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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 9/22/23 Consumers Energy Co. SF-1 9:2.7M Toppan Merrill/FA Consumers 2023 Securitization Funding LLC |
Document/Exhibit Description Pages Size 1: SF-1 Registration Statement (General Form) by an Issuer HTML 1.63M of Asset-Backed Securities 2: EX-3.1 Articles of Incorporation/Organization or Bylaws HTML 7K 3: EX-21.1 Subsidiaries List HTML 8K 4: EX-25.1 Statement of Eligibility to Act as a Trustee HTML 43K 9: EX-FILING FEES Filing Fees HTML 12K 5: EX-99.1 Miscellaneous Exhibit HTML 589K 6: EX-99.4 Miscellaneous Exhibit HTML 7K 7: EX-99.5 Miscellaneous Exhibit HTML 7K 8: EX-99.6 Miscellaneous Exhibit HTML 7K
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CONSUMERS ENERGY COMPANY
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CONSUMERS 2023 SECURITIZATION
FUNDING LLC |
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(Exact name of registrant, sponsor and depositor as specified in its charter)
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(Exact name of registrant and issuing entity as specified in its charter)
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Michigan
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Delaware
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(State or other jurisdiction of incorporation or organization)
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(State or other jurisdiction of incorporation or organization)
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(Commission File Number)
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201533
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1991774
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(Central Index Key Number)
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(Central Index Key Number)
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38-0442310
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93-3119763
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(I.R.S. Employer Identification Number)
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(I.R.S. Employer Identification Number)
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(Address, including zip code, and telephone number, including
area code, of depositor’s principal executive offices) |
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(Address, including zip code, and telephone number, including
area code, of issuing entity’s principal executive offices) |
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David S. Baxter
Pillsbury Winthrop Shaw Pittman LLP 31 West 52nd Street New York, New York 10019-6131 (212) 858-1222 |
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Tranche
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Expected
Weighted Average Life (Years) |
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Principal
Amount Offered |
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Scheduled
Final Payment Date |
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Final
Maturity Date |
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Interest
Rate |
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Initial
Price to Public |
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Underwriting
Discounts and Commissions(1) |
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Proceeds to
Issuing Entity (Before Expenses) |
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Securities Offered:
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| | $ of Senior Secured Securitization Bonds, Series , issued in tranches, and scheduled to pay principal semi-annually in accordance with the expected sinking fund schedule in this prospectus. | |
Tranche
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Principal
Amount* |
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Issuing Entity and Capital Structure:
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| | Consumers 2023 Securitization Funding LLC, a special purpose Delaware limited liability company. Consumers Energy is the Issuing Entity’s sole member and owns all of its equity interests. The Issuing Entity has no commercial operations and was formed solely to purchase, own and administer the Securitization Property, to issue the Bonds and to perform activities incidental thereto, and the Issuing Entity’s organizational documents prohibit it from engaging in any other activity except as specifically authorized by the Financing Order. See “Description of the Issuing Entity” in this prospectus. | |
| | | | The Issuing Entity will be capitalized with an upfront cash deposit by Consumers Energy of 0.50% of the initial aggregate principal amount of the Bonds issued (to be held in the Capital Subaccount described herein). There will also be an Excess Funds Subaccount, which will be used to retain, until the next applicable Payment Date, any amounts collected and remaining after all scheduled payments due on such Payment Date for the Bonds have been made. | |
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Issuing Entity’s Address and Telephone Number:
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One Energy Plaza
Jackson, Michigan 49201 (517) 788-0550 |
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The Depositor, Sponsor, Seller and Initial Servicer:
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| | Consumers Energy is a public utility that owns and operates electric generation and distribution facilities and gas transmission, storage and distribution facilities. Consumers Energy is a wholly-owned subsidiary of CMS Energy Corporation, referred to in this prospectus as CMS Energy. As of June 30, 2023, Consumers Energy served approximately 1.9 million electric customers in Michigan. Consumers Energy’s retail rates and certain other aspects of its business are subject to the jurisdiction of the MPSC. The Bonds do not constitute a debt, liability or other legal obligation of Consumers Energy. | |
| | | | Consumers Energy, acting as the Initial Servicer, and any successor Servicer, will service the Securitization Property securing the Bonds under a Servicing Agreement with the Issuing Entity. See “Consumers Energy Company — The Depositor, Sponsor, Seller and Initial Servicer” and “The Servicing Agreement” in this prospectus. | |
| | | | Consumers Energy currently acts as servicer with respect to the Series 2014A Securitization Bonds issued by Consumers 2014 Securitization Funding LLC, which is a wholly-owned subsidiary of Consumers Energy. Please read “Relationship to the Series 2014A Securitization Bonds” in this prospectus. | |
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Consumers Energy’s Address and Telephone Number:
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One Energy Plaza
Jackson, Michigan 49201 (517) 788-0550 |
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Indenture Trustee:
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| | The Bank of New York Mellon. The Bank of New York Mellon also serves as the trustee for the Series 2014A Securitization Bonds. See “Description of the Indenture Trustee” in this prospectus for a description of the duties and responsibilities of the Indenture Trustee. | |
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Purpose of Transaction:
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| | This issuance of the Bonds will enable Consumers Energy to recover and refinance certain qualified costs eligible for recovery under the Statute. Please read “The Statute and the Financing Order” in this prospectus for additional information. | |
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Transaction Overview:
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| | The Statute allows the recovery of qualified costs by certain electric utilities through the issuance of securitization bonds. The Statute establishes a process to obtain a financing order under which the MPSC is allowed to authorize an electric utility (or its successors) to impose on its customers an irrevocable, Nonbypassable, securitization charge to fully recover qualified costs. The amount and terms for collections of these securitization charges are governed by one or more financing orders issued to an electric utility by the MPSC. The Statute permits an electric utility to transfer its rights and interests under a financing order, including the right to impose, collect and receive securitization charges, to a special purpose entity formed by the electric utility to issue securitization bonds secured by the right to receive revenues arising from the securitization charges. The electric utility’s right to impose, collect, receive and adjust the securitization charges, and all revenue, collections, payments, money and proceeds arising out of the rights and interests created under the financing order, upon transfer to the issuing entity, constitute securitization property. | |
| | | | References in this prospectus to the Financing Order mean the financing order issued by the MPSC in Case No. U-20889 on December 17, 2020, which is further described in this prospectus. Under the Financing Order, the MPSC authorized Consumers Energy to recover up to $688,300,000 of its Qualified Costs, consisting of up to the total amount of: | |
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$677,700,000 of the unrecovered book value of D.E. Karn Units 1 and 2 coal-fired generation units; and
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$10,600,000 of initial other Qualified Costs, referred to in this prospectus as the Initial Other Qualified Costs,
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| | | | through the issuance of the Bonds. In accordance with the Financing Order, Securitization Charges shall be imposed for a period of not greater than eight years after the beginning of the first complete billing cycle during which the Securitization Charges were initially placed on any Customer’s bill and shall be collected from Customers in amounts sufficient to pay principal and interest on the Bonds and Ongoing Other Qualified Costs. | |
| | | | The primary transactions underlying the offering of the Bonds are as follows: | |
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Consumers Energy will sell the Securitization Property to the Issuing Entity in exchange for the net proceeds from the sale of the Bonds;
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the Issuing Entity will sell the Bonds, which will be secured primarily by the Securitization Property, to the underwriters; and
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Consumers Energy will act as the Initial Servicer of the Securitization Property.
