric generating units. Both of these rules are being litigated.

Also in 2015, the EPA published final rules pursuant to Section 111(d) of the Clean Air Act to limit carbon dioxide emissions from existing electric generating units, calling the rules the “Clean Power Plan.” Certain states, corporations, and industry groups have initiated litigation opposing the proposed Clean Power Plan. In February 2016, the U.S. Supreme Court stayed the Clean Power Plan while the litigation proceeds. While Michigan’s Attorney General has joined the litigation, the governor had indicated that Michigan intended to file a state carbon implementation plan, which was to be submitted for EPA review and approval in 2018. Work on this plan has ceased, however, in light of the stay of the Clean Power Plan and pending outcome of the litigation.

The rules would require a 32 percent nationwide reduction in carbon emissions from existing power plants by 2030 (based on 2005 levels). Initial state implementation plans would have been due September 2016 with extensions available until 2018. It is expected that these deadlines will be extended as a result of the rules being stayed. States choosing not to develop their own implementation plans would be subject to the federal plan. The Trump administration issued an executive order in March 2017 directing the EPA and other federal agencies to review rules and policies that burden domestic energy production, including the Clean Power Plan. The EPA subsequently filed motions to hold the Section 111(b) and Clean Power Plan litigation in abeyance while it reconsiders the rule.

In 2015, a group of 195 countries finalized the Paris Agreement, which governs carbon dioxide reduction measures beginning in 2020. As part of this agreement, the United States pledged a 26 percent reduction in greenhouse gas emissions by 2025 (with aspirations to achieve a 28 percent reduction) compared with 2005 levels. These targets are in line with the now-stayed Clean Power Plan targets. While these emission reduction commitments are non-binding, they will be governed by the Clean Power Plan should it survive

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judicial scrutiny. The Trump administration has indicated that it intends to re-examine the Paris Agreement in the coming months.

While Consumers cannot predict the outcome of changes in policy under the Trump administration or of other legislative or regulatory initiatives involving the potential regulation of greenhouse gases, it intends to continue to move forward with its clean energy plan, its present carbon reduction target, and its emphasis on supply diversity. Consumers will continue to monitor regulatory activity regarding greenhouse gas emissions standards that may affect electric generating units.

Litigation, as well as federal laws, EPA regulations regarding greenhouse gases, or similar treaties, state laws, or rules, if enacted or ratified, could ultimately require Consumers to replace equipment, install additional emission control equipment, purchase emission allowances, curtail operations, arrange for alternative sources of supply, or take other steps to manage or lower the emission of greenhouse gases. Although associated capital or operating costs relating to greenhouse gas regulation or legislation could be material and cost recovery cannot be assured, Consumers expects to recover these costs and capital expenditures in rates consistent with the recovery of other reasonable costs of complying with environmental laws and regulations.

CCRs: In 2015, the EPA published a final rule regulating CCRs, such as coal ash, under RCRA. The final rule adopts minimum standards for beneficially reusing and disposing of non-hazardous CCRs. The rule establishes new minimum requirements for site location, groundwater monitoring, flood protection, storm water design, fugitive dust control, and public disclosure of information. The rule also sets out conditions under which CCR units would be forced to cease receiving CCR and non-CCR waste and initiate closure based on the inability to achieve minimum safety standards, meet a location standard, or meet minimum groundwater standards. Consumers continues to develop work plans for submission to the MDEQ for concurrence to ensure coordination between federal and state requirements. Furthermore, Congress passed legislation in December 2016 that allows states to develop a permitting program for CCR under RCRA, and Michigan will likely adopt such a program. As a result, Consumers may need to adjust its recorded ARO associated with coal ash disposal sites depending on the outcome of its submissions to the MDEQ and on a future RCRA permitting program under MDEQ, if the EPA approves a state-level program. Consumers has historically been authorized to recover in electric rates costs incurred related to cleanup and closure of coal ash disposal sites.

Water: The EPA’s rule to regulate existing electric generating plant cooling water intake systems under Section 316(b) of the Clean Water Act became effective in 2014. The rule is aimed at reducing alleged harmful impacts on fish and shellfish. In 2015, the EPA released its final effluent limitation guidelines, which set stringent new requirements for the discharge from electric generating units into wastewater streams. In April 2017, the EPA announced a decision to reconsider the final rule, which is being litigated, and administratively stayed and delayed the compliance dates. Consumers believes that its environmental strategy will allow it to achieve compliance with the final rule, should it survive reconsideration and judicial review.

In June 2015, the EPA and the U.S. Army Corps of Engineers published a final rule redefining “waters of the United States,” which designates the EPA’s jurisdiction under the Clean Water Act. Numerous states and other interested parties, including Michigan’s Attorney General, have filed suits in federal courts to block the rule, which was stayed in October 2015, and that litigation remains pending. The Trump administration issued an executive order in February 2017 directing the EPA and the U.S. Army Corps of Engineers to re-examine the “waters of the United States” rule. Consumers does not expect any adverse changes to its environmental strategy as a result of the final rule or its re-examination.

Many of Consumers’ facilities maintain NPDES permits, which are valid for five years and vital to the facilities’ operations. Failure of the MDEQ to renew any NPDES permit, a successful appeal against a permit, or onerous terms contained in a permit could have a significant detrimental effect on the operations of a facility.

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PCBs: In 2010, the EPA issued an Advance Notice of Proposed Rulemaking, indicating that it is considering a variety of regulatory actions with respect to PCBs. One approach would aim to phase out equipment containing PCBs by 2025. Another approach would eliminate an exemption for small equipment containing PCBs. To comply with any such regulatory actions, Consumers could incur substantial costs associated with existing electrical equipment potentially containing PCBs. The timing of any future rulemaking is uncertain as the Trump administration has not indicated that a PCB rulemaking is a priority.

Other electric environmental matters could have a material impact on Consumers’ outlook. For additional details on other electric environmental matters, see Note 3, Contingencies and Commitments—Consumers Electric Utility Contingencies—Electric Environmental Matters.

Consumers Gas Utility Outlook and Uncertainties

Gas Deliveries: Consumers expects weather-adjusted gas deliveries in 2017 and over the next five years to remain stable relative to 2016. This outlook reflects modest growth in gas demand offset by the predicted effects of energy efficiency and conservation. Actual delivery levels from year to year may vary from this expectation due to:

· weather fluctuations

· use by power producers

· availability and development of renewable energy sources

· gas price changes

· Michigan economic conditions, including population trends and housing activity

· the price of competing energy sources or fuels

· energy efficiency and conservation impacts

Gas Rate Matters: Rate matters are critical to Consumers’ gas utility business. For additional details on rate matters, see Note 2, Regulatory Matters.

Gas Transmission: In September 2016, Consumers filed an application with the MPSC to invest $610 million in the construction of a 95-mile, 24-inch-diameter natural gas pipeline in Saginaw, Genesee, and Oakland Counties, Michigan. The MPSC issued an order in March 2017 authorizing Consumers to construct and operate the pipeline. Consumers expects the pipeline to be operational by the end of 2022.

Gas Pipeline Safety: A new rule from the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, effective in April 2017, requires the installation of additional safety valves on certain gas distribution service lines. Consumers is evaluating the cost of complying with this rule, but expects that it will be able to recover the cost in rates, consistent with the recovery of other reasonable costs of complying with laws and regulations.

Gas Environmental Outlook: Consumers expects to incur response activity costs at a number of sites, including 23 former MGP sites. For additional details, see Note 3, Contingencies and Commitments—Consumers Gas Utility Contingencies—Gas Environmental Matters.

Enterprises Outlook and Uncertainties

The primary focus with respect to CMS Energy’s non-utility businesses is to maximize the value of their generating assets, which represent 1,077 MW of capacity, and to pursue opportunities for the development of renewable generation projects.

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Trends, uncertainties, and other matters that could have a material impact on CMS Energy’s consolidated income, cash flows, or financial position include:

· changes in energy and capacity prices

· changes in commodity prices and interest rates on certain derivative contracts that do not qualify for hedge accounting and must be marked to market through earnings

· changes in various environmental laws, regulations, principles, or practices, or in their interpretation

· the outcome of certain legal proceedings

· indemnity and environmental remediation obligations at Bay Harbor

· obligations related to a tax claim from the government of Equatorial Guinea

· representations, warranties, and indemnities provided by CMS Energy in connection with previous sales of assets

For additional details regarding the enterprises segment’s uncertainties, see Note 3, Contingencies and Commitments.

Other Outlook and Uncertainties

EnerBank: EnerBank is a Utah state-chartered, FDIC-insured industrial bank providing unsecured consumer installment loans for financing home improvements. EnerBank represented four percent of CMS Energy’s net assets at March 31, 2017 and four percent of CMS Energy’s net income available to common stockholders for the three months ended March 31, 2017. The carrying value of EnerBank’s loan portfolio was $1.2 billion at March 31, 2017. Its loan portfolio was funded primarily by certificates of deposit of $1.2 billion. The twelve-month rolling average net default rate on loans held by EnerBank was 1.1 percent at March 31, 2017. CMS Energy is required both by law and by contract to provide financial support, including infusing additional capital, to ensure that EnerBank satisfies mandated capital requirements and has sufficient liquidity to operate. With its self-funding plan, EnerBank has exceeded these requirements historically and exceeded them as of March 31, 2017.

Litigation: CMS Energy, Consumers, and certain of their subsidiaries are named as parties in various litigation matters, as well as in administrative proceedings before various courts and governmental agencies, arising in the ordinary course of business. For additional details regarding these and other legal matters, see Note 2, Regulatory Matters and Note 3, Contingencies and Commitments.

NEW ACCOUNTING STANDARDS

For details regarding new accounting standards issued but not yet effective, see Note 1, New Accounting Standards.

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CMS Energy Corporation

Consolidated Statements of Income (Unaudited)

In Millions, Except Per Share Amounts
Three Months Ended March 31	2017			2016

Operating Revenue	$	1,829		$	1,801

Operating Expenses
Fuel for electric generation	117			125
Purchased and interchange power	333			346
Purchased power – related parties	22			22
Cost of gas sold	336			354
Maintenance and other operating expenses	290			303
Depreciation and amortization	262			238
General taxes	81			87
Total operating expenses	1,441			1,475

Operating Income	388			326

Other Income (Expense)
Interest income	5			1
Allowance for equity funds used during construction	2			3
Income from equity method investees	4			4
Nonoperating retirement benefits, net	3			10
Other income	2			3
Other expense	(2		)	(3		)
Total other income	14			18

Interest Charges
Interest on long-term debt	100			100
Other interest expense	8			7
Allowance for borrowed funds used during construction	(1		)	(1		)
Total interest charges	107			106

Income Before Income Taxes	295			238
Income Tax Expense	96			74

Net Income Available to Common Stockholders	$	199		$	164

Basic Earnings Per Average Common Share	$	0.71		$	0.59
Diluted Earnings Per Average Common Share	$	0.71		$	0.59

Dividends Declared Per Common Share	$	0.33		$	0.31

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consolidated Statements of Comprehensive Income (Unaudited)

				In Millions
Three Months Ended March 31	2017			2016

Net Income	$	199		$	164

Investments
Unrealized gain on investments, net of tax of $- for all periods	1			-

Other Comprehensive Income	1			-

Comprehensive Income	$		200	$	164

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consolidated Statements of Cash Flows (Unaudited)

	In Millions
Three Months Ended March 31	2017			2016

Cash Flows from Operating Activities
Net income	$	199		$	164
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	262			238
Deferred income taxes and investment tax credit	90			68
Other non-cash operating activities and reconciling adjustments	21			21
Cash provided by (used in) changes in assets and liabilities
Accounts and notes receivable and accrued revenue	37			16
Inventories	201			274
Accounts payable and accrued refunds	(40		)	(48		)
Other current and non-current assets and liabilities	(124		)	(101		)
Net cash provided by operating activities	646			632

Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease)	(365		)	(407		)
Decrease (increase) in EnerBank notes receivable	14			(16		)
Proceeds from the sale of EnerBank notes receivable	19			-
Cost to retire property and other investing activities	(14		)	(21		)
Net cash used in investing activities	(346		)	(444		)

Cash Flows from Financing Activities
Proceeds from issuance of debt	923			30
Issuance of common stock	3			63
Net increase (decrease) in EnerBank certificates of deposit	(29		)	14
Payment of dividends on common stock	(94		)	(86		)
Retirement of long-term debt	(475		)	(30		)
Decrease in notes payable	(398		)	(249		)
Payment of capital lease obligations and other financing costs	(24		)	(12		)
Net cash used in financing activities	(94		)	(270		)

Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts	206			(82		)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period	257			288

Cash and Cash Equivalents, Including Restricted Amounts, End of Period	$	463		$	206

Other non-cash investing and financing activities
Non-cash transactions
Capital expenditures not paid	$	112		$	173

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consolidated Balance Sheets (Unaudited)

ASSETS
			In Millions
	March 31		December 31
	2017		2016

Current Assets
Cash and cash equivalents	$	433	$	235
Restricted cash and cash equivalents	30		19
Accounts receivable and accrued revenue, less allowance of $24 for both periods	775		821
Notes receivable, less allowance of $17 in 2017 and $16 in 2016	186		180
Notes receivable held for sale	19		39
Accounts receivable – related parties	12		12
Inventories at average cost
Gas in underground storage	243		446
Materials and supplies	118		119
Generating plant fuel stock	64		61
Deferred property taxes	203		250
Regulatory assets	12		17
Prepayments and other current assets	120		81
Total current assets	2,215		2,280

Plant, Property, and Equipment
Plant, property, and equipment, gross	21,265		21,010
Less accumulated depreciation and amortization	6,206		6,056
Plant, property, and equipment, net	15,059		14,954
Construction work in progress	798		761
Total plant, property, and equipment	15,857		15,715

Other Non-current Assets
Regulatory assets	2,072		2,091
Accounts and notes receivable	1,092		1,118
Investments	66		65
Other	321		353
Total other non-current assets	3,551		3,627

Total Assets	$	21,623	$	21,622

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LIABILITIES AND EQUITY
				In Millions
	March 31			December 31
	2017			2016

Current Liabilities
Current portion of long-term debt, capital leases, and financing obligation	$	812		$	886
Notes payable	-			398
Accounts payable	479			598
Accounts payable – related parties	9			12
Accrued rate refunds	73			21
Accrued interest	73			98
Accrued taxes	260			348
Regulatory liabilities	85			95
Other current liabilities	135			199
Total current liabilities	1,926			2,655

Non-current Liabilities
Long-term debt	9,129			8,640
Non-current portion of capital leases and financing obligation	104			110
Regulatory liabilities	2,068			2,041
Postretirement benefits	781			789
Asset retirement obligations	451			447
Deferred investment tax credit	72			73
Deferred income taxes	2,390			2,287
Other non-current liabilities	295			290
Total non-current liabilities	15,290			14,677

Commitments and Contingencies (Notes 2 and 3)

Equity
Common stockholders’ equity
Common stock, authorized 350.0 shares; outstanding 280.0 shares in 2017 and 279.2 shares in 2016	3			3
Other paid-in capital	4,927			4,916
Accumulated other comprehensive loss	(49		)	(50		)
Accumulated deficit	(511		)	(616		)
Total common stockholders’ equity	4,370			4,253
Noncontrolling interests	37			37
Total equity	4,407			4,290

Total Liabilities and Equity	$	21,623		$	21,622

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consolidated Statements of Changes in Equity (Unaudited)

				In Millions
Three Months Ended March 31	2017			2016

Total Equity at Beginning of Period	$	4,290		$	3,975

Common Stock
At beginning and end of period	3			3

Other Paid-in Capital
At beginning of period	4,916			4,837
Common stock issued	8			70
Common stock repurchased	(12		)	(10		)
Common stock reissued	15			-
At end of period	4,927			4,897

Accumulated Other Comprehensive Loss
At beginning of period	(50		)	(47		)
Retirement benefits liability
At beginning and end of period	(50		)	(43		)
Investments
At beginning of period	-			(4		)
Unrealized gain on investments	1			-
At end of period	1			(4		)
At end of period	(49		)	(47		)

Accumulated Deficit
At beginning of period	(616		)	(855		)
Cumulative effect of change in accounting principle	-			33
Net income attributable to CMS Energy	199			164
Dividends declared on common stock	(94		)	(86		)
At end of period	(511		)	(744		)

Noncontrolling Interests
At beginning and end of period	37			37

Total Equity at End of Period	$	4,407		$	4,146

The accompanying notes are an integral part of these statements.

