CONSUMERS ENERGY CO
For the period ended Dec 31, 2023. Filed Feb 8, 2024.
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FY2023 · Filed Feb 8, 2024
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9: Asset Retirement Obligations
CMS Energy and Consumers record the fair value of the cost to remove assets at the end of their useful lives, if there is a legal obligation to remove them. If a reasonable estimate of fair value cannot be made in the period in which the ARO is incurred, such as for assets with indeterminate lives, the liability is recognized when a reasonable estimate of fair value can be made. CMS Energy and Consumers have not recorded liabilities associated with the closure of certain gas wells that have an indeterminate life. CMS Energy and Consumers have not recorded liabilities for assets that have immaterial cumulative disposal costs, such as substation batteries.
CMS Energy and Consumers calculate the fair value of ARO liabilities using an expected present-value technique that reflects assumptions about costs and inflation, and uses a credit-adjusted risk-free rate to discount the expected cash flows. CMS Energy’s ARO liabilities are primarily at Consumers.
Presented below are the categories of assets that CMS Energy and Consumers have legal obligations to remove at the end of their useful lives and for which they have an ARO liability recorded:
| ARO Description | In-Service Date | Long-Lived Assets |
|---|---|---|
| Closure of coal ash disposal areas | various | Generating plants coal ash areas |
| Gas distribution cut, purge, and cap | various | Gas distribution mains and services |
| Asbestos abatement | 1973 | Electric and gas utility plant |
| Closure of renewable generation assets | various | Wind and solar generation facilities |
| Gas wells plug and abandon | various | Gas transmission and storage |
Presented in the following tables are the changes in CMS Energy’s and Consumers’ ARO liabilities:
| In Millions | ||||||
|---|---|---|---|---|---|---|
| Company and ARO Description | ARO Liability 12/31/2022 | Incurred | Settled | Accretion | Cash Flow Revisions | ARO Liability 12/31/2023 |
| CMS Energy, including Consumers | ||||||
| Consumers | $722 | $4 | $(28) | $32 | $9 | $739 |
| Renewable generation assets | 24 | 7 | — | 1 | — | 32 |
| Total CMS Energy | $746 | $11 | $(28) | $33 | $9 | $771 |
| Consumers | ||||||
| Coal ash disposal areas | $272 | $— | $(15) | $11 | $— | $268 |
| Gas distribution cut, purge, and cap | 287 | — | (10) | 14 | (1) | 290 |
| Asbestos abatement | 39 | — | (1) | 3 | 10 | 51 |
| Renewable generation assets | 95 | 4 | — | 3 | — | 102 |
| Gas wells plug and abandon | 29 | — | (2) | 1 | — | 28 |
| Total Consumers | $722 | $4 | $(28) | $32 | $9 | $739 |
| In Millions | ||||||
|---|---|---|---|---|---|---|
| Company and ARO Description | ARO Liability 12/31/2021 | Incurred | Settled | Accretion | Cash Flow Revisions1 | ARO Liability 12/31/2022 |
| CMS Energy, including Consumers | ||||||
| Consumers | $605 | $1 | $(39) | $27 | $128 | $722 |
| Renewable generation assets | 23 | — | — | 1 | — | 24 |
| Total CMS Energy | $628 | $1 | $(39) | $28 | $128 | $746 |
| Consumers | ||||||
| Coal ash disposal areas | $157 | $— | $(20) | $7 | $128 | $272 |
| Gas distribution cut, purge, and cap | 282 | 1 | (11) | 15 | — | 287 |
| Asbestos abatement | 38 | — | (1) | 2 | — | 39 |
| Renewable generation assets | 93 | — | — | 2 | — | 95 |
| Gas wells plug and abandon | 35 | — | (7) | 1 | — | 29 |
| Total Consumers | $605 | $1 | $(39) | $27 | $128 | $722 |
1 Increase was attributable to a proposed change for closure work at the J.H. Campbell 3 ash disposal landfill and an updated cost estimate for other coal ash disposal areas.
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