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| | | | The Bonds are not obligations of the Indenture Trustee, the Issuing Entity’s Managers or Consumers Energy or any of its affiliates, other than the Issuing Entity. The Bonds are also not obligations of the State of Michigan or any county, municipality or other political subdivision of the State of Michigan, including the MPSC. | |
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Diagram of Transaction:
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| | The following diagram represents a general summary of parties to the transactions underlying the offering of the Bonds, their roles and their various relationships to other parties: | |
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Flow of Funds:
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| | The following diagram represents a general summary of the flow of funds of the Securitization Charges: | |
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Collateral:
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| | The Bonds will be secured only by assets of the Issuing Entity. The Collateral securing the Bonds primarily consists of the Securitization Property. The Securitization Property is a present property right of the Issuing Entity created under the Statute by the Financing Order issued by the MPSC. The Collateral includes all of the Issuing Entity’s right, title and interest (whether owned on the issuance date or thereafter acquired or arising) in and to the Securitization Property created under and pursuant to the Financing Order and the Statute that is transferred by the Seller to the Issuing Entity pursuant to the Sale Agreement, including, to the fullest extent permitted by law, the right to impose, collect and receive Securitization Charges, the right to obtain periodic adjustments, referred to in this prospectus as True-Up Adjustments, to the Securitization Charges as provided in the Financing Order and the Statute, and all revenues, collections, payments, money and proceeds arising out of the rights and interests created under the Financing Order. | |
| | | | The Collateral securing the Bonds also includes the Issuing Entity’s rights under the Basic Documents governing the Bonds, and the Collection Account (and related subaccounts) held pursuant to the Indenture relating to the Bonds. | |
| | | | Subject to certain conditions, the consent of 100% of the registered holders of the Bonds, referred to in this prospectus as Holders, is required to direct the Indenture Trustee to sell or liquidate the Collateral (other than pursuant to an Event of Default for failure to pay interest or principal at maturity). Please read “Description of the Bonds — Events of Default; Rights Upon Event of Default” in this prospectus. | |
| | | | The Collateral for the Bonds will be separate from the collateral for the Series 2014A Securitization Bonds, which were issued by a different issuing entity from the Issuing Entity, and Holders of the Bonds will have no recourse to the collateral from that other issuance. Please read “Security for the Bonds” in this prospectus. | |
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Collection Account and Subaccounts:
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| | The Issuing Entity will establish the Collection Account to hold collections arising from the Securitization Charges as well as the capital contributions made to the Issuing Entity. The Collection Account will consist of three subaccounts: | |
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the General Subaccount;
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the Capital Subaccount; and
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the Excess Funds Subaccount.