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Consumers Energy Company

Consolidated Statements of Income (Unaudited)

				In Millions
Three Months Ended March 31	2017			2016

Operating Revenue	$	1,737		$	1,723

Operating Expenses
Fuel for electric generation	89			99
Purchased and interchange power	331			343
Purchased power – related parties	22			22
Cost of gas sold	332			351
Maintenance and other operating expenses	265			278
Depreciation and amortization	260			237
General taxes	79			85
Total operating expenses	1,378			1,415

Operating Income	359			308

Other Income (Expense)
Interest income	4			1
Allowance for equity funds used during construction	2			3
Nonoperating retirement benefits, net	3			9
Other income	14			3
Other expense	(2		)	(3		)
Total other income	21			13

Interest Charges
Interest on long-term debt	66			65
Other interest expense	3			3
Allowance for borrowed funds used during construction	(1		)	(1		)
Total interest charges	68			67

Income Before Income Taxes	312			254
Income Tax Expense	101			82

Net Income Available to Common Stockholder	$	211		$	172

The accompanying notes are an integral part of these statements.

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Consumers Energy Company

Consolidated Statements of Comprehensive Income (Unaudited)

				In Millions
Three Months Ended March 31	2017			2016

Net Income	$	211		$	172

Investments
Unrealized gain on investments, net of tax of $- and $2	2			3
Reclassification adjustments included in net income, net of tax of $(5) and $-	(8		)	-

Other Comprehensive Income (Loss)	(6		)	3

Comprehensive Income	$	205		$	175

The accompanying notes are an integral part of these statements.

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Consumers Energy Company

Consolidated Statements of Cash Flows (Unaudited)

				In Millions
Three Months Ended March 31	2017			2016

Cash Flows from Operating Activities
Net income	$	211		$	172
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	260			237
Deferred income taxes and investment tax credit	69			62
Other non-cash operating activities and reconciling adjustments	22			17
Cash provided by (used in) changes in assets and liabilities
Accounts and notes receivable and accrued revenue	43			33
Inventories	197			270
Accounts payable and accrued refunds	(38		)	(42		)
Other current and non-current assets and liabilities	(116		)	(84		)
Net cash provided by operating activities	648			665

Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease)	(361		)	(406		)
Cost to retire property and other investing activities	(21		)	(19		)
Net cash used in investing activities	(382		)	(425		)

Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	349			-
Stockholder contribution	250			150
Payment of dividends on common stock	(148		)	(155		)
Retirement of long-term debt	(250		)	-
Decrease in notes payable	(398		)	(249		)
Payment of capital lease obligations and other financing costs	(9		)	(1		)
Net cash used in financing activities	(206		)	(255		)

Net Increase (Decrease) in Cash and Cash Equivalents, Including Restricted Amounts	60			(15		)
Cash and Cash Equivalents, Including Restricted Amounts, Beginning of Period	152			71

Cash and Cash Equivalents, Including Restricted Amounts, End of Period	$	212		$	56

Other non-cash investing and financing activities
Non-cash transactions
Capital expenditures not paid	$	101		$	154

The accompanying notes are an integral part of these statements.

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Consumers Energy Company

Consolidated Balance Sheets (Unaudited)

ASSETS

			In Millions
	March 31		December 31
	2017		2016

Current Assets
Cash and cash equivalents	$	182	$	131
Restricted cash and cash equivalents	30		19
Accounts receivable and accrued revenue, less allowance of $24 for both periods	755		800
Notes receivable	29		29
Accounts receivable – related parties	2		9
Inventories at average cost
Gas in underground storage	243		446
Materials and supplies	113		114
Generating plant fuel stock	63		57
Deferred property taxes	203		250
Regulatory assets	12		17
Prepayments and other current assets	114		70
Total current assets	1,746		1,942

Plant, Property, and Equipment
Plant, property, and equipment, gross	21,092		20,838
Less accumulated depreciation and amortization	6,143		5,994
Plant, property, and equipment, net	14,949		14,844
Construction work in progress	794		759
Total plant, property, and equipment	15,743		15,603

Other Non-current Assets
Regulatory assets	2,072		2,091
Accounts and notes receivable	25		27
Investments	20		33
Other	218		250
Total other non-current assets	2,335		2,401

Total Assets	$	19,824	$	19,946

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LIABILITIES AND EQUITY

				In Millions
	March 31			December 31
	2017			2016

Current Liabilities
Current portion of long-term debt, capital leases, and financing obligation	$	327		$	397
Notes payable	-			398
Accounts payable	465			580
Accounts payable – related parties	13			18
Accrued rate refunds	73			21
Accrued interest	47			67
Accrued taxes	291			354
Regulatory liabilities	85			95
Other current liabilities	99			164
Total current liabilities	1,400			2,094

Non-current Liabilities
Long-term debt	5,419			5,253
Non-current portion of capital leases and financing obligation	104			110
Regulatory liabilities	2,068			2,041
Postretirement benefits	723			730
Asset retirement obligations	450			446
Deferred investment tax credit	72			73
Deferred income taxes	3,119			3,042
Other non-current liabilities	223			218
Total non-current liabilities	12,178			11,913

Commitments and Contingencies (Notes 2 and 3)

Equity
Common stockholder’s equity
Common stock, authorized 125.0 shares; outstanding 84.1 shares for both periods	841			841
Other paid-in capital	4,249			3,999
Accumulated other comprehensive loss	(9		)	(3		)
Retained earnings	1,128			1,065
Total common stockholder’s equity	6,209			5,902
Preferred stock	37			37
Total equity	6,246			5,939

Total Liabilities and Equity	$	19,824		$	19,946

The accompanying notes are an integral part of these statements.

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Consumers Energy Company

Consolidated Statements of Changes in Equity (Unaudited)

				In Millions
Three Months Ended March 31	2017			2016

Total Equity at Beginning of Period	$	5,939		$	5,546

Common Stock
At beginning and end of period	841			841

Other Paid-in Capital
At beginning of period	3,999			3,724
Stockholder contribution	250			150
At end of period	4,249			3,874

Accumulated Other Comprehensive Loss
At beginning of period	(3		)	(6		)
Retirement benefits liability
At beginning and end of period	(21		)	(19		)
Investments
At beginning of period	18			13
Unrealized gain on investments	2			3
Reclassification adjustments included in net income	(8		)	-
At end of period	12			16
At end of period	(9		)	(3		)

Retained Earnings
At beginning of period	1,065			950
Net income	211			172
Dividends declared on common stock	(148		)	(155		)
At end of period	1,128			967

Preferred Stock
At beginning and end of period	37			37

Total Equity at End of Period	$	6,246		$	5,716

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consumers Energy Company

Notes to the Unaudited Consolidated Financial Statements

These interim consolidated financial statements have been prepared by CMS Energy and Consumers in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. As a result, CMS Energy and Consumers have condensed or omitted certain information and note disclosures normally included in consolidated financial statements prepared in accordance with GAAP. CMS Energy and Consumers have reclassified certain prior period amounts to conform to the presentation in the current period and to reflect the implementation of new accounting standards. In management’s opinion, the unaudited information contained in this report reflects all adjustments of a normal recurring nature necessary to ensure that CMS Energy’s and Consumers’ financial position, results of operations, and cash flows for the periods presented are fairly stated. The notes to the unaudited consolidated financial statements and the related unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the 2016 Form 10-K. Due to the seasonal nature of CMS Energy’s and Consumers’ operations, the results presented for this interim period are not necessarily indicative of results to be achieved for the fiscal year.

1: NEW ACCOUNTING STANDARDS

Implementation of New Accounting Standards

ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost: This standard was issued to improve the reporting of net benefit cost by employers that offer defined benefit pension plans and other postretirement benefit plans. The required effective date of the standard for CMS Energy and Consumers is January 1, 2018, but early adoption is permitted in the first interim period of 2017. CMS Energy and Consumers elected to adopt the standard as of January 1, 2017. The standard requires employers to report the service cost component of net benefit cost in the same line item on the income statement as other employee compensation costs, while presenting the other cost components separately outside of operating income. This change is to be applied retrospectively to all prior periods presented. Accordingly, for the three months ended March 31, 2017 and 2016, CMS Energy and Consumers have presented the service cost component of their retirement benefits plans in maintenance and other operating expenses on the consolidated statements of income, while presenting the other components in nonoperating retirement benefits, net, under other income (expense). Prior to this standard, CMS Energy and Consumers had presented all of the cost components in maintenance and other operating expenses. Under a practical expedient permitted by the standard, CMS Energy and Consumers used benefit cost amounts disclosed for prior periods as the basis for retrospective application.

In addition, under this standard, only the service cost component is eligible for capitalization as part of the cost of an asset. This change is to be applied prospectively upon adoption. Accordingly, for the three months ended March 31, 2017, CMS Energy and Consumers capitalized a portion of the service cost component of their retirement benefits plans to plant, property, and equipment, while recognizing the other components in net income. In prior periods, a portion of all cost components was capitalized. For further details on the net periodic cost of CMS Energy’s and Consumers’ retirement benefits plans, see Note 8, Retirement Benefits. The implementation of this standard did not have a material impact on CMS Energy’s or Consumers’ consolidated net income, cash flows, or financial position.

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New Accounting Standards Not Yet Effective

ASU 2014-09, Revenue from Contracts with Customers: This standard provides new guidance for recognizing revenue from contracts with customers. A primary objective of the standard is to provide a single, comprehensive revenue recognition model that will be applied across entities, industries, and capital markets. The new guidance will replace most of the existing revenue recognition requirements in GAAP, although certain guidance specific to rate-regulated utilities will be retained. The standard will be effective on January 1, 2018 for CMS Energy and Consumers, but early adoption in 2017 is permitted. Entities will have the option to apply the standard retrospectively to all prior periods presented, or to apply it retrospectively only to contracts existing at the effective date, with the cumulative effect of the standard recorded as an adjustment to beginning retained earnings. CMS Energy and Consumers have determined that they will not elect to adopt the standard early, but they are still assessing how they will apply the standard upon adoption.

CMS Energy and Consumers have determined that the standard will have no impact on a majority of their revenues. They have also determined that it is unlikely that the standard will require changes in their accounting for utility contributions in aid of construction or their existing practice of recognizing revenue at the billing rates, with associated expenses for uncollectible accounts. While CMS Energy and Consumers have not yet identified any changes in their revenue recognition practices that may be required, they are continuing to evaluate the standard.

ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities: This standard, which will be effective January 1, 2018 for CMS Energy and Consumers, is intended to improve the accounting for financial instruments. The standard will require investments in equity securities to be measured at fair value, with changes in fair value recognized in net income, except for certain investments such as those that qualify for equity-method accounting. The standard will no longer permit unrealized gains and losses for certain equity investments to be recorded in AOCI. CMS Energy and Consumers presently record unrealized gains and losses on certain equity investments, including the mutual funds in the DB SERP and Consumers’ investment in CMS Energy common stock, in AOCI, except that unrealized losses determined to be other than temporary are reported in earnings. For further details on these investments, see Note 6, Financial Instruments. Entities will apply the standard using a modified retrospective approach, with a cumulative-effect adjustment recorded to beginning retained earnings on the effective date.

ASU 2016-02, Leases: This standard establishes a new accounting model for leases. The standard will require entities to recognize lease assets and liabilities on the balance sheet for all leases with a term of more than one year, including operating leases, which are not recorded on the balance sheet under existing standards. As a result, CMS Energy and Consumers expect to recognize additional lease assets and liabilities for their operating leases under this standard. The new guidance will also amend the definition of a lease to require that a lessee control the use of a specified asset, and not simply control or take the output of the asset. On the income statement, leases that meet existing capital lease criteria will generally be accounted for under a financing model, while operating leases will generally be accounted for under a straight-line expense model. The standard will be effective on January 1, 2019 for CMS Energy and Consumers, but early adoption is permitted. CMS Energy and Consumers are continuing to evaluate the impact of the standard on their consolidated financial statements and do not presently expect to adopt the standard early.

ASU 2016-13, Measurement of Credit Losses on Financial Instruments: This standard, which will be effective January 1, 2020 for CMS Energy and Consumers, provides new guidance for estimating and recording credit losses on financial instruments. The standard will apply to the recognition of loan losses at EnerBank as well as to the recognition of uncollectible accounts expense at Consumers. Entities will apply the standard using a modified retrospective approach, with a cumulative-effect adjustment recorded

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to beginning retained earnings on the effective date. CMS Energy and Consumers are evaluating the impact of the standard on their consolidated financial statements.

2: REGULATORY MATTERS

Regulatory matters are critical to Consumers. The Michigan Attorney General, ABATE, the MPSC Staff, and certain other parties typically participate in MPSC proceedings concerning Consumers, such as Consumers’ rate cases and PSCR and GCR processes. These parties often challenge various aspects of those proceedings, including the prudence of Consumers’ policies and practices, and seek cost disallowances and other relief. The parties also have appealed significant MPSC orders. Depending upon the specific issues, the outcomes of rate cases and proceedings, including judicial proceedings challenging MPSC orders or other actions, could negatively affect CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. Consumers cannot predict the outcome of these proceedings.

There are multiple appeals pending that involve various issues concerning cost recovery from customers, the adequacy of the record evidence supporting the recovery of Smart Energy investments, and other matters. Consumers is unable to predict the outcome of these appeals.

2016 Electric Rate Case: In March 2016, Consumers filed an application with the MPSC seeking an annual rate increase of $225 million, based on a 10.7 percent authorized return on equity. In September 2016, Consumers self-implemented an annual rate increase of $170 million, subject to refund with interest. The MPSC issued an order in February 2017, authorizing an annual rate increase of $113 million, based on a 10.1 percent authorized return on equity. Consumers had a recorded liability of $16 million for customer refunds at March 31, 2017.

Gas Rate Case: In August 2016, Consumers filed an application with the MPSC seeking an annual rate increase of $90 million, based on a 10.6 percent authorized return on equity. In March 2017, Consumers reduced its requested annual rate increase to $80 million, of which the majority relates 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 nonfuel revenues with the revenues approved by the MPSC, and another that would provide for additional annual rate increases of $35 million beginning in 2018 and another $35 million beginning in 2019 for incremental investments that Consumers plans to make in those years, subject to reconciliation. These future investments are intended to help ensure adequate system capacity and deliverability.

The MPSC issued an order in January 2017, limiting Consumers’ self-implementation to an annual rate increase of $20 million. Accordingly, in January 2017, Consumers self-implemented an annual rate increase of $20 million, subject to refund with interest.

Energy Optimization Plan Incentive: Consumers will file its 2016 energy optimization reconciliation in May 2017, requesting the MPSC’s approval to collect the maximum performance incentive of $18 million from customers for exceeding its statutory savings targets in 2016. Consumers recognized incentive revenue under this program of $18 million in 2016.

Depreciation Rate Case: In August 2016, Consumers filed a depreciation rate case related to its gas utility property, requesting to decrease depreciation expense by $3 million annually. In March 2017, the MPSC approved a settlement agreement authorizing the requested decrease in depreciation expense effective as of January 2017.

FERC Transmission Order: In September 2016, FERC issued an order reducing the rate of return on equity earned by transmission owners operating within MISO to a base of 10.32 percent from

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12.38 percent. FERC ordered MISO and transmission owners to provide refunds, with interest, to transmission customers such as Consumers for the period from November 2013 through February 2015. In February 2017, as a result of this order, Consumers received from MISO a credit of $28 million, which it will return to its electric customers through the PSCR ratemaking process. The FERC order is subject to further legal proceedings.

3: CONTINGENCIES AND COMMITMENTS

CMS Energy and Consumers are involved in various matters that give rise to contingent liabilities. Depending on the specific issues, the resolution of these contingencies could negatively affect CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. In their disclosures of these matters, CMS Energy and Consumers provide an estimate of the possible loss or range of loss when such an estimate can be made. Disclosures that state that CMS Energy or Consumers cannot predict the outcome of a matter indicate that they are unable to estimate a possible loss or range of loss for the matter.

CMS Energy Contingencies

Gas Index Price Reporting Litigation: CMS Energy, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company, have been named as defendants in four class action lawsuits and one individual lawsuit arising as a result of alleged inaccurate natural gas price reporting to publications that report trade information. Allegations include price-fixing conspiracies, restraint of trade, and artificial inflation of natural gas retail prices in Kansas, Missouri, and Wisconsin. Plaintiffs are making claims for the following: treble damages, full consideration damages, exemplary damages, costs, interest, and/or attorneys’ fees.

After removal to federal court, all of the cases were transferred to a single federal district court pursuant to the multidistrict litigation process. In 2010 and 2011, all claims against CMS Energy defendants were dismissed by the district court based on FERC preemption. Plaintiffs filed appeals in all of the cases. The issues on appeal were whether the district court erred in dismissing the cases based on FERC preemption and denying the plaintiffs’ motions for leave to amend their complaints to add a federal Sherman Act antitrust claim.

