CONSUMERS ENERGY CO

Consumers enters into a number of transactions with related parties in the normal course of business. These transactions include but are not limited to:

•purchases of electricity from affiliates of NorthStar Clean Energy

•payments to and from CMS Energy related to parent company overhead costs

•payments of principal and interest when due to CMS Energy related to borrowings under certain credit agreements and CMS Energy’s repurchase of Consumers’ first mortgage bonds

Transactions involving power supply purchases from certain affiliates of NorthStar Clean Energy are based on avoided costs under PURPA, state law, and competitive bidding. The payment of parent company overhead costs is based on the use of accepted industry allocation methodologies. These payments are for costs that occur in the normal course of business.

Presented in the following table is Consumers’ expense recorded from related-party transactions for the years ended December 31:

Amounts payable to related parties for purchased power and other services were $19 million at December 31, 2023 and $20 million at December 31, 2022. Accounts receivable from related parties were $9 million at December 31, 2023 and $8 million at December 31, 2022.

CMS Energy has a demand note payable to the DB SERP rabbi trust. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028. The portion of the demand note attributable to Consumers was recorded as a note receivable – related party on Consumers’ consolidated balance sheets at December 31, 2023 and 2022.

Consumers has a natural gas transportation agreement with a subsidiary of CMS Energy that extends through 2038, related to a pipeline owned by Consumers. For additional details about the agreement, see Note 8, Leases.

During 2023, CMS Energy repurchased certain of Consumers’ first mortgage bonds. For more information about these repurchases, see Note 4, Financings and Capitalization—CMS Energy’s Purchase of Consumers’ First Mortgage Bonds.

In November 2023, an unregulated subsidiary of Consumers sold certain non-utility renewable development projects to NorthStar Clean Energy for $20 million, the projects’ net book value; there was no gain or loss recognized on this sale.

In December 2023, Consumers renewed a short-term credit agreement with CMS Energy, permitting Consumers to borrow up to $500 million. For additional details about the agreement, see Note 4, Financings and Capitalization—Short-term Borrowings.