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| | | | The Capital Subaccount will be funded by Consumers Energy on or prior to the issuance of the Bonds through a capital contribution in an amount equal to 0.50% of the initial aggregate principal amount of the Bonds issued. | |
| | | | All collections of Securitization Charges by the Servicer will be remitted into the General Subaccount. | |
| | | | The Excess Funds Subaccount will receive deposits of any amounts attributable to the Qualified Costs remaining after payments of interest, scheduled principal, expenses and required deposits into the Capital Subaccount. Withdrawals from and deposits to these subaccounts will be made as described under “Security for the Bonds — How Funds in the Collection Account will be Allocated” in this prospectus. | |
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Credit Ratings:
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| | The Bonds are expected to receive credit ratings from two NRSROs. Please read “Rating Information” in this prospectus. | |
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Payment Dates:
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| | and of each year or, if not a Business Day, the next Business Day, including on the Scheduled Final Payment Date or Final Maturity Date for each tranche. The first Payment Date on which principal for a tranche of the Bonds is to be paid in accordance with the expected amortization schedule is , 2024. | |
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Interest Payments:
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| | Interest is due on each Payment Date. Interest will accrue on a 30/360 basis at the rate per annum specified for such tranche in the table below: | |
Tranche
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Interest
Rate |
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| | | | If any Payment Date is not a Business Day, payments scheduled to be made on such date may be made on the next Business Day, and no interest shall accrue upon such payment during the intervening period. | |
| | | | The Issuing Entity will pay interest on each tranche of Bonds before it pays the principal of any tranche of Bonds. Please read “Description of the Bonds — Principal Payments” in this prospectus. If there is a shortfall in the amounts available in the Collection Account to make interest payments, the Indenture Trustee will distribute interest pro rata to each tranche of Bonds based on the amount of interest payable on each outstanding tranche. | |
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Principal Payments:
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| | The Issuing Entity is scheduled to make payments of principal on each Payment Date and sequentially in accordance with the expected sinking fund schedule included in this prospectus. | |
| | | | Principal for each tranche is due upon the Final Maturity Date for that tranche. | |
| | | | Failure to make scheduled payments of principal on any Payment Date or the entire outstanding amount of Bonds of any tranche by the Scheduled Final Payment Date for that tranche will not result in an Event of Default with respect to any tranche. The failure to pay the entire outstanding principal balance of the Bonds of any tranche will result in an Event of Default only if such payment has not been made by the Final Maturity Date for such tranche. | |
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Expected Weighted Average
Life: |
| | The expected weighted average life for each tranche of Bonds is set forth in the table below: | |
Tranche
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Expected
Weighted Average Life (in years) |
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Scheduled Final Payment Date and Final Maturity Date:
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| | The Scheduled Final Payment Date and Final Maturity Date for each tranche of Bonds will be as set forth in the table below: | |
Tranche
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Scheduled Final
Payment Date Final |
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Maturity
Date |
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Optional Redemption:
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| | None. The Issuing Entity will not be permitted to optionally redeem the Bonds at any time prior to maturity. | |
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Mandatory Redemption:
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| | None. The Issuing Entity is not required to redeem the Bonds at any time prior to maturity. | |
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Priority of Payments:
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| | On each Payment Date, the Indenture Trustee will, solely at the written direction of the Servicer, apply all amounts on deposit in the Collection Account, including all investment earnings thereon, in the following priority: | |
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(1)
amounts owed by the Issuing Entity to the Indenture Trustee (including legal fees and expenses and outstanding indemnity amounts) shall be paid to the Indenture Trustee in an amount not to exceed $ per annum; provided, however, that such capped amount shall be disregarded and inapplicable following an Event of Default;
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(2)
the servicing fee with respect to such Payment Date and any unpaid servicing fees for prior Payment Dates shall be paid to the Servicer;
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(3)
the administration fee for such Payment Date shall be paid to the Administrator and the independent Manager fee for such Payment Date shall be paid to each independent Manager, and in each case with any unpaid administration fees or independent Manager fees from prior Payment Dates;
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(4)
all other ordinary and periodic operating expenses of the Issuing Entity for such Payment Date not described above shall be paid to the parties to which such operating expenses are owed;
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(5)
interest due on the Bonds for such Payment Date, including any overdue interest due on the Bonds, shall be paid to the Holders;
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(6)
principal required to be paid on the Bonds on the Final Maturity Date of each tranche of the Bonds or as a result of an acceleration upon an Event of Default shall be paid to the Holders;
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(7)
scheduled principal payments on the Bonds for such Payment Date, in accordance with the expected amortization schedule included in this prospectus, including any previously unpaid scheduled principal payments, shall be paid to the Holders, pro rata if there is a deficiency;
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(8)
any other unpaid operating expenses (including any such fees, expenses and indemnity amounts owed to the Indenture Trustee but unpaid due to the limitation in clause (1) above) of the Issuing Entity and any remaining amounts owed pursuant to the Basic Documents shall be paid to the parties to which such operating expenses or remaining amounts are owed;
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(9)
replenishment of the amount, if any, by which the Required Capital Level exceeds the amount in the Capital Subaccount as of such Payment Date shall be allocated to the Capital Subaccount;
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(10)
as long as no Event of Default has occurred or is continuing, the investment earnings on deposit in the Capital Subaccount shall be paid to Consumers Energy;
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(11)
the balance, if any, shall be allocated to the Excess Funds Subaccount; and
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(12)
after the Bonds have been paid in full and discharged, and all of the other foregoing amounts have been paid in full, together with all amounts due and payable to the Indenture Trustee under the Indenture, the balance (including all amounts then held in the Capital Subaccount and the Excess Funds Subaccount), if any, shall be paid to the Issuing Entity, free from the lien of the Indenture.