In 2013, the U.S. Court of Appeals for the Ninth Circuit reversed the district court decision. The appellate court found that FERC preemption does not apply under the facts of these cases. The appellate court affirmed the district court’s denial of leave to amend to add federal antitrust claims. The matter was appealed to the U.S. Supreme Court, which in 2015 upheld the Ninth Circuit’s decision. The cases were remanded back to the federal district court. In May 2016, the federal district court granted the defendants’ motion for summary judgment in the individual lawsuit based on a release in a prior settlement involving similar allegations and reinstated CMS Energy as a defendant in one of the class action lawsuits. The order of summary judgment has been appealed. In December 2016, CMS Energy entities reached a tentative settlement with the plaintiffs in the three Kansas and Missouri cases for an amount that was not material to CMS Energy. The tentative settlement and request for preliminary approval have been filed in the federal district court. The settlement will be subject to court approval. Other CMS Energy entities remain as defendants in the two Wisconsin class action lawsuits.

These cases involve complex facts, a large number of similarly situated defendants with different factual positions, and multiple jurisdictions. Presently, any estimate of liability would be highly speculative; the amount of CMS Energy’s reasonably possible loss would be based on widely varying models previously untested in this context. If the outcome after appeals is unfavorable, these cases could negatively affect CMS Energy’s liquidity, financial condition, and results of operations.

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Bay Harbor: CMS Land retained environmental remediation obligations for the collection and treatment of leachate, a liquid consisting of water and other substances, at Bay Harbor after selling its interests in the development in 2002. Leachate is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site. In 2012, CMS Land and the MDEQ finalized an agreement that established the final remedies and the future water quality criteria at the site. CMS Land completed all construction necessary to implement the remedies required by the agreement and will continue to maintain and operate a system to discharge treated leachate into Little Traverse Bay under an NPDES permit issued in 2010 and renewed in October 2016. The renewed NPDES permit is valid through September 2020.

Various claims have been brought against CMS Land or its affiliates, including CMS Energy, alleging environmental damage to property, loss of property value, insufficient disclosure of environmental matters, breach of agreement relating to access, or other matters. CMS Land and other parties have received a demand for payment from the EPA in the amount of $8 million, plus interest. The EPA is seeking recovery under CERCLA of response costs allegedly incurred at Bay Harbor. These costs exceed what was agreed to in a 2005 order between CMS Land and the EPA, and CMS Land has communicated to the EPA that it does not believe that this is a valid claim. The EPA has filed a lawsuit to collect these costs.

At March 31, 2017, CMS Energy had a recorded liability of $51 million for its remaining obligations for environmental remediation. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.34 percent and an inflation rate of one percent on annual operating and maintenance costs. The undiscounted amount of the remaining obligation is $64 million. CMS Energy expects to pay the following amounts for long-term liquid disposal and operating and maintenance costs in 2017 and in each of the next four years:

							In Millions
	2017		2018		2019		2020		2021
CMS Energy
Long-term liquid disposal and operating and maintenance costs	$	4	$	4	$	4	$	4	$	4

CMS Energy’s estimate of response activity costs and the timing of expenditures could change if there are changes in circumstances or assumptions used in calculating the liability. Although a liability for its present estimate of remaining response activity costs has been recorded, CMS Energy cannot predict the ultimate financial impact or outcome of this matter.

Equatorial Guinea Tax Claim: In 2002, CMS Energy sold its oil, gas, and methanol investments in Equatorial Guinea. The government of Equatorial Guinea claims that, in connection with the sale, CMS Energy owes $152 million in taxes, plus substantial penalties and interest that could be up to the amount of the taxes claimed. The matter is proceeding to formal arbitration. CMS Energy has concluded that the government’s tax claim is without merit and is contesting the claim, but cannot predict the financial impact or outcome of the matter. An unfavorable outcome could have a material adverse effect on CMS Energy’s liquidity, financial condition, and results of operations.

Consumers Electric Utility Contingencies

Electric Environmental Matters: Consumers’ operations are subject to environmental laws and regulations. Historically, Consumers has generally been able to recover, in customer rates, the costs to operate its facilities in compliance with these laws and regulations.

Cleanup and Solid Waste: Consumers expects to incur remediation and other response activity costs at a number of sites under the NREPA. Consumers believes that these costs should be recoverable in rates, but cannot guarantee that outcome. Consumers estimates that its liability for NREPA sites for which it can

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estimate a range of loss will be between $3 million and $4 million. At March 31, 2017, Consumers had a recorded liability of $3 million, the minimum amount in the range of its estimated probable NREPA liability, as no amount in the range was considered a better estimate than any other amount.

Consumers is a potentially responsible party at a number of contaminated sites administered under CERCLA. CERCLA liability is joint and several. In 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party for cleanup of PCBs at the Kalamazoo River CERCLA site. The notification claimed that the EPA has reason to believe that Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site. In 2011, Consumers received a follow-up letter from the EPA requesting that Consumers agree to participate in a removal action plan along with several other companies for an area of lower Portage Creek, which is connected to the Kalamazoo River. All parties, including Consumers, that were asked to participate in the removal action plan declined to accept liability. Until further information is received from the EPA, Consumers is unable to estimate a range of potential liability for cleanup of the river.

Based on its experience, Consumers estimates that its share of the total liability for known CERCLA sites will be between $3 million and $8 million. Various factors, including the number and creditworthiness of potentially responsible parties involved with each site, affect Consumers’ share of the total liability. At March 31, 2017, Consumers had a recorded liability of $3 million for its share of the total liability at these sites, the minimum amount in the range of its estimated probable CERCLA liability, as no amount in the range was considered a better estimate than any other amount.

The timing of payments related to Consumers’ remediation and other response activities at its CERCLA and NREPA sites is uncertain. Consumers periodically reviews these cost estimates. A change in the underlying assumptions, such as an increase in the number of sites, different remediation techniques, the nature and extent of contamination, and legal and regulatory requirements, could affect its estimates of NREPA and CERCLA liability.

Ludington PCB: In 1998, during routine maintenance activities, Consumers identified PCB as a component in certain paint, grout, and sealant materials at Ludington. Consumers removed part of the PCB material and replaced it with non-PCB material. Consumers has had several communications with the EPA regarding this matter, but cannot predict the financial impact or outcome.

Consumers Gas Utility Contingencies

Gas Environmental Matters: Consumers expects to incur remediation and other response activity costs at a number of sites under the NREPA. These sites include 23 former MGP facilities. Consumers operated the facilities on these sites for some part of their operating lives. For some of these sites, Consumers has no present ownership interest or may own only a portion of the original site.

At March 31, 2017, Consumers had a recorded liability of $106 million for its remaining obligations for these sites. This amount represents the present value of long-term projected costs, using a discount rate of 2.57 percent and an inflation rate of 2.5 percent. The undiscounted amount of the remaining obligation is $115 million. Consumers expects to pay the following amounts for remediation and other response activity costs in 2017 and in each of the next four years:

							In Millions
	2017		2018		2019		2020		2021
Consumers
Remediation and other response activity costs	$	33	$	14	$	19	$	10	$	5

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Consumers periodically reviews these cost estimates. Any significant change in the underlying assumptions, such as an increase in the number of sites, changes in remediation techniques, or legal and regulatory requirements, could affect Consumers’ estimates of annual response activity costs and the MGP liability.

Pursuant to orders issued by the MPSC, Consumers defers its MGP-related remediation costs and recovers them from its customers over a ten-year period. At March 31, 2017, Consumers had a regulatory asset of $138 million related to the MGP sites.

Consumers estimates that its liability to perform remediation and other response activities at NREPA sites other than the MGP sites could reach $3 million. At March 31, 2017, Consumers had a recorded liability of less than $1 million, the minimum amount in the range of its estimated probable liability, as no amount in the range was considered a better estimate than any other amount.

Guarantees

Presented in the following table are CMS Energy’s and Consumers’ guarantees at March 31, 2017:

					In Millions
			Maximum		Carrying
Guarantee Description	Issue Date	Expiration Date	Obligation		Amount
CMS Energy, including Consumers
Indemnity obligations from stock and asset sale agreements 1	Various	Indefinite	$	153	$	7
Guarantees 2	Various	Indefinite	45		-
Consumers
Guarantee 2	July 2011	Indefinite	$	30	$	-

1 These obligations arose from stock and asset sale agreements under which CMS Energy or a subsidiary of CMS Energy indemnified the purchaser for losses resulting from various matters, primarily claims related to taxes. CMS Energy believes the likelihood of material loss to be remote for the indemnity obligations not recorded as liabilities.

2 At Consumers, this obligation comprises a guarantee provided to the U.S. Department of Energy in connection with a settlement agreement regarding damages resulting from the department’s failure to accept spent nuclear fuel from nuclear power plants formerly owned by Consumers. At CMS Energy, the guarantee obligations comprise Consumers’ guarantee to the U.S. Department of Energy and CMS Energy’s 1994 guarantee of non-recourse revenue bonds issued by Genesee.

Additionally, in the normal course of business, CMS Energy, Consumers, and certain other subsidiaries of CMS Energy have entered into various agreements containing tax and other indemnity provisions for which they are unable to estimate the maximum potential obligation. The carrying value of these indemnity obligations is $1 million. CMS Energy and Consumers consider the likelihood that they would be required to perform or incur substantial losses related to these indemnities to be remote.

Other Contingencies

In addition to the matters disclosed in this Note and Note 2, Regulatory Matters, there are certain other lawsuits and administrative proceedings before various courts and governmental agencies arising in the ordinary course of business to which CMS Energy, Consumers, and certain other subsidiaries of CMS Energy are parties. These other lawsuits and proceedings may involve personal injury, property damage, contracts, environmental matters, federal and state taxes, rates, licensing, employment, and other matters. Further, CMS Energy and Consumers occasionally self-report certain regulatory non-compliance matters that may or may not eventually result in administrative proceedings. CMS Energy and Consumers

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believe that the outcome of any one of these proceedings will not have a material negative effect on their consolidated results of operations, financial condition, or liquidity.

4: FINANCINGS AND CAPITALIZATION

Financings: Presented in the following table is a summary of major long-term debt transactions during the three months ended March 31, 2017.

	Principal (In Millions)		Interest Rate		Issue/Retirement Date	Maturity Date
Debt issuances
CMS Energy, parent only
Senior notes	$	350	3.450	%	February 2017	August 2027
Consumers
First mortgage bonds	$	350	3.950	%	February 2017	July 2047
Debt retirements
Consumers
First mortgage bonds	$	250	5.150	%	February 2017	February 2017

Term Loan: In April 2017, CMS Energy reached an agreement to extend the maturity date of its $180 million term loan by one year, through April 2019.

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at March 31, 2017:

							In Millions
Expiration Date	Amount of Facility		Amount Borrowed		Letters of Credit Outstanding		Amount Available
CMS Energy, parent only
May 27, 2021 1	$	550	$	-	$	1	$	549
Consumers
May 27, 2021 2	$	650	$	-	$	7	$	643
November 23, 2018 2	250		-		-		250
May 9, 2018 2	30		-		30		-

1 During the three months ended March 31, 2017, CMS Energy’s average borrowings totaled $85 million with a weighted-average interest rate of 2.02 percent. Obligations under this facility are secured by Consumers common stock.

2 Obligations under this facility are secured by first mortgage bonds of Consumers.

Short-term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, commercial paper notes with maturities of up to 365 days and that bear interest at fixed or floating rates. These issuances are supported by Consumers’ $650 million revolving credit facility and may have an aggregate principal amount outstanding of up to $500 million. While the amount of outstanding commercial paper does not reduce the revolver’s available capacity, Consumers does not intend to issue commercial paper in an amount exceeding the available revolver capacity. At March 31, 2017, no commercial paper notes were outstanding under this program.

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Dividend Restrictions: At March 31, 2017, payment of dividends by CMS Energy on its common stock was limited to $4.4 billion under provisions of the Michigan Business Corporation Act of 1972.

Under the provisions of its articles of incorporation, at March 31, 2017, Consumers had $1.1 billion of unrestricted retained earnings available to pay dividends on its common stock to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that under a variety of circumstances dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.

For the three months ended March 31, 2017, Consumers paid $148 million in dividends on its common stock to CMS Energy.

Issuance of Common Stock: In March 2017, CMS Energy entered into an updated continuous equity offering program permitting it to sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $100 million. There have been no sales of securities under this program.

5: 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.

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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
	March 31		December 31		March 31		December 31
	2017		2016		2017		2016
Assets 1
Cash equivalents	$	50	$	44	$	-	$	-
Restricted cash equivalents	30		19		30		19
CMS Energy common stock	-		-		20		33
Nonqualified deferred compensation plan assets	12		12		9		8
DB SERP
Cash equivalents	-		3		-		2
Mutual funds	143		141		102		102
Derivative instruments
Commodity contracts	-		1		-		1
Total	$	235	$	220	$	161	$	165
Liabilities 1
Nonqualified deferred compensation plan liabilities	$	12	$	12	$	9	$	8
Derivative instruments
Commodity contracts	1		-		-		-
Total	$	13	$	12	$	9	$	8

1 All assets and liabilities were classified as Level 1 with the exception of some commodity contracts, which were classified as Level 3.

Cash Equivalents: Cash equivalents and restricted cash equivalents consist of money market funds with daily liquidity. Short-term debt instruments classified as cash equivalents on the consolidated balance sheets are not included since they are recorded at amortized cost.

Nonqualified Deferred Compensation Plan Assets and Liabilities: The nonqualified deferred compensation plan assets consist of mutual funds, which 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 what is 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.

DB SERP Assets: The DB SERP cash equivalents consist of a money market fund with daily liquidity. The DB SERP invests in mutual funds that hold primarily fixed-income instruments of varying maturities. In order to meet their investment objectives, the funds hold investment-grade debt securities, and may invest a portion of their assets in high-yield securities, foreign debt, and derivative instruments. CMS Energy and Consumers value these funds using the daily quoted net asset values. CMS Energy and Consumers report their DB SERP assets in other non-current assets on their consolidated balance sheets. For additional details about DB SERP securities, see Note 6, Financial Instruments.

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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 values its exchange-traded derivative contracts based on Level 1 quoted prices. CMS Energy’s and Consumers’ remaining derivatives are classified as Level 3.

The majority of these derivatives are FTRs held by Consumers. Consumers uses FTRs to manage price risk related to electricity transmission congestion. An FTR is a financial instrument that entitles its holder to receive compensation or requires its holder to remit payment for congestion-related transmission charges. Under regulatory accounting, all changes in fair value associated with FTRs are deferred as regulatory assets and liabilities until the instruments are settled. Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements.

6: FINANCIAL INSTRUMENTS

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 5, Fair Value Measurements.

	In Millions
	March 31, 2017										December 31, 2016
			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	$	18	$	18	$	-	$	-	$	18	$	22	$	22	$	-	$	-	$	22
Notes receivable 2	1,288		1,373		-		-		1,373		1,326		1,415		-		-		1,415
Securities held to maturity	12		12		-		12		-		13		13		-		13		-
Liabilities
Long-term debt 3	9,919		10,345		-		9,367		978		9,504		9,953		-		8,990		963
Long-term payables 4	18		18		-		-		18		17		17		-		-		17
Consumers
Assets
Long-term receivables 1	$	18	$	18	$	-	$	-	$	18	$	22	$	22	$	-	$	-	$	22
Notes receivable 5	45		45		-		-		45		45		45		-		-		45
Liabilities
Long-term debt 6	5,724		5,999		-		5,021		978		5,628		5,903		-		4,940		963

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1 Includes current accounts receivable of $12 million at March 31, 2017 and December 31, 2016.

2 Includes current portion of notes receivable of $205 million at March 31, 2017 and $219 million at December 31, 2016.

3 Includes current portion of long-term debt of $790 million at March 31, 2017 and $864 million at December 31, 2016.

4 Includes current portion of long-term payables of $1 million at March 31, 2017 and December 31, 2016.

5 Includes current portion of notes receivable of $29 million at March 31, 2017 and December 31, 2016.

6 Includes current portion of long-term debt of $305 million at March 31, 2017 and $375 million at December 31, 2016.

At CMS Energy, notes 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 March 31, 2017 and December 31, 2016, 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:

	In Millions
	March 31, 2017								December 31, 2016
			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	$	142	$	1	$	-	$	143	$	141	$	-	$	-	$	141
Held to maturity
Debt securities	12		-		-		12		13		-		-		13
Consumers
Available for sale
DB SERP
Mutual funds	$	102	$	-	$	-	$	102	$	102	$	-	$	-	$	102
CMS Energy common stock	2		18		-		20		4		29		-		33

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.