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| | | | If on any Payment Date, or, for any amounts payable under clauses (1) through (4) above, on any Business Day, funds on deposit in the General Subaccount are insufficient to make the payments contemplated by clauses (1) through (8) above, the Servicer will direct the Indenture Trustee to draw from amounts on deposit in the Excess Funds Subaccount and, if such amounts remain insufficient, then to draw from amounts on deposit in the Capital Subaccount. In addition, if on any Payment Date funds on deposit in the General Subaccount are insufficient to make the allocations contemplated by clause (9) above, the Servicer will direct the Indenture Trustee to draw from amounts on deposit in the Excess Funds Subaccount to make such allocations to the Capital Subaccount. | |
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Relationship to the Series 2014A Securitization Bonds:
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| | On July 22, 2014, Consumers Energy sold securitization property to its wholly-owned subsidiary Consumers 2014 Securitization Funding LLC, which issued and sold $378,000,000 aggregate principal amount of Series 2014A Securitization Bonds, all in accordance with a financing order issued by the MPSC on December 6, 2013 pursuant to the Statute. After giving effect to payments on the Series 2014A Securitization Bonds on the May 1, 2023 semi-annual payment date, the Series 2014A Securitization Bonds had $155,807,040.44 in aggregate principal amount outstanding, which was equal to the amount set forth in the expected amortization schedule for the Series 2014A Securitization Bonds. The Series 2014A Securitization Bonds were issued in three tranches. Tranche A-1 of the Series 2014A Securitization Bonds has been repaid in full. Tranche A-2 of the Series 2014A Securitization Bonds has a final legal maturity date of November 1, 2025, and Tranche A-3 of the Series 2014A Securitization Bonds has a final legal maturity date of May 1, 2029. The scheduled final payment date of Tranche A-2 of the Series 2014A Securitization Bonds is November 1, 2024, and the scheduled final payment date of Tranche A-3 of the Series 2014A Securitization Bonds is May 1, 2028. Consumers Energy currently acts as servicer with respect to the Series 2014A Securitization Bonds. Consumers 2014 Securitization Funding LLC will have no obligations under the Bonds, and the Issuing Entity has no obligations under the Series 2014A Securitization Bonds. The collateral for the Bonds will be separate from the collateral for the Series 2014A Securitization Bonds, which were issued by a different issuing entity from the Issuing Entity, and Holders of the Bonds will have no recourse to the collateral from that other issuance. Please read “Relationship to the Series 2014A Securitization Bonds” in this prospectus. | |
| | | | Securitization Charges relating to the Bonds and securitization charges relating to the Series 2014A Securitization Bonds will be collected through single bills to individual retail electric distribution customers. In the event a retail electric distribution customer does not pay in full all amounts owed under any bill, including securitization charges, Consumers Energy, as servicer, is required to allocate any resulting shortfalls in securitization charges ratably based on the amounts of Securitization Charges owing in respect of the Bonds, amounts owing in respect to the Series 2014A Securitization Bonds, and any amounts owing to any subsequently created affiliate of Consumers Energy that issues securitization bonds. Please read “Relationship to the Series 2014A Securitization Bonds” in this prospectus. | |
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Initial Securitization Charges as a Percentage of Customer’s Total Electricity Bill:
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| | The initial Securitization Charge is expected to represent approximately % of the total electricity bill, as of June 30, 2023, received by a 659 kWh residential customer of Consumers Energy. When combined with the securitization charges for the Series 2014A Securitization Bonds, the cumulative securitization charges would be expected to represent approximately % of the total electricity bill, as of June 30, 2023, received by a 659 kWh residential customer of Consumers Energy. | |
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True-Up Adjustments to the Securitization Charges:
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| | The Statute and the Financing Order mandate that the Securitization Charges be reviewed and adjusted by the MPSC at least annually to correct any overcollections or undercollections of the preceding 12 months and to ensure the expected recovery during the succeeding annual period of amounts required for the timely payment of debt service and other required amounts and charges in connection with the Bonds. True-Up Adjustments may also be made by the Servicer semi-annually or more frequently at any time, without limits as to frequency, if the Servicer determines that a True-Up Adjustment is necessary to ensure the expected recovery during the succeeding annual period of amounts required for the timely payment of debt service and other required amounts and charges in connection with the Bonds. The Servicing Agreement will require Securitization Charges to be adjusted quarterly following the Scheduled Final Payment Date for each tranche of Bonds if there are any remaining amounts due. The Financing Order provides that semi-annual or more frequent true-ups may be implemented absent an MPSC order, unless contested. Any contest of any True-Up Adjustment shall be subject only to confirmation of the mathematical computations contained in the proposed True-Up Adjustment. Please read “The Statute and the Financing Order — True-Up Mechanism” in this prospectus. In the Financing Order, the MPSC affirms that it will act pursuant to the Financing Order to ensure that expected Securitization Charges are sufficient to pay on a timely basis all scheduled payments of principal of and interest on the Bonds and Ongoing Other Qualified Costs in connection with the Bonds. | |
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Nonbypassable Securitization Charges:
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| | The Statute provides that the Securitization Charges are Nonbypassable, and the Financing Order requires the imposition and collection of Securitization Charges from Customers. | |
| | | | Any successor to Consumers Energy under the Statute, whether pursuant to any bankruptcy, reorganization or other insolvency proceeding or pursuant to any merger, acquisition, sale or transfer, by operation of law, as a result of electric utility restructuring or otherwise, must perform and satisfy all obligations of Consumers Energy under the Statute and the Financing Order, including the collection of Securitization Charges. | |
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Credit Enhancement:
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| | Credit enhancement for the Bonds will be provided by the True-Up Mechanism, as well as the Capital Subaccount. The primary purpose of the Excess Funds Subaccount is not to provide credit enhancement for the Bonds. However, amounts in the Excess Funds Subaccount may be used to make debt service payments on the Bonds if needed. | |
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Servicing Fees:
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| | Consumers Energy, as Servicer, will receive an annual servicing fee equal to 0.05% of the initial aggregate principal amount of the Bonds. In the event that a successor Servicer is appointed that is not Consumers Energy or any of its affiliates, a higher annual servicing fee of up to 0.75% of the initial aggregate principal amount of the Bonds will be payable to the successor Servicer. | |
| | | | Additionally, the Servicer will be entitled to reimbursement by the Issuing Entity for filing fees and fees and expenses for attorneys, accountants, printing or other professional services retained by the Issuing Entity and paid for by the Servicer (or procured by the Servicer on behalf of the Issuing Entity and paid for by the Servicer) to meet the Issuing Entity’s obligations under the agreements governing the Bonds. | |
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Michigan State Pledge:
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| | The State of Michigan has pledged in the Statute, for the benefit and protection of the Holders, including trustees, collateral agents and other persons acting for the benefit of the Holders, referred to in this prospectus as the Financing Parties, under the Financing Order and Consumers Energy, that it will not take or permit any action that would impair the value of the Securitization Property, reduce or alter, except as allowed in connection with a True-Up Adjustment, or impair the Securitization Charges to be imposed, collected and remitted, until the principal, interest and premium, if any, and any other charges incurred and contracts to be performed, in connection with the Bonds have been paid and performed in full. | |
| | | | Michigan has both a voter initiative and a referendum process. The time for challenging the Statute through a referendum has expired, but the right of voters in Michigan to enact laws by initiative can be exercised at any time, provided a prescribed process is followed and successfully concluded. Constitutional protections against actions that violate the pledge of the State of Michigan should apply whether legislation is passed by the Michigan legislature or is brought about by a voter initiative. | |
| | | | The Bonds are not a debt or obligation of the State of Michigan and are not a charge on its full faith and credit or taxing power. | |
| | | | Please read “The Statute and the Financing Order — Electric Utilities May Securitize Qualified Costs” in this prospectus. | |
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Minimum Denominations:
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| | The Issuing Entity will issue the Bonds in minimum denominations of $2,000 and in integral multiples of $1,000 in excess thereof, although one bond of each tranche may be of a smaller denomination. | |
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Use of Proceeds:
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| | The net proceeds of this offering are estimated to be approximately $ , after deducting underwriting discounts and commissions and initial costs of the transaction. The Issuing Entity will use the net proceeds from the sale of the Bonds to purchase the Securitization Property from the Seller. Consumers Energy, the Seller, will apply the proceeds of the sale of the Securitization Property in accordance with the Financing Order, as required by the Statute. The Financing Order approves proceeds to be applied for the following uses: | |
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to pay initial Qualified Costs incurred in connection with the issuance of the Bonds;
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to reimburse Consumers Energy for Qualified Costs, all of which shall have been incurred at the time of issuance of the Bonds; and
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to refinance or retire a portion of debt or equity of Consumers Energy in accordance with the Statute.
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1940 Act Registration:
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| | The Issuing Entity will be relying on an exclusion or exemption from the definition of “investment company” under the Investment Company Act of 1940, as amended, referred to in this prospectus as the 1940 Act, contained in Rule 3a-7 promulgated under the 1940 Act, although there may be additional exclusions or exemptions available to the Issuing Entity. The Issuing Entity is being structured so as not to constitute a “covered fund” for purposes of the Volcker Rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act, referred to in this prospectus as the Dodd-Frank Act. | |
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Credit Risk Retention:
|
| | The Bonds are not subject to the 5% risk retention requirements imposed by Section 15G of the Exchange Act due to the exemption provided in Rule 19(b)(8) of the risk retention regulations in 17 C.F.R. Part 246 of the Exchange Act, referred to in this prospectus as Regulation RR. For information regarding the requirements of European legislation comprising Regulation (EU) 2017/2402, as amended, referred to in this prospectus as the EU Securitization Regulation, as to risk retention and other matters, please read “Risk Factors — Other Risks Associated with the Purchase of the Bonds — Regulatory provisions affecting certain investors could adversely affect the liquidity and the regulatory treatment of investments in the Bonds” in this prospectus. | |
|
Federal Income Tax Status:
|
| | In the opinion of Pillsbury Winthrop Shaw Pittman LLP, counsel to the Issuing Entity and Consumers Energy, for United States federal income tax purposes, the Bonds will constitute indebtedness of Consumers Energy, the sole member of the Issuing Entity. If you purchase a beneficial interest in any Bonds, you agree by your purchase to treat the Bonds as debt of Consumers Energy for United States federal income tax purposes. | |
|
ERISA Considerations:
|
| | Employee benefit plans, plans and other investors subject to the Employee Retirement Income Security Act of 1974, as amended, referred to in this prospectus as ERISA, Section 4975 of the Internal Revenue Code of 1986, as amended, referred to in this prospectus as the Code, or Similar Law, may acquire the Bonds subject to specified conditions. The acquisition, holding and disposition of the Bonds could be treated as a direct or indirect prohibited transaction under ERISA and/or Section 4975 of the Code or, in the case of a plan subject to Similar Law, a violation of Similar Law. Accordingly, by purchasing the Bonds, each investor purchasing on behalf of such a plan will be deemed to certify that the purchase, holding and disposition of the Bonds will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code or, in the case of a plan subject to Similar Law, will not constitute or result in a violation of Similar Law. Please read “ERISA Considerations” in this prospectus. | |
|
Expected Settlement:
|
| | On or about , 2023, settling through DTC, Clearstream Banking, Luxembourg, S.A., and Euroclear Bank SA/NV, as operator of the Euroclear System, without the payment of accrued interest. | |
Name
|
| |
Age
|
| |
Title
|
| |
Background
|
|
Srikanth Maddipati | | | 41 | | | President, Chief Executive Officer, Chief Financial Officer and Treasurer | | | Srikanth (Sri) Maddipati is Treasurer, Vice President, Finance and Investor Relations for CMS Energy and Consumers Energy. Mr. Maddipati also chairs the Benefit Administration Committee, which is responsible for the investment management of the employee benefit plans. Mr. Maddipati joined CMS Energy in 2014 as Assistant Treasurer. | |
Rejji P. Hayes | | | 48 | | | Manager and Executive Vice President | | | Rejji P. Hayes is Executive Vice President and Chief Financial Officer of CMS Energy and Consumers Energy. He was named to this position in 2017. Mr. Hayes joined CMS Energy from ITC Holdings Corp., a regulated electric transmission utility, where he served as executive vice president and chief financial officer. Mr. Hayes is a Fortive Corporation (NYSE: FTV) board member and serves as chair of the audit committee. He also serves on the boards of Amherst College, Business Leaders for Michigan and the Detroit Regional Chamber. | |