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7: NOTES RECEIVABLE

Presented in the following table are details of CMS Energy’s and Consumers’ current and non-current notes receivable:

			In Millions
	March 31, 2017		December 31, 2016
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses	$	157	$	151
EnerBank notes receivable held for sale	19		39
State of Michigan tax settlement	29		29
Non-current
EnerBank notes receivable	1,064		1,088
State of Michigan tax settlement	19		19
Total notes receivable	$	1,288	$	1,326
Consumers
Current
State of Michigan tax settlement	$	29	$	29
Non-current
State of Michigan tax settlement	16		16
Total notes receivable	$	45	$	45

EnerBank notes receivable are unsecured consumer installment loans for financing home improvements. EnerBank records its notes receivable at cost, less an allowance for loan losses. In March 2017, EnerBank completed a sale of notes receivable, receiving proceeds of $19 million and recording an insignificant gain. At March 31, 2017, $19 million of notes receivable remained classified as held for sale; the fair value of notes receivable held for sale exceeded their carrying value. These notes are expected to be sold in 2017.

Authorized contractors pay fees to EnerBank to provide borrowers with same-as-cash, zero interest, or reduced interest loans. Unearned income associated with the loan fees, which is recorded as a reduction to notes receivable on CMS Energy’s consolidated balance sheets, was $83 million at March 31, 2017 and $84 million at December 31, 2016. Unearned income associated with the loan fees for notes receivable held for sale was $4 million at March 31, 2017 and $8 million at December 31, 2016.

The allowance for loan losses is a valuation allowance to reflect estimated credit losses. The allowance is increased by the provision for loan losses and decreased by loan charge-offs net of recoveries. Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors. Loan losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.

Loans that are 30 days or more past due are considered delinquent. The balance of EnerBank’s delinquent consumer loans was $9 million at March 31, 2017 and $11 million at December 31, 2016.

At March 31, 2017 and December 31, 2016, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.

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8: RETIREMENT BENEFITS

CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans.

CMS Energy and Consumers elected to adopt ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, as of January 1, 2017. For further details on the implementation of this standard, see Note 1, New Accounting Standards.

Presented in the following table are the costs (credits) and other changes in plan assets and benefit obligations incurred in CMS Energy’s and Consumers’ retirement benefits plans:

							In Millions
	DB Pension Plan						OPEB Plan
Three Months Ended March 31	2017			2016			2017			2016
CMS Energy, including Consumers
Net periodic cost (credit)
Service cost	$	11		$	11		$	5		$	5
Interest cost	22			21			13			12
Expected return on plan assets	(38		)	(37		)	(22		)	(22		)
Amortization of:
Net loss	20			17			8			5
Prior service cost (credit)	1			1			(9		)	(10		)
Net periodic cost (credit)	$	16		$	13		$	(5	)	$	(10	)
Consumers
Net periodic cost (credit)
Service cost	$	11		$	10		$	5		$	4
Interest cost	21			21			13			11
Expected return on plan assets	(37		)	(36		)	(21		)	(20		)
Amortization of:
Net loss	20			17			8			6
Prior service cost (credit)	1			1			(9		)	(10		)
Net periodic cost (credit)	$	16		$	13		$	(4	)	$	(9	)

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9: INCOME TAXES

Presented in the following table is a reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate from continuing operations:

Three Months Ended March 31	2017		2016
CMS Energy, including Consumers
U.S. federal income tax rate	35.0	%	35.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect	4.7		4.1
Accelerated flow-through of regulatory tax benefits 1	(4.3	)	(4.7	)
Employee share-based awards	(1.9	)	(2.2	)
Other, net	(1.0	)	(1.1	)
Effective tax rate	32.5	%	31.1	%
Consumers
U.S. federal income tax rate	35.0	%	35.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect	4.5		4.4
Accelerated flow-through of regulatory tax benefits 1	(4.2	)	(4.2	)
Employee share-based awards	(1.7	)	(2.0	)
Other, net	(1.2	)	(0.9	)
Effective tax rate	32.4	%	32.3	%

1 Since 2014, Consumers has followed a regulatory treatment ordered by the MPSC that accelerates the return of certain income tax benefits to customers. This change, which also accelerates Consumers’ recognition of the income tax benefits, reduced Consumers’ income tax expense by $13 million for the three months ended March 31, 2017 and by $11 million for the three months ended March 31, 2016.

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10: EARNINGS PER SHARE—CMS ENERGY

Presented in the following table are CMS Energy’s basic and diluted EPS computations based on net income:

In Millions, Except Per Share Amounts
Three Months Ended March 31	2017		2016
Income available to common stockholders
Net income available to common stockholders – basic and diluted	$	199	$	164
Average common shares outstanding
Weighted-average shares – basic	278.9		276.7
Add dilutive nonvested stock awards	1.0		1.2
Weighted-average shares – diluted	279.9		277.9
Net income per average common share available to common stockholders
Basic	$	0.71	$	0.59
Diluted	0.71		0.59

Nonvested Stock Awards

CMS Energy’s nonvested stock awards are composed of participating and non-participating securities. The participating securities accrue cash dividends when common stockholders receive dividends. Since the recipient is not required to return the dividends to CMS Energy if the recipient forfeits the award, the nonvested stock awards are considered participating securities. As such, the participating nonvested stock awards were included in the computation of basic EPS. The non-participating securities accrue stock dividends that vest concurrently with the stock award. If the recipient forfeits the award, the stock dividends accrued on the non-participating securities are also forfeited. Accordingly, the non-participating awards and stock dividends were included in the computation of diluted EPS, but not basic EPS.

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11: CASH AND CASH EQUIVALENTS

Presented in the following table are the components of total cash and cash equivalents, including restricted amounts, and their location on CMS Energy’s and Consumers’ consolidated balance sheets:

			In Millions
	March 31		December 31
	2017		2016
CMS Energy, including Consumers
Cash and cash equivalents	$	433	$	235
Restricted cash and cash equivalents	30		19
Other non-current assets	-		3
Cash and cash equivalents, including restricted amounts	$	463	$	257
Consumers
Cash and cash equivalents	$	182	$	131
Restricted cash and cash equivalents	30		19
Other non-current assets	-		2
Cash and cash equivalents, including restricted amounts	$	212	$	152

Cash and Cash Equivalents: Cash and cash equivalents include short-term, highly liquid investments with original maturities of three months or less.

Restricted Cash and Cash Equivalents: Restricted cash and cash equivalents are held primarily for the repayment of securitization bonds. Cash and cash equivalents may also be restricted to pay other contractual obligations such as leasing of coal rail cars. These amounts are classified as current assets since they relate to payments that could or will occur within one year.

Other Non-current Assets: The majority of cash equivalents classified as other non-current assets represent an investment in a money market fund held in the DB SERP rabbi trust. See Note 5, Fair Value Measurements for more information regarding the DB SERP.

Implementation of ASU 2016-18, Restricted Cash : CMS Energy and Consumers have early adopted the provisions of ASU 2016-18 , Restricted Cash , which requires restricted cash and cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period amounts shown on the statement of cash flows. In addition, the standard requires that entities apply the new guidance retrospectively to all prior periods presented. Accordingly, CMS Energy and Consumers made the following adjustments to prior-period amounts on their consolidated statements of cash flows:

	In Millions
Three Months Ended March 31	2016
CMS Energy, including Consumers
Increase (decrease) in:
Net cash used in investing activities	$	(7	)
Cash and cash equivalents, including restricted amounts, end of period	29
Consumers
Increase (decrease) in:
Net cash used in investing activities	$	(8	)
Cash and cash equivalents, including restricted amounts, end of period	29

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12: REPORTABLE SEGMENTS

Reportable segments consist of business units defined by the products and services they offer. CMS Energy and Consumers evaluate the performance of each segment based on its contribution to net income available to CMS Energy’s common stockholders.

CMS Energy

The reportable segments for CMS Energy are:

· electric utility, consisting of regulated activities associated with the generation, transmission, and distribution of electricity in Michigan

· gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan

· enterprises, consisting of various subsidiaries engaging primarily in domestic independent power production

CMS Energy presents EnerBank and corporate interest and other expenses within other reconciling items.

Consumers

The reportable segments for Consumers are:

· electric utility, consisting of regulated activities associated with the generation, transmission, and distribution of electricity in Michigan

· gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan

Consumers’ other consolidated entities are presented within other reconciling items.

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Presented in the following tables is financial information by reportable segment:

				In Millions
Three Months Ended March 31	2017			2016
CMS Energy, including Consumers
Operating revenue
Electric utility	$	1,036		$	1,013
Gas utility	701			710
Enterprises	59			48
Other reconciling items	33			30
Total operating revenue – CMS Energy	$	1,829		$	1,801
Consumers
Operating revenue
Electric utility	$	1,036		$	1,013
Gas utility	701			710
Total operating revenue – Consumers	$	1,737		$	1,723
CMS Energy, including Consumers
Net income (loss) available to common stockholders
Electric utility	$	124		$	91
Gas utility	87			81
Enterprises	12			6
Other reconciling items	(24		)	(14		)
Total net income available to common stockholders – CMS Energy	$	199		$	164
Consumers
Net income available to common stockholder
Electric utility	$	124		$	91
Gas utility	87			81
Total net income available to common stockholder – Consumers	$	211		$	172

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			In Millions
	March 31, 2017		December 31, 2016
CMS Energy, including Consumers
Plant, property, and equipment, gross
Electric utility 1	$	14,715	$	14,540
Gas utility 1	6,362		6,283
Enterprises	158		157
Other reconciling items	30		30
Total plant, property, and equipment, gross – CMS Energy	$	21,265	$	21,010
Consumers
Plant, property, and equipment, gross
Electric utility 1	$	14,715	$	14,540
Gas utility 1	6,362		6,283
Other reconciling items	15		15
Total plant, property, and equipment, gross – Consumers	$	21,092	$	20,838
CMS Energy, including Consumers
Total assets
Electric utility 1	$	13,653	$	13,429
Gas utility 1	6,131		6,446
Enterprises	269		269
Other reconciling items	1,570		1,478
Total assets – CMS Energy	$	21,623	$	21,622
Consumers
Total assets
Electric utility 1	$	13,656	$	13,430
Gas utility 1	6,131		6,446
Other reconciling items	37		70
Total assets – Consumers	$	19,824	$	19,946

1 Amounts include a portion of Consumers’ other common assets attributable to both the electric and gas utility businesses.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition and results of operations for CMS Energy and Consumers is contained in Part I—Item 1. Financial Statements—MD&A, which is incorporated by reference herein.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to market risk as previously disclosed in Part II—Item 7A. Quantitative and Qualitative Disclosures About Market Risk, in the 2016 Form 10-K.

Item 4. Controls and Procedures

CMS ENERGY

Disclosure Controls and Procedures: CMS Energy’s management, with the participation of its CEO and CFO, has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, CMS Energy’s CEO and CFO have concluded that, as of the end of such period, its disclosure controls and procedures are effective.

Internal Control Over Financial Reporting: There have not been any changes in CMS Energy’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

CONSUMERS

Disclosure Controls and Procedures: Consumers’ management, with the participation of its CEO and CFO, has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, Consumers’ CEO and CFO have concluded that, as of the end of such period, its disclosure controls and procedures are effective.

Internal Control Over Financial Reporting: There have not been any changes in Consumers’ internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

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Part II—Other Information

Item 1. Legal Proceedings

CMS Energy, Consumers, and certain of their affiliates are parties to various lawsuits and regulatory matters in the ordinary course of business. For information regarding material legal proceedings, including updates to information reported under Part I—Item 3. Legal Proceedings, of the 2016 Form 10-K, see Part I—Item 1. Financial Statements—Notes to the Unaudited Consolidated Financial Statements—Note 2, Regulatory Matters and Note 3, Contingencies and Commitments.

Item 1A. Risk Factors

There have been no material changes to the Risk Factors as previously disclosed in Part I—Item 1A. Risk Factors, in the 2016 Form 10-K, which Risk Factors are incorporated herein by reference.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

UNREGISTERED SALES OF EQUITY SECURITIES

None.

ISSUER REPURCHASES OF EQUITY SECURITIES

Presented in the following table are CMS Energy’s repurchases of equity securities for the three months ended March 31, 2017:

Period	Total Number of Shares Purchased 1	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet Be Purchased Under Publicly Announced Plans or Programs
January 1, 2017 to
January 31, 2017	176,572	$	42.29	-	-
February 1, 2017 to
February 28, 2017	741	42.62		-	-
March 1, 2017 to
March 31, 2017	103,594	45.01		-	-
Total	280,907	$	43.29	-	-

1 All of the common shares were repurchased to satisfy the minimum statutory income tax withholding obligation for common shares that have vested under the Performance Incentive Stock Plan. The value of shares repurchased is based on the market price on the vesting date.

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Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On April 25, 2017, CMS Energy and JPMorgan Chase Bank, N.A., in its capacity as agent (the “Agent”) for itself and the other financial institutions (the “Banks”) named in the $180 million unsecured Term Loan Credit Agreement dated June 11, 2015 between CMS Energy, the Banks, and the Agent (the “Agreement”), agreed to extend the maturity date of the term loans made thereunder. The Agreement was previously filed as Exhibit 10.1 to the Form 8-K filed June 16, 2015 and is incorporated herein by reference. Subject to the terms of the Agreement, effective as of April 25, 2017, the maturity date will extend for a period of one year to April 25, 2019.

The Banks have provided banking and underwriting services to CMS Energy in the ordinary course of business.

Item 6. Exhibits

See CMS Energy’s and Consumers’ Exhibit Index included as the last part of this report, which is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiary.

		CMS ENERGY CORPORATION

Dated: April 30, 2017	By:	/s/ Thomas J. Webb

		Thomas J. Webb

		Executive Vice President and Chief Financial Officer


		CONSUMERS ENERGY COMPANY

Dated: April 30, 2017	By:	/s/ Thomas J. Webb

		Thomas J. Webb

		Executive Vice President and Chief Financial Officer

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CMS ENERGY’S AND CONSUMERS’ EXHIBIT INDEX

The agreements included as exhibits to this Form 10-Q filing are included solely to provide information regarding the terms of the agreements and are not intended to provide any other factual or disclosure information about CMS Energy, Consumers, or other parties to the agreements. The agreements may contain representations and warranties made by each of the parties to each of the agreements that were made exclusively for the benefit of the parties involved in each of the agreements and should not be treated as statements of fact. The representations and warranties were made as a way to allocate risk if one or more of those statements prove to be incorrect. The statements were qualified by disclosures of the parties to each of the agreements that may not be reflected in each of the agreements. The agreements may apply standards of materiality that are different than standards applied to other investors. Additionally, the statements were made as of the date of the agreements or as specified in the agreements and have not been updated. The representations and warranties may not describe the actual state of affairs of the parties to each agreement.

Additional information about CMS Energy and Consumers may be found in this filing, at www.cmsenergy.com, at www.consumersenergy.com, and through the SEC’s website at www.sec.gov.

Exhibits		Description
4.1 1	—	Thirty-Fifth Supplemental Indenture dated as of February 13, 2017 between CMS Energy and The Bank of New York Mellon, as Trustee (Exhibit 4.1 to Form 8-K filed February 13, 2017 and incorporated herein by reference)
4.2	—	128 th Supplemental Indenture dated as of February 22, 2017 between Consumers and The Bank of New York Mellon, as Trustee (Exhibit 4.1 to Form 8-K filed February 22, 2017 and incorporated herein by reference)
10.1 2	—	Form of Officer Separation Agreement as of January 2017 (Exhibit 10.8 to Form 10-K for the fiscal year ended December 31, 2016 and incorporated herein by reference)
10.2 2	—	CMS Energy’s Deferred Salary Savings Plan, as amended and restated, effective January 1, 2017
10.3 2	—	CMS Energy’s Performance Incentive Stock Plan as amended and restated, effective March 7, 2017
10.4 1	—	Description of the second $180,000,000 Term Loan Credit Agreement Extension
12.1	—	Statement regarding computation of CMS Energy’s Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends
12.2	—	Statement regarding computation of Consumers’ Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends
31.1	—	CMS Energy’s certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	—	CMS Energy’s certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3	—	Consumers’ certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.4	—	Consumers’ certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	—	CMS Energy’s certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	—	Consumers’ certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS 3	—	XBRL Instance Document
101.SCH 3	—	XBRL Taxonomy Extension Schema
101.CAL 3	—	XBRL Taxonomy Extension Calculation Linkbase
101.DEF 3	—	XBRL Taxonomy Extension Definition Linkbase
101.LAB 3	—	XBRL Taxonomy Extension Labels Linkbase
101.PRE 3	—	XBRL Taxonomy Extension Presentation Linkbase

1 Obligations of CMS Energy or its subsidiaries, but not of Consumers.

2 Management contract or compensatory plan or arrangement.

3 The financial information contained in the XBRL-related information is “unaudited” and “unreviewed.”

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EXHIBITS

Exhibit 10.2

CMS ENERGY DEFERRED SALARY SAVINGS PLAN

The purposes of the CMS Energy Deferred Salary Savings Plan (the “Plan”) are to provide key management employees the opportunity to defer additional compensation in excess of the limitations on contributions imposed on the Savings Plan for Employees of Consumers Energy and other CMS Energy Companies due to the application of various laws and regulations including the limitations of Code Section 401(a)(17), 402(g) or 415(c)(1)(A) and to provide those employees with employer matching contributions equal to the matching contributions that would have been made by the Company on their behalf under the Savings Plan. Further, Additional Deferrals are also permitted to assist employees in meeting their financial goals. This plan is maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees.

This Plan was originally effective on December 1, 1989 and includes amendments effective on or before January 1, 2017.

SECTION 1. DEFINITIONS

1.1 Definitions. Whenever used in this Plan, the following terms shall have the respective meanings set forth below, unless the context indicates otherwise:


Account or Account Balance	The notional amount credited to a Participant or beneficiary in accordance with the provisions of this Plan.
Additional Deferral	The amount deferred by a Participant in accordance with Section 3.3.
Code	The Internal Revenue Code of 1986, as amended.
Company	CMS Energy Corporation and its subsidiaries which are directly or indirectly owned 80% or greater. For purposes of determining a Separation from Service from the Company, the Company shall include the CMS Energy Corporation and all persons or entities that would be considered a single employer under Code Section 414(b) or Section 414(c), using for such purposes a “50 percent” standard, instead of an “80 percent” standard, under such provisions.
Compensation	A Participant’s regular salary from an Employer, before any adjustment for Deferrals under this Plan or any other deferred compensation plan of the Company, the Savings Plan, Code Section 125 plans, or deductions for taxes or other withholdings, but excluding any bonus, imputed income, incentive or other premium pay. For purposes of determining Deferrals, Compensation for a Plan Year does not include any amounts paid in the Plan Year that are attributable to services performed by the Participant in an earlier Plan Year, except to the extent permitted by Code Section 409A.
Deferrals	Amounts deferred by a Participant pursuant to Section 3.
Employee	Any person, employed by an Employer and on the payroll and employment records system as an employee, excluding consultants, advisors and independent contractors, whose Compensation, when annualized, exceeds the Threshold Limit.


Employer	The entity within the Company that employs the Participant.
Employer Matching Amounts	Money or property added to the Participant’s account as provided in Section 3.2.
Participant	Any Employee who meets the eligibility requirements of the Plan, who elects to enroll under the Plan, and for whom Deferrals are currently being made under the Plan or for whom Deferrals were previously made under the Plan which have not been distributed.
Payment Event	The time when the Participant may receive the benefits deferred under the Plan as described in Section 6.2.
Payment Term	The form and duration of any payment to a participant or beneficiary as described in Section 6.2.
Plan Administrator	The Benefit Administration Committee as selected by the Chief Executive Officer and Chief Financial Officer of the Company to manage the plan.
Plan Record Keeper	The person(s) or entity named as such by the Plan Administrator.
Plan Year	January 1 to December 31 of a calendar year.
Savings Plan	The Savings Plan for Employees of Consumers Energy and other CMS Energy Companies.
Separation from Service	Means the Employee retires or otherwise has a separation from service from the Company as defined under Code Section 409A and any applicable regulations. The Plan Administrator will determine, consistent with the requirements of Code Section 409A and any applicable regulations, to what extent a person on a leave of absence, including on paid sick leave pursuant to Company policy, has incurred a Separation from Service. Notwithstanding the above, a Separation from Service will occur consistent with the requirement of Code Section 409A when it is reasonably anticipated that the future level of bona fide services provided by the Employee (whether as an employee or as an independent contractor) will be no more than 45% of the average level of bona find services performed by the Employee (whether as an employee or as an independent contractor) over the immediately preceding 36 month period (or the full period of services, if less than 36 months).
Threshold Limit	The amount as determined by the Secretary of the Treasury above which annual compensation is disregarded for qualified plans. As of January 1, 2016, the Threshold Limit was $265,000.

SECTION 2. ELIGIBILITY AND ENROLLMENT

2.1 Eligibility . Each Employee is eligible to become a Participant on the date of employment, or if later, the first of the month following when the Employee first has annualized Compensation in excess of the Threshold Limit. A Participant will no longer be permitted to make contributions to this Plan as of the end of any Plan Year when his or her annualized Compensation falls below the Threshold Limit.

2.2 Enrollment. An Employee may enroll during an enrollment period prior to the start of each Plan Year. A new Employee may enroll within 30 days of the date of employment. An Employee may enroll within 30 days of first becoming eligible to participate in the Plan for the initial Plan Year of his or her participation. The foregoing provisions allowing late elections by new Employees and newly eligible Employees shall apply only to the extent permitted by Code Section 409A.

2.3 Procedure. An Employee must enroll in the Plan by completing the application for participation. Such application may, at the election of the Company or the Plan Record Keeper, be in an electronic format. Completion of the application by the Employee shall constitute an acceptance of the terms and conditions of the Plan.

SECTION 3. DEFERRALS

3.1 Deferrals. Upon enrolling in the Plan, each Participant may elect to defer a portion of his or her Compensation that is in excess of the Threshold Limit. Except as otherwise provided in Section 3.3, the Deferral amount shall be 5% of his or her Compensation in excess of the Threshold Limit. A deferral election applies to one Plan Year.

Deferral elections made during the enrollment period immediately prior to the start of a Plan Year shall apply to Compensation received during that coming Plan Year. A deferral election made during one of the 30-day periods described at 2.2 above shall apply to Compensation paid for services to be rendered during the portion of the Plan Year following the deferral election.

Any such deferral election shall become irrevocable as to the applicable Plan Year’s Compensation as of the last permissible date for making such an election under Code Section 409A.

3.2 Employer Matching Amounts . Not less frequently than annually, the Company shall add an amount to the Participant’s Deferral which is equal to 100% of the first 3% and 50% of the next 2% of the amount deferred by the Participant under Section 3.1 of the Plan. At no time will the applicable rate for the Employer Matching Amounts hereunder exceed the then current rate of match under the Savings Plan, and n o Employer Matching Amounts will be contributed to the Participant Account for any period in which the company match under the Savings Plan is suspended or terminated. The employee share of any applicable FICA, FUTA and other applicable taxes for any Deferrals and Employer Matching Amounts will be deducted from the Participant’s pay at the time of any Deferral.

3.3 Additional Deferral . A Participant may elect to defer an additional amount (in excess of the 5% deferral under Section 3.1 above) into the Plan, up to a maximum of 50% of his or her Compensation. The election of any additional deferral will be made in accordance with Section 3.1. The deferral will be subject to its own Payment Election as described under Section 6 and will be consistent with the provisions of Section 6.1. Any such Additional Deferral will not receive any Employer Matching Amounts.

SECTION 4 INVESTMENTS

4.1 Designation of Investments. At the time of electing a Deferral under the Plan, the Participant shall specify the proportions of the Deferral to be invested among the various options available as investments under the Plan. A Participant who has previously deferred amounts under a nonqualified deferred compensation plan of the Company will automatically have his or her existing investment profile apply to this Deferral also.

All determinations of the available investments by the Plan Administrator are final and binding upon the Participants. If a Participant fails to make an investment election, then such amounts shall be accounted for as if contributed to a Target Date Fund (as that term is defined in the Savings Plan) with a date that is applicable to the Participant’s age 65, rounded up, or such other investments as determined by the Plan Administrator.

4.2 Changes in Investment Elections. All investment elections may be changed at the Participant’s election subject to any applicable restrictions imposed by the Plan Administrator, the Plan Record Keeper or by any laws and regulations.

4.3 Determination of Investment Earnings. All gains and losses will be based upon the performance of the investments selected by the participant from the date any Deferral or Employer Matching Amount is first credited to the Participant’s Account. If the Company elects to fund its obligation for its convenience as described in Section 8.5, then investment performance will be the Account Balance as reported by the Plan Record Keeper.

SECTION 5 VESTING AND RECOUPMENT

5.1 Vesting of Employer Matching Amounts. Employer Matching Amounts and any related earnings do not vest until such time as the Participant has been employed by the Company for not less than five full calendar years. Notwithstanding the above, if a Participant dies or becomes disabled, as that term is defined under Code Section 409A and any applicable regulations, the Matching Employer Amounts and any related earnings will vest as of the date of the Participant’s death or disability. For purposes of vesting, all periods of service with an Employer are counted and completion of 12 months of employment, whether or not continuous, counts as one year of vesting under this Plan.

5.2 Recoupment. Any Matching Employer Amounts are also subject to recoupment under the CMS Energy Recoupment Policy Relating to Financial Restatements.

SECTION 6. PAYMENT ELECTIONS

6.1 Payment Elections. At the time the Employee makes a deferral election to participate in the Plan as described in Section 3.1 and/or 3.3, such Employee must select the Payment Event and Payment Term applicable to the Deferral and the Employer Matching Amounts for the Plan Year, as well as any earnings or income attributable to such amounts. Such Payment Options must be in accordance with the provisions of Section 6.2 and cannot be subsequently changed except as permitted under Section 6.3.

6.2 Payment Options.

(a) Payment Events. Each Participant must annually select one or more Payment Events from the following choices for each contribution including Deferrals, Employer Matching Amounts and/or Additional Deferrals. Such election must be made at the time the deferral election is made:

(i) Separation from Service for any reason other than death. Payment will be made, or begin in January of the year following Separation from Service or, if later, the seventh month after the month of Separation from Service. Later installments, if any, will be paid in January of the succeeding years;

(ii) Payment upon attainment of a date certain that is more than 5 years after the last day of the applicable Plan Year. However, for amounts attributable to an Additional Deferral, payment upon attainment of a date certain that is more than one month after the last day of the applicable Plan Year. Later installments, if any, will be paid in January of the succeeding years.

(iii) The earlier of (i) or (ii) above.

(iv) The later of (i) or (ii) above.

Any participant failing to make an election will be deemed to have elected payment upon Separation from Service in accordance with 6.2(a)(i).

(b) Payment Term. Upon selecting a Payment Event, the Participant must also elect how he or she wishes to receive any such payment from among the following options (the Participant may elect a separate Payment Term for each Payment Event elected):

(i) Payment in a single sum upon occurrence of the Payment Event.

(ii) Payment of a series of annual installment payments over a period from two (2) years to fifteen (15) years following the Payment Event. Each installment shall be equal to a fractional amount of the Account Balance the numerator of which is one and the denominator of which is the number of installment payments remaining. For example, a series of five installment payments will result in a payout of one fifth of the Account Balance for the first installment, one fourth of the Account Balance in the second installment, one third of the Account Balance for the third installment, one half of the Account Balance for the fourth installment and in the fifth installment the Account Balance is paid in full. Each installment, because of gains and losses, may not be identical to the prior installment.

Any participant failing to elect a Payment Term will be deemed to have elected a single sum.

6.3 Changes to Payment Options. Once a Payment Option has been elected, subsequent changes which would accelerate the receipt of benefits from the Plan are not permitted, except that the Plan Administrator may at its discretion accelerate payments to the extent permitted by Code Section 409A and applicable regulations. A subsequent election to change the Payment Options related to a Payment Event, in order to delay a payment or to change the form of a payment, can be made when all of the following conditions are satisfied:

(a) such election may not take effect until at least 12 months after the date on which the election is made;

(b) the payment(s) with respect to which such election is made is deferred for a period of not less than 5 years from the date such payment would otherwise have been made (or, in the case of installment payments under Section 6.2(b)(ii) with regard to amounts deferred (and the related earnings) prior to January 1, 2016, 5 years from the date the first installment was scheduled to be paid); and

(c) such election must be made not less than 12 months before the date the payment was previously scheduled to be made, (or, in the case of installment payments under Section 6.2(b)(ii) with regard to amounts deferred (and the related earnings) prior to January 1, 2016, 12 months before the first installment was scheduled to be paid), if the Participant’s previous commencement date was a specified date.

Effective January 1, 2016, the right to a series of installment payments is to be treated as a right to a series of separate payments to the extent permissible under Code Section 409A and any applicable regulations.

6.4 Payment Upon the Death of the Participant. In the event of the death of a Participant prior to the start of any payments under the Plan, the Participant’s named beneficiary or beneficiaries shall receive as soon as administratively practicable but not later than 90 days after the Participant’s death, the entire Account Balance. In the event of the death of a Participant after commencement of benefits, the Participant’s named beneficiary or beneficiaries shall receive in a single sum as soon as administratively practicable but not later than 90 days after the Participant’s death, the entire Account Balance remaining under the Plan. If the Participant fails to name a beneficiary, or the beneficiary predeceases the Participant, then the Participant’s estate will receive, in a single sum as soon as administratively practicable but not later than 90 days after the Participant’s death, the entire Account Balance. In no event may any recipient designate a year of payment for an amount payable upon the death of the Participant.

6.5 Payment in the Event of an Unforeseeable Emergency. The Participant may request that payments of any vested amounts commence immediately upon the occurrence of an unforeseeable emergency as that term is defined in Code Section 409A and any applicable regulations. Generally, an unforeseeable emergency is a severe financial hardship resulting from an illness or accident of the Employee or the Employee’s spouse or dependent, loss of the Employee’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Employee. A distribution on account of unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by

liquidation of the Employee’s assets (without causing severe financial hardship), or by cessation of deferrals under this arrangement, the Savings Plan or other arrangements. Distributions because of an unforeseeable emergency shall not exceed the amount permitted under Section 409A and are limited to the amount reasonably necessary to satisfy the emergency need (after use of insurance proceeds, liquidation of assets, etc.) plus an amount to pay taxes reasonably anticipated as a result of the distribution. In the event any payment is made due to an unforeseeable emergency, all deferral elections for the current Plan Year will cease and the Participant will not be eligible to make any deferral elections under this Plan for the following Plan Year. For any Participant receiving a hardship withdrawal from the Savings Plan as permitted by the Code and the Savings Plan, all deferral elections under this Plan for the current Plan Year will cease and the Participant will not be eligible to make any deferral elections or receive Employer Matching Amounts under this Plan for the following Plan Year.

SECTION 7. NON-ALIENATION OF BENEFITS

7.1 Non-Alienation. Except as may be required by a domestic relations order described in Code Section 414(p)(1)(B), in no event shall the Plan Administrator pay or assign over any part of the interest of a Participant under the Plan, or his or her beneficiary or beneficiaries, which is payable, distributable or credited to his or her account, to any assignee or creditor of such Participant or his or her beneficiary or beneficiaries. Prior to the time of distribution, a Participant, his or her beneficiary or beneficiaries or legal representative shall have no right by way of anticipation or otherwise to assign or otherwise dispose of any interest which may be payable, distributable or credited to the account of the Participant or his or her beneficiary or beneficiaries under the Plan, and every attempted assignment or other disposition of such interest in the Plan shall not be merely voidable but absolutely void.

SECTION 8. ADMINISTRATION

8.1 Plan Administrator. The Plan Administrator shall have authority to take necessary actions to implement the Plan and is granted full discretionary authority to apply the terms of the Plan, make administrative rulings, interpret the Plan and make any other determinations with respect to all aspects of the Plan. Any Participant with a claim under the Plan must make a written request within 60 days to the Plan Administrator for a determination on the claim. If the claim involves a benefit or issue relevant to an individual who has been appointed to serve on the Benefits Administration Committee, the individual so affected shall not participate in the determination. The Plan Administrator may hire such experts, accountants, or attorneys as it deems necessary to make a decision and may rely on the opinion of such persons in making a determination. The Plan Administrator shall notify the Participant of its determination in writing within 60 days of the claim unless the Plan Administrator advises the Participant that it requires additional time (not to exceed 90 days) to complete its investigation. The Participant may, within 60 days from the date the determination was mailed to the Participant, request a redetermination of the matter, and provide any additional information for the Plan Administrator to consider in its redetermination. The Plan Administrator will issue its opinion within 60 days of the request for redetermination, unless the Plan administrator advises the Participant that it requires additional time (not to exceed 90 days) to complete its reconsideration of the matter.

8.2 Administrative Expenses. Any administrative expenses, costs, charges or fees, to the extent not paid by the Company are to be charged to the Participant Accounts in accordance with the Plan Record Keeper’s normal procedures.