Shaun M. Johnson | | | 44 | | | Manager, Senior Vice President and General Counsel | | | Shaun M. Johnson is Senior Vice President and General Counsel of CMS Energy and Consumers Energy. He was named to this position in 2019. Mr. Johnson joined CMS Energy as Vice President and Deputy General Counsel in 2016. Mr. Johnson also serves on the board of the Michigan Chamber of Commerce. | |
Name
|
| |
Age
|
| |
Title
|
| |
Background
|
|
Melissa M. Gleespen | | | 55 | | | Manager, Vice President and Secretary | | | Melissa M. Gleespen is Vice President, Corporate Secretary and Chief Compliance Officer for CMS Energy and Consumers Energy. Ms. Gleespen was elected as Vice President and Corporate Secretary in 2013 and was elected Chief Compliance Officer in 2016. She joined CMS Energy in 2013 as Supervisory Assistant General Counsel. | |
Scott B. McIntosh | | | 47 | | | Vice President and Controller | | | Scott B. McIntosh is Vice President, Controller and Chief Accounting Officer for CMS Energy and Consumers Energy. Mr. McIntosh was elected to this position in 2021. Mr. McIntosh joined Consumers Energy in 2004 and has held increasingly responsible tax positions, including Vice President of Tax. | |
| | | | | | Independent Manager | | | | |
Electricity Delivered to Michigan Customers, Total Billed Electric Revenues and Customers*
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Electric Usage (As Measured by Billed GWh Sales) by Securitization Rate Class and Percentage Composition
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securitization Rate
Class |
| |
Year Ended
December 31, 2018 |
| |
Year Ended
December 31, 2019 |
| |
Year Ended
December 31, 2020 |
| |
Year Ended
December 31, 2021 |
| |
Year Ended
December 31, 2022 |
| |||||||||||||||||||||||||||||||||||||||||||||
Residential
|
| | | | 13,051 | | | | | | 38.3% | | | | | | 12,485 | | | | | | 38.2% | | | | | | 13,331 | | | | | | 42.4% | | | | | | 13,229 | | | | | | 41.1% | | | | | | 12,977 | | | | | | 39.1% | | |
Secondary
|
| | | | 7,531 | | | | | | 22.1% | | | | | | 7,236 | | | | | | 22.1% | | | | | | 6,871 | | | | | | 21.9% | | | | | | 7,237 | | | | | | 22.5% | | | | | | 7,312 | | | | | | 22.0% | | |
Primary
|
| | | | 13,335 | | | | | | 39.2% | | | | | | 12,826 | | | | | | 39.3% | | | | | | 11,095 | | | | | | 35.3% | | | | | | 11,642 | | | | | | 36.1% | | | | | | 12,818 | | | | | | 38.6% | | |
Streetlighting
|
| | | | 135 | | | | | | 0.4% | | | | | | 129 | | | | | | 0.4% | | | | | | 119 | | | | | | 0.4% | | | | | | 110 | | | | | | 0.3% | | | | | | 109 | | | | | | 0.3% | | |
Total Retail
|
| | | | 34,053 | | | | | | 100.0% | | | | | | 32,675 | | | | | | 100.0% | | | | | | 31,416 | | | | | | 100.0% | | | | | | 32,217 | | | | | | 100.0% | | | | | | 33,216 | | | | | | 100.0% | | |
Total Billed Electric Revenue by Securitization Rate Class and Percentage Composition (Dollars in Millions)*
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securitization Rate
Class |
| |
Year Ended
December 31, 2018 |
| |
Year Ended
December 31, 2019 |
| |
Year Ended
December 31, 2020 |
| |
Year Ended
December 31, 2021 |
| |
Year Ended
December 31, 2022 |
| |||||||||||||||||||||||||||||||||||||||||||||
Residential
|
| | | $ | 2,070 | | | | | | 47.7% | | | | | $ | 1,979 | | | | | | 46.9% | | | | | $ | 2,079 | | | | | | 50.5% | | | | | $ | 2,398 | | | | | | 51.6% | | | | | $ | 2,350 | | | | | | 50.0% | | |
Secondary
|
| | | $ | 1,087 | | | | | | 25.0% | | | | | $ | 1,069 | | | | | | 25.4% | | | | | $ | 1,017 | | | | | | 24.7% | | | | | $ | 1,150 | | | | | | 24.8% | | | | | $ | 1,148 | | | | | | 24.4% | | |
Primary
|
| | | $ | 1,156 | | | | | | 26.6% | | | | | $ | 1,136 | | | | | | 27.0% | | | | | $ | 990 | | | | | | 24.1% | | | | | $ | 1,067 | | | | | | 23.0% | | | | | $ | 1,170 | | | | | | 24.9% | | |
Streetlighting
|
| | | $ | 30 | | | | | | 0.7% | | | | | $ | 31 | | | | | | 0.7% | | | | | $ | 29 | | | | | | 0.7% | | | | | $ | 29 | | | | | | 0.6% | | | | | $ | 29 | | | | | | 0.6% | | |
Total Retail
|
| | | $ | 4,342 | | | | | | 100.0% | | | | | $ | 4,215 | | | | | | 100.0% | | | | | $ | 4,114 | | | | | | 100.0% | | | | | $ | 4,644 | | | | | | 100.0% | | | | | $ | 4,697 | | | | | | 100.0% | | |
Service Territory Number of Average Metered Customers and Percentage Composition*
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securitization Rate
Class |
| |
Year Ended
December 31, 2018 |
| |
Year Ended
December 31, 2019 |
| |
Year Ended
December 31, 2020 |
| |
Year Ended
December 31, 2021 |
| |
Year Ended
December 31, 2022 |
| |||||||||||||||||||||||||||||||||||||||||||||
Residential
|