8.3 Amendment or Termination of the Plan. The Company may amend or terminate the Plan at any time. Upon termination, any amount accrued under the Plan and vested will remain in the Plan and be paid out in accordance with the Payment Elections previously selected, but no further Deferrals or Employer Matching Amounts will be made to the Plan. The Plan Administrator is authorized to make any amendments that are deemed necessary or desirable to comply with any applicable laws, regulations or orders or as may be advised by counsel or to clarify the terms and operation of the Plan. Notwithstanding the above, the Company may terminate the Plan and accelerate any benefits under the Plan, at its discretion, if it acts consistent in all manners with the requirements of Code Section 409A and any applicable regulations, with respect to when a terminated plan may accelerate payment to a Participant.

8.4 Naming a Beneficiary. A Participant may at any time file a beneficiary designation with the Company or the Plan Record Keeper. Only one such beneficiary designation, the most recent received by the Plan Record Keeper, is effective at any time. No beneficiary designation is effective until it is received and accepted by the Company or the Plan Record Keeper. If a Participant fails to name a beneficiary or if the beneficiary predeceases the Participant, any benefit accrued under the Plan will be paid to the Participant’s estate. A Participant must name a separate beneficiary for each Account Balance Plan.

8.5 Funding Status. This is an unfunded nonqualified deferred compensation plan. To the extent the Company elects to place funds with a trustee to pay its future obligations under this Plan such amounts are placed for the convenience of the Company, remain the property of the Company and the Participant shall have no right to such funds until properly paid in accordance with the provisions of this Plan. For administrative ease and convenience, such amounts may be referred to as Participant Accounts, but as such are a notional account only and are not the property of the Participant. Such amounts are subject to the claims of the creditors of the Company.

IN WITNESS WHEREOF, signed this 28th day of March, 2017.

CONSUMERS ENERGY COMPANY	Attest:



/s/ Patricia K. Poppe	/s/ Melissa M. Gleespen
Patricia K. Poppe	Melissa M. Gleespen
President and Chief Executive Officer	Vice President and Corporate Secretary

Exhibit 10.3

PERFORMANCE INCENTIVE STOCK PLAN

The CMS Energy Corporation Performance Incentive Stock Plan, first effective February 3, 1988, is hereby set forth as amended and restated effective March 7, 2017.

Article I. Purpose

The CMS Energy Corporation Performance Incentive Stock Plan (hereinafter called the “Plan”) is a Plan to provide incentive compensation to Eligible Persons, based upon such Eligible Persons’ individual contributions to the long-term growth and profitability of the Corporation, and in order to encourage such Eligible Persons to identify with shareholder concerns and their current and continuing interest in the development and financial success of the Corporation. Because it is expected that the efforts of Officers, Employees or Directors selected for participation in the Plan will have a significant impact on the results of the Corporation’s operations in future years, the Plan is intended to assist the Corporation in attracting and retaining Officers, Employees or Directors of superior ability and in motivating their activities on behalf of the Corporation.

Article II. Definitions

2.1 Definitions: When used in the Plan, the following words and phrases shall have the following meanings:

a. “Affiliate” has the meaning set forth in Rule 12b-2 under the Exchange Act.

b. “Appreciation Value” means the increase in the value of a Phantom Share awarded to a Participant and as described in Section 8.1 of the Plan.

c. “Award” means the incentive compensation awarded or granted under this Plan in the form of shares of Restricted Common Stock, Restricted Common Stock Units, Unrestricted Common Stock, Stock Options, Stock Appreciation Rights, Phantom Shares and/or Performance Units.

d. “Award Document” means an agreement, certificate or other type or form of document or documentation approved by the Committee which sets forth the terms and conditions of an Award. An Award Document may be written, electronic or other media, including a notation on the books and records of the Corporation and, unless the Committee requires otherwise, need not be signed by a representative of the Corporation or a Participant.

e. “Award Period” means the period or periods of time relating to any Restrictions imposed by the Committee with respect to Restricted Common Stock or Restricted Common Stock Units awarded under Article VII of the Plan. Such period of time shall extend for a period of at least twelve months for Directors (or, if earlier, the period from the date of award until the next annual meeting of shareholders to occur after the date of the award) and for a period of at least thirty-six months for Officers and Employees from and after the date of the award provided that vesting may, in the discretion of the Committee, occur in full at the end of such period or may occur in specified installments over such period, and further provided that the Committee may provide for early vesting upon the death, Disability, Retirement or termination of service of the award recipient, all as set forth in the Award Document.

f. “Beneficial Owner” has the meaning set forth in Rule 13d-3 under the Exchange Act.

g. “Beneficiary” means the beneficiary or beneficiaries designated to receive the amount, if any, payable under the Plan upon the death of a Participant.

h. “Board” means the Board of Directors of CMS Energy Corporation or Consumers Energy Company.

i. “Cause” shall have the meaning set forth in any written agreement between the Participant and the Corporation and, if not defined, “Cause” means the occurrence of any one or more of the following:

(a) The continued failure by the Participant to substantially perform his or her duties of employment (other than any such failure resulting from the Participant’s Disability), after a demand for substantial performance is delivered to the Participant

that identifies the manner in which the Committee believes that the Participant has not substantially performed his or her duties, and the Participant has failed to remedy the situation within a reasonable period of time specified by the Committee which shall not be less than 30 days; or

(b) The Participant’s (i) indictment for a felony or (ii) a conviction for a misdemeanor involving fraud, embezzlement, theft, misappropriation or failure to be truthful; or

(c) The Participant’s (i) gross negligence, (ii) failure or refusal, on request or demand by the Corporation or any governmental authority, to provide testimony to or cooperate with any governmental regulatory authority, or any other similar non-cooperation by the Participant, (iii) willful engaging in misconduct materially or demonstrably injurious to the business or reputation (by adverse publicity or otherwise) of the Corporation, monetarily or otherwise, or (iv) violation of a material provision of the Corporation’s code of conduct and/or code of ethics, including but not limited to violations of the Corporation’s policies relating to substance abuse and discrimination.

j. “Change in Control” for Participants who have a written agreement with the Corporation including a change in control provision, shall have the meaning as specified in such agreement. For other Participants, the phrase shall have the meaning provided in Attachment A hereto.

k. “Code” means the Internal Revenue Code of 1986, as amended.

l. “Committee” means, as and to the extent specified in Section 3.2 of this Plan, the Compensation and Human Resources Committee[s] of the Board and/or the Governance and Public Responsibility Committee[s] of the Board which shall each be comprised in such a manner intended to comply with the requirements of the New York Stock Exchange or other applicable stock exchanges, Rule 16b-3 (or any successor rule) under the Exchange Act and Code Section 162(m), in each case, to the extent applicable.

m. “Common Stock” means the common stock of CMS Energy Corporation as authorized for issuance in its Articles of Incorporation at the time of an award or grant under this Plan.

n. “Corporation” means CMS Energy Corporation, its successors and assigns, and each of its subsidiaries, or any of them individually.

o. “Director” means any person who is a member of the Board.

p. “Disability” means a determination by the insurer or third-party administrator under an individual and/or group disability policy covering the Participant that the Participant is totally and permanently disabled as defined in the policy or if there is no such coverage, then a disability that satisfies the requirements of total and permanent disability under Code Section 22(e).

q. “Eligible Person” means an Officer, an Employee or Non-Employee Director.

r. “Eligible Termination” means a termination (not involving death, Disability, Retirement or Cause); pursuant to a notice of termination delivered to the Participant by the Corporation or pursuant to a request that the Participant submit a resignation as an employee.

s. “Employee” means a non-Officer salaried employee of the Corporation.

t. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

u. “Grant Period” means the period or periods of time relating to any restrictions imposed by the Committee with respect to Stock Options or Stock Appreciation Rights granted under Article VI of the Plan. Such period(s) of time shall extend for a period of at least thirty-six months from and after the date of the grant provided that vesting may, in the discretion of the Committee, occur in full at the end of such period or may occur in specified installments over such period, and further provided that the Committee may provide for early vesting upon the death, Disability, Retirement or termination of service of the award recipient, all as set forth in the Award Document.

v. “Immediate Family” means a Participant’s spouse, child, step-child, grandchild, sibling or parent.

w. “Incentive Option” means an option to purchase Common Stock that meets the requirements of the Plan and Code Section 422, or any successor provision, and which is intended by the Committee to constitute an Incentive Option.

x. “Non-Employee Director” means a member of the Board who is not currently an employee of the Corporation.

y. “Nonqualified Option” means an option to purchase Common Stock that meets the requirements of the Plan and which is not an Incentive Option.

z. “Officer” means an employee of the Corporation in salary grade E-3 or higher.

aa. “Optionee” means any person to whom a Stock Option or Stock Appreciation Right has been granted or who becomes a holder under Article VI of the Plan.

bb. “Participant” means a person to whom an Award has been made which has not been paid, exercised, forfeited, canceled, expired or otherwise terminated or satisfied under the Plan.

cc. “Performance Criteria” are the factors used by the Committee (on an absolute or relative basis) to establish goals to track business measures. To the extent necessary for an award to be qualified performance-based compensation under Code Section 162(m) and the regulations thereunder, the Committee shall use one or more of the following business criteria, which may be based on corporate-wide or subsidiary, division, operating unit or individual measures: net earnings; operating earnings or income; earnings growth; net income; cash flow (including operating cash flow, free cash flow, discounted cash flow return on investment, and cash flow in excess of cost of capital); earnings per share; earnings per share growth; stock price; total shareholder return; absolute and/or relative return on common shareholders equity; return on shareholders equity; return on capital; return on assets; economic value added (income in excess of cost of capital); independent customer satisfaction studies or indices; expense reduction; sales; or ratio of operating expenses to operating revenues. The established Performance Criteria may be applied on a pre- or post-tax basis and may be adjusted to include or exclude objectively determinable components of any Performance Criteria, including, without limitation, special charges such as restructuring or impairment charges, debt refinancing costs, extraordinary or noncash items, unusual, nonrecurring or one-time events affecting the Corporation or its financial statements or changes in law or accounting principles (each an “Adjustment Event”). In the sole discretion of the Committee, unless such action would cause an Award to a Code Section 162(m) Employee to fail to qualify as qualified performance-based compensation under Code Section 162(m), the Committee may amend or adjust the Performance Criteria or other terms and conditions of an outstanding Award in recognition of any Adjustment Event.

dd. “Performance Unit” means a contractual right granted to a Participant pursuant to Article VIII of the Plan to receive a designated dollar value equal to the value established by the Committee and subject to such terms and conditions as are set forth in this Plan and the applicable Award Document.

ee. “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as provided in Section 13(d) of the Exchange Act.

ff. “Plan Administrator” has the meaning set forth in Section 3.2 of the Plan.

gg. “Phantom Share” means a contractual right granted to a Participant pursuant to Article VIII of the Plan to receive an amount equal to the Appreciation Value at such time, and subject to such terms and conditions as are set forth in this Plan and the applicable Award Document.

hh. “Restricted Common Stock” means Common Stock delivered subject to the Restrictions described in Article VII of the Plan.

ii. “Restricted Common Stock Unit” means a right to receive one share of Common Stock or, in lieu thereof and to the extent provided in the applicable Award Document, the fair market value of such share of Common Stock in cash, which shall be subject to the Restrictions described in Article VII of the Plan.

jj. “Restrictions” for purposes of Article VII of the Plan includes any time-based and/or performance-based conditions to vesting.

kk. “Retirement” means retirement of a Participant from active employment or service with the Corporation on or after age 55.

ll. “Shareholder(s)” means the shareholder(s) of CMS Energy Corporation stock.

mm. “Stock Appreciation Right” shall mean a right to receive the appreciation in value of the optioned shares over the option price, granted pursuant to Article VI of the Plan.

nn. “Stock Option” means an option to purchase shares of Common Stock at a specified price, granted pursuant to Article VI of the Plan, which includes Incentive Options and Non-qualified Options.

oo. “Unrestricted Common Stock” shall mean Common Stock which is not subject to Restrictions or Performance Criteria.

pp. “Valuation Date” means the date or dates established by the Committee at the time of grant of Phantom Shares, when the Appreciation Value is determined.

Article III. Effective Date, Duration, Scope and Administration of the Plan

3.1 Effective Date: This restatement of the Plan shall be effective June 1, 2014, conditioned upon approval of the Shareholders, and shall continue until May 31, 2024.

3.2 Administration: The Compensation and Human Resources Committees shall be the Plan Administrator for Officers and Employees, including any Award or any Award Document with respect to Officers and Employees, and the Governance and Public Responsibility Committees shall be the Plan Administrator for Non-Employee Directors including any Award or any Award Document with respect to Non-Employee Directors.

The Committee shall have full power and authority to construe, interpret and administer the Plan. All decisions, actions or interpretations of the Committee shall be final, conclusive and binding upon all parties. If any Participant objects to any such interpretation or action formally or informally, the expenses of the Committee and its agents and counsel shall be chargeable against any amounts otherwise payable under the Plan to or on account of the Participant.

3.3 Indemnification: No member of the Committee shall be personally liable by reason of any contract or other instrument executed by him or on his behalf in his capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Corporation shall indemnify and hold harmless each member of the Committee and each other Officer, employee of the Corporation or Director to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with the Plan, unless arising out of such person’s own fraud or bad faith. To the extent that any payment or reimbursement of any liability, cost or other expense of a Committee member or other person pursuant to this Article III (each, an “indemnitee”) is subject to the requirements of Code Section 409A, the following conditions shall apply: (a) the indemnitee shall only be entitled to the payment or reimbursement of expenses incurred during the indemnitee’s lifetime; (b) the amount of expenses paid or reimbursed during one taxable year of the indemnitee shall not affect the amount of expenses eligible for payment or reimbursement in any other taxable year; (c) any reimbursement of an expense shall be made on or before the last day of the indemnitee’s taxable year following the taxable year in which the expense was incurred; and (d) the right to payment or reimbursement of expenses shall not be subject to liquidation or exchange for another benefit.

Article IV. Participation, Awards and Grants

4.1 Participation: Each year the Committee shall designate as Participants in the Plan those Eligible Persons who, in the opinion of the Committee, have significantly contributed to the Corporation.

4.2 Awards and Grants: Each year, the Committee may award shares of Restricted Common Stock and/or Unrestricted Common Stock and may grant Restricted Common Stock Units, Phantom Shares, Performance Units, Stock Options and/or Stock Appreciation Rights to each Eligible Person whom it has designated as a Participant in such year. No Incentive Option will be granted to an Eligible Person who is not a full or part-time employee of the Corporation.

The Committee, at its sole discretion, may give authorization to the chief executive officer of the Corporation to award a specified number of shares of Common Stock and/or grant Restricted Common Stock Units, Phantom Shares, Performance Units, Stock Options and/or Stock Appreciation Rights to Employees designated as Participants; provided, however, such authorization shall not be given with regard to the selection for participation in this Plan of an Officer, Director or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such an Officer, Director or other person subject to Section 16 of the Exchange Act.

4.3 Awards and Grants to Foreign Nationals: Awards of Common Stock and grants of Stock Options (with or without Stock Appreciation Rights), Restricted Common Stock Units, Phantom Shares or Performance Units may be made, without amending the Plan, to Eligible Persons who are foreign nationals or employed outside the United States or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to further the purposes of the Plan or to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to or alternative versions of the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, no such supplement or alternative version shall: (a) increase the number of available shares of Common Stock under Section 5.1 of the Plan; or (b) increase the limitations contained in Section 5.3 of the Plan; or (c) increase the individual compensation limit in Section 8.2 of the Plan.

Eligible Persons who are subject to United States of America taxes are not eligible to receive a Stock Option or Stock Appreciation Right that does not meet the requirements for exemption from Code Section 409A.

4.4 Terms and Conditions: The Committee may impose such terms and conditions on each Award, set forth in an Award Document, as it deems necessary or appropriate, including without limitation the vesting, the timing and method of payment, the right to earn dividend or dividend equivalents and termination provisions. Any such Awards either shall be structured in such a manner as to be exempt from the requirements of Code Section 409A or shall be structured to meet the requirements of Code Section 409A. Grants of Stock Options or Stock Appreciation Rights are in all cases intended to meet the requirements for exemption from Code Section 409A. Awards shall be made in accordance with applicable legal requirements of federal and state securities laws, and in making determinations of legal requirements the Committee may rely on an opinion of counsel for the Corporation.

4.5 Deferral of Payment: The provisions of this Plan regarding payment of Awards shall be subject to and interpreted in accordance with, in all respects, the deferral elections, if any, that are made from time to time by a Participant who is salary grade 19 or above and in accordance with the Award Document. The Committee may at its discretion impose mandatory deferral for an Officer or Director to comply with stock ownership requirements outside of this Plan. However, no such deferral election shall be made to the extent that the deferral would cause adverse consequences under Code Section 409A, and to the extent that an Award is subject to Code Section 409A and such deferral causes an Award to be paid on account of a separation from service thereunder, payment shall be delayed to the extent required by Code Section 409A(a)(2)(B)(i).

4.6 Dividends and Dividend Equivalents for Awards with Performance Criteria: Dividend equivalents with respect to shares subject to performance-based vesting conditions shall be subject to the same vesting conditions as the underlying shares. Payment of dividends and dividend equivalent rights, as prescribed in the Award Document, may occur only upon the achievement of Performance Criteria and payment is not permitted during the performance period.

Article V. Shares Reserved Under the Plan

5.1 Shares Reserved: There is hereby reserved for award under this Plan 6.5 million whole shares of Common Stock. All shares available under the Plan may be granted as Incentive Options. To the extent permitted by law or the rules and regulations of any stock exchange on which the Common Stock is listed, shares of Common Stock with respect to which payment or exercise is in cash may thereafter again be awarded or made subject to grant under the Plan. Shares of Common Stock which are not issued by reason of expiration, cancellation, termination or forfeiture under the terms of the Award Document and the Plan are permitted to again be awarded or made subject to grant under the Plan. The number of shares made available for option and sale under Article VI of the Plan plus the number of shares awarded under Article VII of the Plan plus the number of shares granted or purchased under Article VIII of the Plan will not exceed, at any time, the number of shares of Common Stock reserved pursuant to this Article V.

For purposes of determining the number of shares that remain available for issuance under this Plan, (i) the number of shares of Common Stock that are tendered by a Participant or withheld by the Corporation to pay the exercise price of a Stock Option or to satisfy the Participant’s tax withholding obligations in connection with the exercise or settlement of an Award and (ii) the number of shares of Common Stock covered by a stock-settled Stock Appreciation Right to the extent exercised, shall be deemed to have been released or delivered for purposes of determining the maximum number of shares of Common Stock available under the terms of this Plan and will not be available for new grants or awards.

5.2 Adjustments. In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the number and class of securities available under this Plan, the terms of each outstanding Stock Option and Stock Appreciation Right (including the number and class of securities subject to each outstanding Stock Option or Stock Appreciation Right and the purchase price or base price per share), the terms of each outstanding Restricted Common Stock Award and Restricted Common Stock Unit Award (including the number and class of securities subject thereto), the terms of each outstanding Phantom Share Award and Performance Unit Award (including the number and class of securities subject thereto), the maximum number of securities with respect to which Awards may be granted during any calendar year under Section 5.3 to any one grantee, shall be appropriately adjusted by the Committees. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Corporation, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of Participants. In either case, the decision of the Committee regarding any such adjustment shall be final, binding and conclusive. Any such adjustment with respect to each Stock Option or Stock Appreciation Right shall be consistent with the requirements applicable to exempt stock rights under Code Section 409A and applicable regulations. Any adjustment with respect to Incentive Options shall also conform to the requirements of Code Section 422 .

5.3 Limits: The maximum shares awarded or granted for any one Officer or Employee for any one calendar year under this Plan, excluding any Performance Units granted under Section 8.2, will not exceed 500,000 shares of Common Stock in the aggregate. The limits applicable to Performance Units are set forth in Section 8.2. The maximum shares awarded or granted for any one Non-Employee Director for any one calendar year under this Plan, excluding any Performance Units granted under Section 8.2, will not exceed the lesser of 10,000 shares of Common Stock or a value of $250,000 in the aggregate. Not more than 10% of the total shares reserved for grant or award under this Plan shall be granted or awarded to Non-Employee Directors.

5.4 Tax Withholding Payments: Each vesting and payment of Common Stock under the Plan shall be made subject to applicable federal, state and local tax withholding requirements. For this purpose, the Committee may provide for the withholding of shares of Common Stock or allow a Participant to pay to the Corporation funds sufficient to satisfy such withholding requirements. Each vesting and payment under Article VIII shall be made subject to such federal, state and local tax withholding requirements as apply on the relevant date. For this purpose, if a payout is made under Section 8.2 of the Plan in Common Stock, the Committee may provide for the withholding of shares of Common Stock or allow a Participant to pay to the Corporation funds sufficient to satisfy such withholding requirements.

If upon the exercise of a Nonqualified Option and/or a Stock Appreciation Right or as a result of a disqualifying disposition (within the meaning of Code Sections 422 and 424) of shares acquired upon exercise of an Incentive Option, there shall be payable by the Corporation any amount for income tax withholding, either the Corporation shall appropriately reduce the amount of stock or cash to be paid to the Optionee or the Optionee shall pay such amount to the Corporation to reimburse it for such income tax withholding.

Article VI. Stock Options and Stock Appreciation Rights

6.1 Options: The Committee may from time to time authorize a grant of Stock Options, which may consist in whole or in part of authorized and unissued Common Stock. Exercises of grants of Stock Options are restricted by the Grant Period.

6.2 Optionees : The Committee shall determine and designate from time to time, in its sole discretion, those Eligible Persons to whom Stock Options and Stock Appreciation Rights are to be granted and who thereby become Optionees under the Plan.

6.3 Allotment of Shares: The Committee shall determine and fix the number of shares of Common Stock subject to options to be

offered to each Optionee.

6.4 Option Price: The Committee shall establish the option price at the time any Stock Option is granted at not less than 100% of the fair market value of the Common Stock on the date on which such option is granted; provided, however, that with respect to an Incentive Option granted to an employee who at the time of the grant owns (after applying the attribution rules of Code Section 425(d)) more than 10% of the total combined voting power of the Corporation (or any parent or subsidiary corporation within the meaning of Code Section 422), the option price shall not be less than 110% of the fair market value of the Common Stock subject to the Incentive Option on the date such Incentive Option is granted. Other than as contemplated in Section 5.2, in no event shall Stock Options previously granted under this Plan be re-priced by reducing the exercise price thereof, nor shall Stock Options previously granted under this Plan be bought out or canceled and replaced by a subsequent re-grant under this Plan of Stock Options having an exercise price lower than the Stock Options so canceled.

6.5 Stock Appreciation Rights: At the sole discretion of the Committee, any Stock Option granted under this Plan may, at the time of such grant, include a Stock Appreciation Right. A Stock Appreciation Right shall pertain to, and be granted only in conjunction with, a related underlying Stock Option, and shall be exercisable only at the time and to the extent the related underlying Stock Option is exercisable and only if the fair market value of the Common Stock exceeds the Stock Option price in the related underlying Stock Option. An Optionee who is granted a Stock Appreciation Right may elect to surrender the related underlying Stock Option with respect to all or part of the number of shares subject to the related underlying Stock Option and exercise in lieu thereof the Stock Appreciation Right with respect to the number of shares as to which the Stock Option is surrendered.

The exercise of the underlying Stock Option shall terminate the related Stock Appreciation Right to the extent of the number of shares purchased upon exercise of the underlying Stock Option. The exercise of a Stock Appreciation Right shall terminate the related underlying Stock Option to the extent of the number of shares with respect to which the Stock Appreciation Right is exercised. Upon exercise of a Stock Appreciation Right, an Optionee shall be entitled to receive, without payment to the Corporation (except for applicable withholding taxes), an amount equal to the excess of (i) the then aggregate fair market value of the number of shares with respect to which the Optionee exercises the Stock Appreciation Right, over (ii) the aggregate Stock Option price per share for such number of shares. Such amount may be paid by the Corporation, in cash, Common Stock or any combination thereof.

Notwithstanding the above, the Committee may grant Stock Appreciation Rights that are not in conjunction with a related underlying Stock Option. The basis used in determining any increase in the value of the Common Stock under such Stock Appreciation Right shall be not less than 100% of the fair market value of the Common Stock on the date of grant. To the extent, if any, that the Committee elects to grant such Stock Appreciation Rights, then such Stock Appreciation Rights shall in all respects be intended to be exempt from Code Section 409A. Other than as contemplated in Section 5.2, in no event shall Stock Appreciation Rights previously granted under this Plan be re-priced by reducing the exercise price thereof, nor shall Stock Appreciation Rights previously granted under this Plan be bought out or canceled and replaced by a subsequent re-grant under this Plan of Stock Appreciation Rights having an exercise price lower than the Stock Appreciation Rights so canceled.

6.6 Granting and Exercise of Stock Options and Stock Appreciation Rights: Each Stock Option and Stock Appreciation Right granted hereunder shall be exercisable at any such time or times or in any such installments as may be determined by the Committee at the time of the grant. However, the aggregate fair market value of shares underlying Incentive Options (determined as of the date of option grant) that become exercisable for the first time by any Optionee during any calendar year may not exceed $100,000 (or such other amount as may be reflected in the limits imposed from time to time by Code Section 422(d) or any successor provision). This limitation shall be applied by taking Stock Options into account in the order in which they were granted and, to the extent a Stock Option exceeds this limitation; it shall be treated as a Nonqualified Option and not as an Incentive Option.

6.7 Payment of Stock Option Price: Notice of exercise of a Stock Option must be accompanied by payment in full of the exercise price for all shares so purchased. Payment shall be made by the Optionee either in cash or in Common Stock, including but not limited to (i) check, (ii) tendering (either actually or by attestation) shares owned by a Participant or directing the Corporation to withhold shares in each case, having a fair market value at the date of exercise equal to such exercise price, (iii) a third-party exercise procedure, including the use of broker-assisted cashless exercise or (iv) a combination of the foregoing. No Optionee shall have any of the rights of a Shareholder under any such Stock Option until the actual issuance of shares to said Optionee, and prior to such issuance no adjustment shall be made for dividends, distributions or other rights in respect of such shares, except as provided in Section 5.2 of the Plan.

6.8 Term of Stock Options and Stock Appreciation Rights: If not sooner terminated, each Stock Option and Stock Appreciation Right

granted hereunder shall expire not more than ten years from the date of the granting thereof; provided, that with respect to an Incentive Option and a related Stock Appreciation Right granted to an Optionee who, at the time of the grant, owns (after applying the attribution rules of Code Section 425(d)) more than 10% of the total combined voting power of all classes of stock of the Corporation (or any parent or subsidiary corporation within the meaning of Code Section 422), such Incentive Option and Stock Appreciation Right shall expire not more than five years after the date of granting thereof.

6.9 Restrictions on Sale of Shares: If, at the time of exercise of any Stock Option or Stock Appreciation Right granted hereunder, the Corporation is precluded by any legal, regulatory or contractual restriction from selling and/or delivering shares pursuant to the terms of such Stock Option or Stock Appreciation Right, the sale and delivery of the shares may be delayed until the restrictions are resolved and only cash may be paid upon exercise of the Stock Appreciation Right. At any time during such delay, the Committee, in its sole discretion, may permit the Optionee to revoke a Stock Option exercise, in which event any corresponding Stock Appreciation Right shall be reinstated. This provision shall be interpreted in such a manner as to preserve the exemption of the Stock Option or Stock Appreciation Right from Code Section 409A.

Article VII. Restricted Common Stock, Restricted Common Stock Units and Unrestricted Common Stock

7.1 Awards: Subject to the terms of this Plan, the Committee may from time to time award Restricted Common Stock, Restricted Common Stock Units or Unrestricted Common Stock to any Eligible Person it has designated as a Participant and in accordance with such rules as the Committee may prescribe. The Committee may also award Restricted Common Stock or Restricted Common Stock Units conditioned on the attainment of a performance goal measured by Performance Criteria as determined by the Committee and set forth in the Award Document and subject to such other restrictions as the Committee deems advisable.

7.2 Terms of Restricted Common Stock Awards :

a. Stock Awarded: Whenever shares of Restricted Common Stock are awarded to a Participant, such shares shall be outstanding, and the Award Document shall bear language stating that the shares have been issued subject to the restrictions set forth in the Plan and the Award Document. All shares of Restricted Common Stock awarded under the Plan shall be deposited for the benefit of the Participant with the Secretary of the Corporation as custodian until such time as the shares are vested and transferable.

b. Voting Rights: A Participant who is awarded shares of Restricted Common Stock under the Plan shall have full voting rights on such shares, whether or not the shares are vested or transferable.

c. Dividend Rights: Shares of Restricted Common Stock awarded to a Participant under the Plan, whether or not vested or transferable, may have full dividend rights as determined by the Committee and set forth in the Award Document. If shares of Common Stock or other securities are issued as a result of a merger, consolidation or similar event, such shares shall be issued in the same manner, and subject to the same deposit requirements, vesting provisions and transferability restrictions as the shares of Restricted Common Stock which have been awarded.

d. Vesting: If a Participant has received an Award of Restricted Common Stock pursuant to the provisions of the Plan, (i) is employed by the Corporation or remains a Non-Employee Director at the end of the Award Period and (ii) for shares with performance-based restrictions, the performance goals have been met, then the Participant shall vest at the end of the Award Period in the shares of Common Stock awarded to the Participant for that Award Period, in each case, to the extent provided in the applicable Award Document.

e. Forfeiture: A forfeiture of shares of Restricted Common Stock pursuant to the terms of the Award Document and the Plan shall affect a complete forfeiture of voting rights, dividend rights and all other rights relating to the Award as of the date of forfeiture.

7.3 Terms of Restricted Common Stock Unit Awards:

a. Number of Shares and Other Terms: The number of shares of Common Stock subject to a Restricted Common Stock Unit Award and the Award Period and performance-based restrictions (if any) applicable to a Restricted Common Stock Unit Award shall be determined by the Committee.

b. Vesting: If a Participant has received an Award of Restricted Common Stock Units pursuant to the provisions of the Plan, (i) is employed by the Corporation or remains a Non-Employee Director at the end of the Award Period and (ii) for Restricted

Common Stock Units subject to performance-based vesting restrictions, the performance goals have been met, then the Participant shall vest at the end of the Award Period in the Award, in each case, to the extent provided in the applicable Award Document.

c. Sett lement of Vested Restricted Common Stock Unit Awards: The Award Document relating to a Restricted Common Stock Unit Award shall specify (i) whether such Award may be settled in shares of Common Stock or cash or a combination thereof and (ii) whether the Participant shall be entitled to receive, on a current or deferred basis, dividend equivalents, and, if determined by the Committee, interest on, or the deemed reinvestment of, any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such Award. Any dividend equivalents with respect to Restricted Common Stock Units that are subject to performance-based restrictions shall be subject to the same Restrictions as such Restricted Common Stock Units. Prior to the settlement of a Restricted Common Stock Unit Award, the Participant shall have no rights as a shareholder of the Corporation with respect to the shares of Common Stock subject to such Award.

d. Forfeiture : A forfeiture of a Restricted Common Stock Unit Award pursuant to the terms of the Award Document and the Plan shall affect a complete forfeiture of all rights relating to the Award as of the date of forfeiture.

7.4 Terms of Unrestricted Common Stock Awards. The number of shares of Common Stock subject to an Unrestricted Common Stock Award shall be determined by the Committee. Unrestricted Common Stock Awards shall not be subject to any Restrictions or Performance Criteria; provided, however, Unrestricted Common Stock Awards shall not be granted to Officers. Upon the grant of an Unrestricted Common Stock Award, subject to the Company’s right to require payment of any taxes in accordance with Section 5.4, shares shall be transferred to the holder in book entry form.

7.5 Transferability of Restricted Common Stock and Restricted Common Stock Units : Shares subject to a Restricted Common Stock Award or Restricted Common Stock Unit Award granted to a Participant will become freely transferable by the Participant only at the end of the Award Period established with respect to such Award.

Article VIII. Phantom Shares and Performance Units.

8.1 Phantom Shares:

a. Grants of Phantom Shares: The Committee may from time to time grant Phantom Shares, the value of which is determined by reference to a share of Common Stock on terms and conditions as the Committee, in its sole discretion, may from time to time determine. Each grant of Phantom Shares shall specify the number of Phantom Shares granted, the initial value of such Phantom Shares which shall not be less than 100% of the fair market value of the Common Stock as of the date of grant, the Valuation Dates, the number of Phantom Shares whose Appreciation Value shall be determined on each such Valuation Date, any applicable vesting schedule for such Phantom Shares, and any applicable limitation on payment for such Phantom Shares. In the event of any adjustments as described in Section 5.2 of the Plan, any outstanding Phantom Shares shall be also subject to the same adjustment as provided for in Section 5.2 of the Plan.

b. Appreciation Value:

(i) Valuation Dates; Measurement of Appreciation Value: The Committee shall provide for one or more Valuation Dates on which the Appreciation Value of the Phantom Shares granted shall be measured and fixed, and shall designate the number of such Phantom Shares whose Appreciation Value is to be calculated on each such Valuation Date.