| | | | 1,603,125 | | | | | | 87.8% | | | | | | 1,611,320 | | | | | | 87.7% | | | | | | 1,630,424 | | | | | | 87.9% | | | | | | 1,642,642 | | | | | | 87.8% | | | | | | 1,645,580 | | | | | | 87.8% | | |
Secondary
|
| | | | 217,475 | | | | | | 11.9% | | | | | | 219,496 | | | | | | 12.0% | | | | | | 219,167 | | | | | | 11.8% | | | | | | 221,294 | | | | | | 11.8% | | | | | | 222,073 | | | | | | 11.8% | | |
Primary
|
| | | | 3,706 | | | | | | 0.2% | | | | | | 3,725 | | | | | | 0.2% | | | | | | 3,751 | | | | | | 0.2% | | | | | | 3,835 | | | | | | 0.2% | | | | | | 3,876 | | | | | | 0.2% | | |
Streetlighting
|
| | | | 1,860 | | | | | | 0.1% | | | | | | 2,127 | | | | | | 0.1% | | | | | | 2,330 | | | | | | 0.1% | | | | | | 2,352 | | | | | | 0.1% | | | | | | 3,490 | | | | | | 0.2% | | |
Total Retail
|
| | | | 1,826,166 | | | | | | 100.0% | | | | | | 1,836,668 | | | | | | 100.0% | | | | | | 1,855,672 | | | | | | 100.0% | | | | | | 1,870,123 | | | | | | 100.0% | | | | | | 1,875,019 | | | | | | 100.0% | | |
| | | | | | | | | | | | ||||||||||||||||||||
TOTAL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Forecast(1)
|
| | | | 33,770 | | | | | | 33,983 | | | | | | 32,866 | | | | | | 31,618 | | | | | | 33,342 | | |
Actual
|
| | | | 34,053 | | | | | | 32,675 | | | | | | 31,416 | | | | | | 32,217 | | | | | | 33,216 | | |
Variance (%)
|
| | | | 0.8% | | | | | | -3.8% | | | | | | -4.4% | | | | | | 1.9% | | | | | | -0.4% | | |
| | |
2018
|
| |
2019
|
| |
2020
|
| |
2021
|
| |
2022
|
| |||||||||||||||
Billed Electric Revenues ($ in millions)
|
| | | $ | 4,342.4 | | | | | $ | 4,215.2 | | | | | $ | 4,114.1 | | | | | $ | 4,644.3 | | | | | $ | 4,696.7 | | |
Net Charge-Offs ($ in millions)
|
| | | $ | 16.7 | | | | | $ | 15.9 | | | | | $ | 14.9 | | | | | $ | 15.5 | | | | | $ | 18.8 | | |
Percentage of Billed Revenue
|
| | | | 0.38% | | | | | | 0.38% | | | | | | 0.36% | | | | | | 0.33% | | | | | | 0.40% | | |
| | |
As Of
12/31/18 |
| |
As Of
12/31/19 |
| |
As Of
12/31/20 |
| |
As Of
12/31/21 |
| |
As Of
12/31/22 |
| |||||||||||||||
Days Outstanding
|
| | | | 44.83 | | | | | | 42.50 | | | | | | 43.63 | | | | | | 42.04 | | | | | | 40.51 | | |
| | |
As Of
12/31/18 |
| |
As Of
12/31/19 |
| |
As Of
12/31/20 |
| |
As Of
12/31/21 |
| |
As Of
12/31/22 |
| |||||||||||||||
01 – 30 days
|
| | | | 0.72% | | | | | | 0.99% | | | | | | 1.11% | | | | | | 1.00% | | | | | | 0.87% | | |
31 – 60 days
|
| | | | 0.20% | | | | | | 0.16% | | | | | | 0.22% | | | | | | 0.21% | | | | | | 0.27% | | |
61 – 90 days
|
| | | | 0.10% | | | | | | 0.08% | | | | | | 0.12% | | | | | | 0.10% | | | | | | 0.10% | | |
91+ days
|
| | | | 0.19% | | | | | | 0.17% | | | | | | 0.39% | | | | | | 0.19% | | | | | | 0.18% | | |
Total
|
| | | | 5.79% | | | | | | 5.01% | | | | | | 5.92% | | | | | | 5.00% | | | | | | 5.03% | | |
Tranche
|
| |
Expected
Weighted Average Life (Years) |
| |
Initial
Principal Balance |
| |
Scheduled
Final Payment Date |
| |
Final
Maturity Date |
| |
Interest
Rate |
| ||||||
| | | | | | | $ | | | | | | | | | | |
|
%
|
| | |
| | | | | | | $ | | | | | | | | | | | |
|
%
|
| |
Semi-Annual Payment Date
|
| |
Tranche
|
| |
Tranche
|
| ||||||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
Total Payments
|
| | | $ | | | | | $ | | | |
Semi-Annual Payment Date
|
| |
Tranche
|
| |
Tranche
|
| ||||||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
| | | | $ | | | | | $ | | | ||
Total Payments
|
| | | $ | | | | | $ | | | |
Recipient
|
| |
Source of Payment
|
| |
Fees and Expenses Payable
|
|
Servicer | | | Securitization Charge collections and investment earnings | | | 0.05% of the initial aggregate principal balance of the Bonds on an annualized basis (so long as the Servicer is Consumers Energy or an affiliate), plus expenses | |
Indenture Trustee | | | Securitization Charge collections and investment earnings | | |
$ per annum, plus expenses
|
|
Independent Manager | | | Securitization Charge collections and investment earnings | | |
$ per annum, plus expenses
|
|
Administrator | | | Securitization Charge collections and investment earnings | | |
$50,000 per annum, plus expenses
|
|
| | |
Expected
Weighted Average Life (Years) |
| |
-5%
( Standard Deviations from Mean) |
| |
-15%
( Standard Deviations from Mean) |
| ||||||
Tranche
|
| |
WAL (Years)
|
| |
Change (Days)*
|
| |
WAL (Years)
|
| |
Change (Days)*
|
| |||
| | | | | | | | | | | | | | | % | |
| | | | | | | | | | | | | | | % | |
Underwriter
|
| |
Tranche
|
| |
Tranche
|
| ||||||
Citigroup Global Markets Inc.