(ii) Payment of Appreciation Value : Except as otherwise provided in this Section 8.1, the Appreciation Value of a Phantom Share shall be paid to a Participant in cash in a lump sum as soon as practicable following the Valuation Date applicable to such Phantom Share. The Committee may in its sole discretion, establish and set forth a maximum dollar amount payable under the Plan for each Phantom Share granted.

8.2 Performance Units: The Committee may, in its sole discretion, grant Performance Units to Eligible Persons. Each Performance Unit will have an initial value that is established by the Committee at the time of grant and credited to a bookkeeping account established for the Participant, but no Participant shall be granted Performance Units during any one calendar year that will provide for payment in excess of $2.5 million. The Committee will set performance periods and objectives and other terms and conditions of the grant based upon Performance Criteria as determined by the Committee that, depending upon the extent to which they are

met, will determine the value of Performance Units that will be paid out to the Participant. The Committee may pay earned Performance Units in cash, Common Stock or a combination thereof.

Article IX. Amendment, Duration and Termination of the Plan

9.1 Duration of Plan: No grants or awards may be made under this Plan after May 31, 2024. Any Award effective on or prior to May 31, 2024 will continue to vest and otherwise be effective after the expiration of this Plan in accordance with the terms and conditions of this Plan as well as any requirements set forth in the Award Document relative to such Award.

9.2 Right To Amend, Suspend or Terminate Plan: Except as provided in Section 9.5 below, the Board reserves the right at any time to amend, suspend or terminate the Plan in whole or in part and for any reason and without the consent of any Participant or Beneficiary; provided, that no such amendment shall:

a. Change the Stock Option price or adversely affect any Stock Option or Stock Appreciation Right outstanding under the Plan on the effective date of such amendment or termination, or

b. Adversely affect any Award then in effect or rights to receive any amount to which Participants or Beneficiaries have become entitled prior to such amendment, or

c. Unless approved by the Shareholders, increase the aggregate number of shares of Common Stock reserved for award or grant under Section 5.1 of the Plan, change the group of Eligible Persons under the Plan or increase the compensation limits of Section 5.3 and 8.2 of the Plan.

Notwithstanding anything contained in this Plan or any Award Document to the contrary, the Corporation shall have the unilateral right to amend this Plan and the Awards and Award Documents thereunder at any time to the extent deemed necessary or advisable by the Corporation to ensure compliance with, or exemption from, the requirements of Section 409A.

9.3 Periodic Review of Plan: In order to assure the continued realization of the purposes of the Plan, the Committee shall periodically review the Plan, and the Committee may suggest amendments to the Board as it may deem appropriate.

9.4 Amendments May Be Retroactive: Subject to Section 9.1 and 9.2 above, any amendment, modification, suspension or termination of any provisions of the Plan may be made retroactively.

9.5 Change in Control Under an Agreement: Notwithstanding any other provisions in the Plan, in the event of a Change in Control and a qualifying termination as defined under any written employment contract or agreement between the Corporation and an Officer, Awards granted under this Plan shall vest to the extent, if any, provided for in the written employment agreement or contract or in such separate contractual arrangement relating to such an award or grant as may exist from time to time.

9.6 Change in Control Without an Agreement: Except as otherwise may be provided by the Committee, in the event of a Change in Control and an Eligible Termination, a Participant not covered by a written employment contract or agreement containing a change in control provision will have any portion of an Award awarded or granted under this Plan subject to time based only restrictions vest fully and subject to a performance-based restriction vest on a pro rata basis to the change in control date using the target number of shares as the basis for the pro ration.

9.7 Compliance With Section 409A: Notwithstanding anything in Section 9.5 or 9.6, or in any individual agreement to the contrary, to the extent required for compliance with Code Section 409A, if applicable, an award granted under this Plan shall not be paid or settled on an accelerated basis solely as a result of a Change in Control unless such Change in Control is a “change in control event”, as defined for purposes of Code Section 409A.

Article X. General Provisions

10.1 Rights to Continued Employment, Award or Option: Nothing contained in the Plan or in any Award under this Plan shall give any employee the right to be retained in the employment of the Corporation or affect the right of the Corporation to terminate the employee’s employment at any time. The adoption of the Plan shall not constitute a contract between the Corporation and any employee. No Eligible Person who is an employee shall receive any right to be granted an option, right or award hereunder nor shall any such option, right or award be considered as compensation under any employee benefit plan of the Corporation.

10.2 Nontransferability: No Award shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Corporation or, to the extent expressly permitted in the Award Document relating to such Award, to the holder’s Immediate Family members, a trust or entity established by the holder for estate planning purposes or a charitable organization designated by the holder, in each case, without consideration. Except to the extent permitted by the foregoing sentence or the Award Document relating to an Award, each Award may be exercised or settled during the holder’s lifetime only by the holder or the holder’s legal representative or similar person. Except as permitted by the second preceding sentence, no Award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any Award, such Award and all rights thereunder shall immediately become null and void.

10.3 Clawback:

a. If, due to a restatement of CMS Energy Corporation’s or an Affiliate’s publicly disclosed financial statements or otherwise, an Eligible Person is subject to an obligation to make a repayment or return of benefits to CMS Energy Corporation or an Affiliate pursuant to a clawback provision contained in this Plan, a supplemental executive retirement plan, a bonus plan, or any other benefit plan (a “benefit plan clawback provision”) of the Corporation, the Board or Committee may determine that it shall be a precondition to the vesting of any unvested Award of the Eligible Person under this Plan, that the Eligible Person fully repay or return to the Corporation any amounts owing under such benefit plan clawback provision taking into account the requirements of Code Section 409A, to the extent applicable. Any and all Awards under this Plan are further subject to (i) any provision of law which may require the Eligible Person to forfeit or return any benefits provided hereunder, in the event of a restatement of the CMS Energy Corporation’s or an Affiliate’s publicly disclosed accounting statements or other illegal act, whether required by Section 304 of the Sarbanes-Oxley Act of 2002, federal securities law (including any rule or regulation promulgated by the Securities and Exchange Commission), any state law, or any rule or regulation promulgated by the applicable listing exchange or system on which CMS Energy Corporation or Consumers Energy Company lists its traded securities or (ii) any clawback policy of the Corporation, as it may exist from time to time.

b. To the degree any benefits hereunder are not otherwise forfeitable pursuant to the preceding sentences of this Section 10.3, the Board or Committee may require the Eligible Person to return to the Corporation any amounts granted, awarded or paid under this Plan, or may determine that all or any portion of an Award shall not vest, if:

(1) the award or grant of such compensation or the vesting of such compensation, or profit realized on the exercise or sale of securities obtained pursuant to the Plan, was predicated upon achieving certain financial results which were subsequently the subject of a substantial accounting restatement of the Corporation’s financial statements filed under the securities laws (a “financial restatement”),

(2) a lower Award, a lower vesting result, or a lower profit on the exercise or sale of securities obtained pursuant to the Plan (“reduced financial results”), would have occurred based upon the financial restatement, and

(3) in the reasonable opinion of the Board or the Committee, the circumstances of the financial restatement justify such a modification of the Award or its vesting. Such circumstances may include, but are not limited to, whether the financial restatement was caused by misconduct, whether the financial restatement affected more than one period and the reduced financial results in one period were offset by increased financial results in another period, the timing of the financial restatement or any required repayment, and other relevant factors.

Unless otherwise required by law, the provisions of this Subsection 10.3b. relating to the return of previously vested Plan benefits shall not apply unless a claim is made therefore by the Corporation within three years of the vesting of such benefits.

c. The Committee shall also have the sole discretion to require a clawback in the event of a mistake or accounting error in the calculation of a benefit or an Award that results in a benefit to an Eligible Person to which he/she was not otherwise entitled. The rights set forth in this Plan concerning the right of the Corporation to a clawback are in addition to any other rights to recovery or damages available at law or equity and are not a limitation of such rights. Any Award will be subject to the Corporation’s clawback policy, as may be modified from time to time in conformance with securities laws, rules and regulations.

10.4 Governing Law: The provisions of this Plan and all rights thereunder shall be governed by and construed in accordance with the laws of the State of Michigan.

IN WITNESS WHEREOF, execution is hereby effected.

ATTEST:		CMS ENERGY CORPORATION


/s/ Melissa M. Gleespen	By:	/s/ Patricia K. Poppe
Secretary	Chief Executive Officer

Attachment A

“Change in Control” means a change in control of CMS Energy Corporation, and shall be deemed to have occurred upon the first to occur of any of the following events:

(a) Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of CMS Energy Corporation (not including in the securities beneficially owned by such Person any securities acquired directly from CMS Energy Corporation or its Affiliates) representing thirty percent (30%) or more of the combined voting power for the election of directors of CMS Energy Corporation’s then outstanding equity securities with the power under ordinary circumstances to vote for the election of directors, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below; or

(b) The following individuals cease for any reason to constitute a majority of directors then serving: individuals who, on the effective date of the Plan (here after called the “Effective Date”), constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of CMS Energy Corporation) whose appointment or election by the Board or nomination for election by CMS Energy Corporation’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; or

(c) The consummation of a merger or consolidation of CMS Energy Corporation or any direct or indirect subsidiary of CMS Energy Corporation with any other corporation or other entity, other than: (i) any such merger or consolidation which involves either CMS Energy Corporation or any such subsidiary and would result in the voting securities of CMS Energy Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of CMS Energy Corporation or its Affiliates, at least fifty one percent (51%) of the combined voting power of the voting securities of CMS Energy Corporation or the surviving entity or any parent thereof outstanding immediately after such merger or consolidation and immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of CMS Energy Corporation, the entity surviving such merger or consolidation or, if CMS Energy Corporation or the entity surviving such merger is then a subsidiary, the ultimate parent thereof; or (ii) a merger or consolidation effected to implement a recapitalization of CMS Energy Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of CMS Energy Corporation (not including in the securities beneficially owned by such Person any securities acquired directly from CMS Energy Corporation or its Affiliates) representing thirty percent (30%) or more of the combined voting power of CMS Energy Corporation’s then outstanding securities; or

(d) Either (1) the stockholders of CMS Energy Corporation approve a plan of complete liquidation or dissolution of CMS Energy Corporation and such plan is consummated, or (2) there is consummated an agreement for the sale, transfer or disposition by CMS Energy Corporation of all or substantially all of CMS Energy Corporation’s assets (or any transaction having a similar effect). For purposes of clause (d)(2), (i) the sale, transfer or disposition of a majority of the shares of common stock of Consumers Energy Company shall constitute a sale, transfer or disposition of substantially all of the assets of CMS Energy Corporation and (ii) the sale, transfer or disposition of subsidiaries or affiliates of CMS Energy Corporation, singly or in combinations, or their assets, only qualifies as a Change in Control if it satisfies the substantiality test contained in that clause and the Board of CMS Energy Corporation’s determination in that regard is final. In addition, for purposes of clause (d)(2), the sale, transfer or disposition of assets has to be in a transaction or series of transactions closing within six (6) months after the closing of the first transaction in the series, other than with an entity in which at least fifty-one 51% of the combined voting power of the voting securities is owned by stockholders of CMS Energy Corporation in substantially the same proportions as their ownership of CMS Energy Corporation immediately prior to such transaction or transactions and immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold, transferred or disposed or, if such entity is a subsidiary, the ultimate parent thereof.

Attachment A

Notwithstanding the foregoing clauses (a), (c) and (d), a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions closing within six (6) months after the closing of the first transaction in the series immediately following which the record holders of the common stock of CMS Energy Corporation immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of CMS Energy Corporation immediately following such transaction or series of transactions.

Exhibit 10.4

Description of the $180,000,000 Term Loan Credit Agreement Extension

April 25, 2017

Pursuant to the terms of the $180,000,000 Term Loan Credit Agreement, dated as of June 11, 2015, among CMS Energy Corporation, the financial institutions named therein and JPMorgan Chase Bank, N.A., as Agent, the parties have all agreed, effective April 25, 2017, to extend the Maturity Date for a period of one year to April 25, 2019.

Exhibit 12.1

CMS Energy Corporation

Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends

	In Millions, Except Ratios
	Three Months
	Ended			Year Ended December 31
	March 31, 2017			2016			2015			2014			2013			2012
Earnings as defined 1
Pretax income from continuing operations	$	295		$	826		$	796		$	729		$	756		$	622
Exclude equity basis subsidiaries	(4		)	(2		)	(2		)	(1		)	(2		)	(7		)
Fixed charges as defined 2	116			469			421			432			423			414
Earnings as defined 2	$	407		$	1,293		$	1,215		$	1,160		$	1,177		$	1,029
Fixed charges as defined 1
Interest on long-term debt	$	100		$	411		$	386		$	393		$	385		$	372
Estimated interest portion of lease rental	8			29			21			21			21			21
Other interest charges	8			31			16			19			18			23
Fixed charges as defined 2	$	116		$	471		$	423		$	433		$	424		$	416
Preferred dividends	-			-			-			-			-			-
Combined fixed charges and preferred dividends	$	116		$	471		$	423		$	433		$	424		$	416
Ratio of earnings to fixed charges	3.51			2.75			2.87			2.68			2.78			2.47
Ratio of earnings to combined fixed charges and preferred dividends	3.51			2.75			2.87			2.68			2.78			2.47

1 Earnings and fixed charges as defined in instructions for Item 503 of Regulation S-K.

2 Preferred dividends of a consolidated subsidiary are included in fixed charges, but excluded from earnings as defined because the amount was not deducted in arriving at pretax income from continuing operations.

Exhibit 12.2

Consumers Energy Company

Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends

In Millions, Except Ratios
	Three Months
	Ended		Year Ended December 31
	March 31, 2017		2016		2015		2014		2013		2012
Earnings as defined 1
Pretax income from continuing operations	$	312	$	936	$	896	$	873	$	880	$	736
Fixed charges as defined	77		302		275		274		269		269
Earnings as defined	$	389	$	1,238	$	1,171	$	1,147	$	1,149	$	1,005
Fixed charges as defined 1
Interest on long-term debt	$	66	$	261	$	252	$	243	$	237	$	232
Estimated interest portion of lease rental	8		29		21		21		21		21
Other interest charges	3		12		2		10		11		16
Fixed charges as defined	77		302		275		274		269		269
Preferred dividends	-		3		3		3		3		3
Combined fixed charges and preferred dividends	$	77	$	305	$	278	$	277	$	272	$	272
Ratio of earnings to fixed charges	5.05		4.10		4.26		4.19		4.27		3.74
Ratio of earnings to combined fixed charges and preferred dividends	5.05		4.06		4.21		4.14		4.22		3.69

1 Earnings and fixed charges as defined in instructions for Item 503 of Regulation S-K.

Exhibit 31.1

CERTIFICATION OF PATRICIA K. POPPE

I, Patricia K. Poppe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CMS Energy Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: April 30, 2017	By:	/s/ Patricia K. Poppe
		Patricia K. Poppe
		President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF THOMAS J. WEBB

I, Thomas J. Webb, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CMS Energy Corporation;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: April 30, 2017	By:	/s/ Thomas J. Webb
		Thomas J. Webb
		Executive Vice President and Chief Financial Officer

Exhibit 31.3

CERTIFICATION OF PATRICIA K. POPPE

I, Patricia K. Poppe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Consumers Energy Company;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: April 30, 2017	By:	/s/ Patricia K. Poppe
		Patricia K. Poppe
		President and Chief Executive Officer

Exhibit 31.4

CERTIFICATION OF THOMAS J. WEBB

I, Thomas J. Webb, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Consumers Energy Company;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: April 30, 2017	By:	/s/ Thomas J. Webb
		Thomas J. Webb
		Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF CEO AND CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of CMS Energy Corporation (the “Company”) for the quarterly period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Patricia K. Poppe, as President and Chief Executive Officer of the Company, and Thomas J. Webb, as Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his or her knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Patricia K. Poppe

Name:	Patricia K. Poppe
Title:	President and Chief Executive Officer
Date:	April 30, 2017


/s/ Thomas J. Webb

Name:	Thomas J. Webb
Title:	Executive Vice President and Chief Financial Officer
Date:	April 30, 2017

Exhibit 32.2

CERTIFICATION OF CEO AND CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Consumers Energy Company (the “Company”) for the quarterly period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Patricia K. Poppe, as President and Chief Executive Officer of the Company, and Thomas J. Webb, as Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his or her knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Patricia K. Poppe

Name:	Patricia K. Poppe
Title:	President and Chief Executive Officer
Date:	April 30, 2017


/s/ Thomas J. Webb

Name:	Thomas J. Webb
Title:	Executive Vice President and Chief Financial Officer
Date:	April 30, 2017