|
| | | $ | | | | | $ | | | ||
Total: | | | | $ | | | | | $ | | | |
| | |
Selling Concession
|
| |
Reallowance Discount
|
| ||||||
Tranche
|
| | | | % | | | | | | % | | |
Tranche
|
| | | | % | | | | | | % | | |
|
Securities and Exchange Commission registration fee
|
| | | $ | 69,426 | | |
|
Printing and engraving expenses
|
| | | | * | | |
|
Indenture Trustee fees and expenses
|
| | | | * | | |
|
Legal fees and expenses
|
| | | | * | | |
|
Accounting fees and expenses
|
| | | | * | | |
|
Rating Agencies’ fees and expenses
|
| | | | * | | |
|
Structuring agent fees and expenses
|
| | | | * | | |
|
Organizational costs
|
| | | | * | | |
|
Miscellaneous fees and expenses
|
| | | | * | | |
|
Total
|
| | | $ | * | | |
|
Exhibit
Number |
| |
Description of Exhibit
|
|
| 1.1 | | | Form of Underwriting Agreement* | |
| 3.1 | | | | |
| 3.2 | | | Form of Amended and Restated Limited Liability Company Agreement of Consumers 2023 Securitization Funding LLC* | |
| 4.1 | | | Form of Indenture between Consumers 2023 Securitization Funding LLC and the Indenture Trustee (including forms of the Bonds and form of Series Supplement)* | |
| 5.1 | | | Opinion of Pillsbury Winthrop Shaw Pittman LLP with respect to legality* | |
| 8.1 | | | Opinion of Pillsbury Winthrop Shaw Pittman LLP with respect to federal tax matters* | |
| 10.1 | | | Form of Securitization Property Servicing Agreement between Consumers 2023 Securitization Funding LLC and Consumers Energy Company, as Servicer* | |
| 10.2 | | | Form of Securitization Property Purchase and Sale Agreement between Consumers 2023 Securitization Funding LLC and Consumers Energy Company, as Seller* | |
|
Exhibit
Number |
| |
Description of Exhibit
|
|
| 10.3 | | | Form of Administration Agreement between Consumers 2023 Securitization Funding LLC and Consumers Energy Company, as Administrator* | |
| 21.1 | | | | |
| 23.1 | | | Consent of Pillsbury Winthrop Shaw Pittman LLP (included as part of its opinions filed as Exhibits 5.1, Exhibit 8.1 and Exhibit 99.2)* | |
| 23.2 | | | Consent of Miller Canfield Paddock and Stone, P.L.C. (included as part of its opinion filed as Exhibit 99.3)* | |
| 24.1 | | | Powers of Attorney of Consumers Energy Company (included on signature page to this Registration Statement)** | |
| 25.1 | | | | |
| 99.1 | | | | |
| 99.2 | | | Form of Opinion of Pillsbury Winthrop Shaw Pittman LLP with respect to U.S. constitutional matters* | |
| 99.3 | | | Form of Opinion of Miller Canfield Paddock and Stone, P.L.C. with respect to Michigan constitutional matters* | |
| 99.4 | | | | |
| 99.5 | | | | |
| 99.6 | | | | |
| 99.7 | | | Consent of Independent Manager Nominee* | |
| 107.1 | | | |
|
Name and Signature
|
| |
Title
|
| |
Date
|
|
|
|
| | President, Chief Executive Officer (Principal Executive Officer) and Director | | | | |
|
/s/ Rejji P. Hayes
|
| | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | | | | |
|
|
| | Vice President, Tax, Controller and Chief Accounting Officer (Principal Accounting Officer) | | | | |
|
A Majority of the Directors:
|
| | | | | | |
|
/s/ John G. Russell
|
| | Chairman of the Board of Directors | | | | |
|
/s/ Jon E. Barfield
|
| | Director | | | | |
|
|
| | Director | | | |
|
Name and Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Kurt L. Darrow
|
| | Director | | | | |
|
|
| | Director | | | | |
|
/s/ Ralph Izzo
|
| | Director | | | | |
|
/s/ Suzanne F. Shank
|
| | Director | | | | |
|
/s/ Myrna M. Soto
|
| | Director | | | | |
|
/s/ John G. Sznewajs
|
| | Director | | | | |
|
/s/ Ronald J. Tanski
|
| | Director | | | | |
|
/s/ Laura H. Wright
|
| | Director | | | |
This ‘SF-1’ Filing | Date | Other Filings | ||
---|---|---|---|---|
5/1/29 | ||||
5/1/28 | ||||
11/1/25 | ||||
11/1/24 | ||||
3/31/24 | ||||
Filed on: | 9/22/23 | |||
8/16/23 | ||||
6/30/23 | 10-Q | |||
5/1/23 | ||||
12/31/22 | 10-K, ARS | |||
12/31/21 | 10-K | |||
11/18/21 | ||||
1/15/21 | ||||
1/7/21 | ||||
12/31/20 | 10-K | |||
12/17/20 | ||||
9/18/20 | ||||
12/31/19 | 10-K | |||
12/31/18 | 10-K | |||
7/22/14 | 8-K | |||
12/6/13 | ||||
1/27/11 | 8-K | |||
1/4/01 | ||||
10/24/00 | ||||
6/5/00 | ||||
10/1/99 | ||||
8/20/96 | ||||
1/1/96 | ||||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/12/24 Consumers 2023 Securitizatio… LLC 10-K 12/31/23 7:269K 11/13/23 Consumers Energy Co. SF-1/A 14:4.5M Toppan Merrill/FA 10/18/23 SEC UPLOAD¶ 12/20/23 2:44K Consumers 2023 Securitizatio… LLC |